Exchange: NASDAQ | Sector: Healthcare | Industry: Medical Devices
Q2 2025
Published: Nov 13, 2024
Earnings Highlights
EPS of $-0.20 increased by 83.6% from previous year
Net income of -2.81M
""Our emphasis on expense reductions has allowed for optimized resource allocation. This, in turn, enabled our continued work on the high-impact area of oncology."" - James Frakes
Aethlon Medical Inc (AEMD) QQ2 2025 Financial & Strategic Update: Cost Reduction Drive, Australian Oncology Trials Progress, and Early Hemopurifier Program Milestones
Executive Summary
Aethlon Medical reported a cash-positive yet revenue-light quarter as it continues to refocus on expense discipline and the advancement of its Hemopurifier program in oncology. For the fiscal quarter ended September 30, 2024 (QQ2 2025), operating expenses totaled approximately $2.90 million and net income declined to about -$2.81 million, with earnings per share of -$0.20. Management emphasized cost reductions as a strategic priority, noting that excluding a $0.50 million employee-separation provision would yield a material operating-efficiency improvement. The company ended the quarter with roughly $6.9 million in cash, underscoring a modestly improved but still tight liquidity position given the lack of current revenue. The aggressive cost-control measures are positioned to support ongoing oncology efforts and prospective PMA-directed activities, while management outlined a multi-site clinical rollout in Australia (Royal Adelaide Hospital and Gold Coast willing sites, with a Sydney ethics-approval pathway) and a parallel India program pending CDSCO import clearances. Importantly, management highlighted Australia’s 43% cash rebate (cash-based tax credit) as a meaningful contributor to R&D cost recovery, potentially halving program costs in future years. Near-term catalysts include first safety readouts from Australia (anticipated as early as January 2025 after run-in) and subsequent EV/T-cell data in mid-2025, with additional milestones expected from India and broader regulatory discussions. While the near-term revenue outlook remains contingent on successful trial outcomes and eventual PMA planning, the company’s improved expense discipline and ongoing international trial progression offer potential upside should safety and mechanistic biomarkers (extracellular vesicles and T-cell activity) trend positively.
Key Performance Indicators
Operating Income
-2.90M
QoQ: -10.72% | YoY:8.60%
Net Income
-2.81M
QoQ: -9.18% | YoY:7.48%
EPS
-0.20
QoQ: 41.18% | YoY:83.61%
Revenue Trend
Margin Analysis
Key Insights
Revenue: None reported in QQ2 2025 (no topline growth in the quarter).
Operating expenses: $2.902 million for the quarter, broadly flat vs. prior-year period but with a favorable mix attributed to lower professional fees and headcount-adjustment benefits.
Balance sheet and liquidity: Cash and cash equivalents: $6.859 million; Total assets: $8.847 million; Total debt: $0.798 million; Long-term debt: $0.497 million; Total stockholders’ equity: $6.019 million; Retained earnings: -$159.945 million (cumulative losses).
Cash flow: Net cash provided by operating activities: -$2.214 million; Net change in cash: -$2.213 million; Cash at end of period: $6.846 million; Free cash flow: -$2.214 million.
Financial Highlights
Overview of QQ2 2025 financials and operating metrics:
- Revenue: None reported in QQ2 2025 (no topline growth in the quarter).
- Operating expenses: $2.902 million for the quarter, broadly flat vs. prior-year period but with a favorable mix attributed to lower professional fees and headcount-adjustment benefits.
- EBITDA: -$2.816 million; Operating income: -$2.902 million; Net income: -$2.807 million; EPS: -$0.20.
- Balance sheet and liquidity: Cash and cash equivalents: $6.859 million; Total assets: $8.847 million; Total debt: $0.798 million; Long-term debt: $0.497 million; Total stockholders’ equity: $6.019 million; Retained earnings: -$159.945 million (cumulative losses).
- Cash flow: Net cash provided by operating activities: -$2.214 million; Net change in cash: -$2.213 million; Cash at end of period: $6.846 million; Free cash flow: -$2.214 million.
