Good afternoon, and welcome to the Aethlon Medical Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Dr. Jim Frakes, CFO. Please go ahead.

Thank you, operator. And good afternoon, everyone. Welcome to Aethlon Medical's second quarter 2021 earnings conference call. My name is Jim Frakes, and I'm Aethlon's Chief Financial Officer. At 4:15 P.M. Eastern Time today, Aethlon Medical released financial results for its second quarter ending September 30, 2020. If you have not seen or received Aethlon Medical's earnings release, please visit the Investors Page at www.aethlonmedical.com. Following this introduction and the reading of our forward-looking statements, Aethlon's CEO, Dr. Tim Rodell, and our Chairman, Dr. Chuck Fischer, will provide an overview of Aethlon's strategy and recent developments. I will then make some brief remarks on Aethlon's financials, and then we will open up the call for the Q&A session. Before I hand the call over to Dr. Rodell, please note that the news release today, and this call contain forward-looking statements within the meaning of the Federal Securities Act of 1933 and the Securities Exchange Act of 1934. The company cautions you that any statement that is not a statement of historical fact is a forward-looking statement. These statements are based on expectations and assumptions as of the date of this conference call. Such forward-looking statements are subject to significant risks and uncertainties, and actual results may differ materially from the results anticipated in the forward-looking statements. Factors that could cause results to differ materially from those anticipated in forward-looking statements can be found under the caption Risk Factors in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020; and in the company's other filings with the Securities and Exchange Commission. Except as may be required by law, the company does not intend nor does it undertake any duty to update this information to reflect future events or circumstances. With that, I will now turn the call over to Dr. Tim Rodell, Aethlon Medical's CEO.

Thank you, Jim, and thank you everyone for joining us this afternoon. I want to begin by discussing our oncology programs. Our leading oncology program focuses on head and neck cancer, where we are conducting an early feasibility study, comparable to a Phase I study, at the University of Pittsburgh Hillman Cancer Center. Previously, we mentioned that we received Institutional Review Board approval for this site, and I am pleased to announce that the trial is now open for patient enrollment. You can find trial details, including the inclusion-exclusion criteria and endpoints, on clinicaltrials.gov, but I will summarize them here. We plan to enroll 10 to 12 patients with advanced or metastatic head and neck cancer who will receive pembrolizumab, or KEYTRUDA from Merck, as standard frontline care; these patients have not been treated before. KEYTRUDA was approved for this use in June of last year, after prior approvals for other immuno-oncology agents in salvage situations for patients who did not respond to earlier chemotherapy. The primary endpoint of this trial is safety, with secondary endpoints focusing on clearance, characterization of exosomes, response rates, and survival, both progression-free and overall. It's important to note that the hemo-purifier has already been used about 150 times in human cases with viral diseases and has maintained a strong safety profile. While KEYTRUDA and similar immuno-oncology agents have shown remarkable success in a small number of patients, leading some to live for over five years with metastatic cancer where they previously might have survived just months, unfortunately, many patients do not respond. Indeed, in first-line treatment for head and neck cancer, only about 30% to 35% of patients react positively, and the response rate is even lower in salvage settings. Research suggests that one reason patients may not respond to these drugs is due to immunosuppressive exosomes, which are small particles released by cancer cells that the hemo-purifier is designed to eliminate, along with glycosylated viruses. As a well-selling drug, KEYTRUDA continues to see growing revenue. Exosomes may contribute in significant ways to cancer progression, particularly when combined with checkpoint inhibitors, presenting substantial opportunities beyond our initial focus on head and neck cancer. We are also exploring additional solid tumor targets. Moving on to infectious diseases, the FDA has approved a supplement to our existing investigational device exemption to treat up to 40 patients with COVID-19 using the hemo-purifier at 20 centers in the United States. We are in the process of initiating the first centers for this study. With IRB approval now secured, we are finalizing administrative details, and the trial has just recently been listed on clinicaltrials.gov for public access to trial design and enrolled centers. We are actively working to recruit more centers. Finally, I mentioned in