- Working capital and liquidity ratios: Current ratio 3.06; Quick ratio 3.06; Cash ratio 2.94. Net debt reported as negative, reflecting a net cash position versus modest debt.
- Share count and earnings quality: Weighted average shares outstanding 13.938 million; EPS diluted -$0.20.
- Notable drivers: Ongoing cost-reduction initiatives and the lack of revenue generation during QQ2 2025, with management signaling potential upside from Australian and Indian oncology trials and tax-credit rebates that reduce program spending going forward.
Income Statement
Metric
Value
YoY Change
QoQ Change
Operating Income
-2.90M
8.60%
-10.72%
Net Income
-2.81M
7.48%
-9.18%
EPS
-0.20
83.61%
41.18%
Key Financial Ratios
currentRatio
3.06
returnOnAssets
-31.7%
returnOnEquity
-46.6%
debtEquityRatio
0.13
operatingCashFlowPerShare
$-0.16
freeCashFlowPerShare
$-0.16
priceToBookRatio
1.08
priceEarningsRatio
-0.58
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key insights from management commentary and Q&A on the earnings call:
- Strategy and cost discipline: James Frakes stated the two goals upon assuming permanent CEO duties were to “move the company forward in oncology and to reduce our expenses in order to streamline operations,” noting measurable progress on expense reductions and improved resource allocation during the latest quarter.
- Oncology program progression in Australia: Steven LaRosa reported that the first patient was enrolled at Royal Adelaide Hospital, with a second patient enrolled soon after. The Gold Coast site (Pindara Private Hospital) is open and actively screening, and a third Sydney site is anticipated to obtain ethics-board approval shortly, enabling broader enrollment for the safety/feasibility/dose-finding trial in solid tumors post-anti-PD-1 therapy.
- Trial design and data-readout cadence: The Australian study is a sequential, escalating cohort trial (1, then 2, then 3 Hemopurifier treatments). Safety data are expected after the first cohort (January 2025), followed by EV/T-cell data after the full cohort completes, with an anticipated data cadence into the summer of 2025 as EV biomarkers and T-cell activity inform subsequent efficacy trial design.
- India trial and regulatory timing: LaRosa reiterated an ethics/DSO timing path for India, noting ethics-approval for a safety/feasibility trial and the need for CDSCO device-import regulatory clearance, underscoring the two-country, parallel data strategy to mitigate population-heterogeneity concerns.
- Australia tax incentive: James Frakes detailed Australia’s cash-based tax credit equal to 0.43 on the dollar for eligible R&D spending, which effectively halves project costs when cash refunded, with applicability extending to the central Australian lab work.
- Readthrough on data cadence and investor updates: Management committed to reporting data after each cohort, not waiting for the entire study end, which provides incremental visibility into safety signals and mechanistic biomarker responses.
"Our emphasis on expense reductions has allowed for optimized resource allocation. This, in turn, enabled our continued work on the high-impact area of oncology."
— James Frakes
"The first patient was enrolled at the Royal Adelaide Hospital in Adelaide, Australia. We’ve now enrolled a second patient from the same hospital, marking a critical milestone for our oncology program."
— Steven LaRosa
Forward Guidance
Forward-looking assessment and catalysts:
- Near-term catalysts (calendar 2025): The Australian trial's first safety data from the initial cohort is anticipated around January 2025, with EV and T-cell analyses following after the cohort completes (likely mid-2025). Successful safety signals and favorable biomarker trends could support additional funding discussions or accelerated PMA planning with regulators, provided other cohorts demonstrate robustness.
- Australia tax credit impact: The 43% cash rebate on eligible Australian R&D spending offers meaningful cost deferral relief; if sustained, it can materially improve project economics in future periods and reduce the required external financing burden.
- India trial timing: Regulatory imports (CDSCO clearance) remain a gating item; approval would enable a separate data stream that complements the Australian data and strengthens the global safety/feasibility evidence base.
- Revenue and profitability trajectory: At present, QQ2 2025 shows no revenue and ongoing net losses. The achievability of an accelerated PMA pathway will hinge on clear safety and mechanistic demonstrations (EV reduction, T-cell activity augmentation) and alignment with FDA/other regulators. Management’s emphasis on cost discipline supports a longer runway, but additional capital may be required to fund ongoing trials and potential later-stage studies.
- Key factors for investors to monitor: (1) Enrollment cadence and ethics approvals across Australian sites; (2) Readouts from the first safety cohort (January 2025) and biomarker trends (EVs/T-cells); (3) Australia India cost-recovery via rebates and the resulting impact on burn rate; (4) Any regulatory updates on PMA design or adaptive trial constructs; (5) Potential strategic partnerships or licensing discussions related to Hemopurifier applications in oncology or infectious disease settings.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AEMD Focus
0.00%
0.00%
-46.60%
-57.90%
TIVC
21.40%
-8.61%
-30.20%
-10.10%
TLIS
0.00%
0.00%
-18.20%
-43.40%
BJDX
0.00%
0.00%
-28.60%
-52.90%
HSCS
0.00%
0.00%
-0.05%
-32.40%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Aethlon Medical presents a high-risk, high-reward opportunity. The QQ2 2025 results underscore a company in the early stages of clinical validation with no revenue but meaningful upside if the Hemopurifier oncology program demonstrates robust safety signals and favorable EV/T-cell biomarker trends. Near-term catalysts include the January 2025 safety readout from the Australian cohort and subsequent biomarker data in mid-2025, along with potential progress on the India trial and PMA planning discussions. The Australian 43% cash rebate materially improves unit economics and could extend the company’s runway, reducing the urgency for immediate external financing assuming the rebate process remains on track. However, the lack of revenue, ongoing cash burn, and regulatory/clinical execution risks require a disciplined, event-driven investment approach, with potential upside contingent on positive clinical readouts and any favorable regulatory outcomes. Investors should monitor enrollment progression across Australian sites, readouts from the first safety cohort, and updates on India CDSCO timing and PMA strategy to assess the probability of transitioning from a development-stage company to a regulated medical device with a commercial path.
Key Investment Factors
Growth Potential
Growth potential centers on Hemopurifier’s oncology niche (combating cancer-associated exosomes) and its capacity to address viral infections by selective extracorporeal filtration. Positive safety signals and favorable EV/T-cell biomarker changes could de-risk further clinical development and potentially unlock PMA discussions with regulators. Australia’s centralized trial framework and cash rebate program create a more favorable cost structure for ongoing studies, enhancing the potential ROI of the Hemopurifier program if early data look compelling.
Profitability Risk
Key risks include: (i) lack of revenue in QQ2 2025 and continued reliance on financing to fund trials; (ii) regulatory uncertainty and potential delays in ethics approvals or CDSCO submissions; (iii) biomarker data may fail to demonstrate meaningful tumor response or EV reduction; (iv) competitive dynamics in targeted oncology and exosome-focused therapies; (v) execution risk in enrolling a broader Australian cohort and managing international trial sites; (vi) financial risk if tax credit programs or rebates are reduced or delayed.
Financial Position
Balance sheet highlights: cash $6.86M with total debt $0.80M and negative retained earnings of $159.95M, indicating substantial cumulative losses. Current ratio 3.06 and cash ratio 2.94 reflect solid short-term liquidity, albeit against the backdrop of no revenue and ongoing R&D expenditures. The company’s liquidity runway is sensitive to quarterly burn (~$2.2–2.9M) and potential need for additional capital. Management’s cost-reduction measures improved the expense trajectory; the Australia tax-credit program mitigates some ongoing R&D outlays, strengthening future project economics if the rebates are realized consistently.
SWOT Analysis
Strengths
Progress in the Australian oncology program with two enrolled patients and active site expansion to a third site.
Cost discipline leading to a lower quarterly operating expense trend and improved resource allocation.
International multi-site exploration (Australia and India) potentially broadens data applicability and regulatory engagement.
Tax credit/rebate (43% cash refund) in Australia improves project economics and reduces net R&D cost relative to spend.
Non-dilutive financing potential via grants/tax incentives in Australia and a focused, cost-conscious operating plan.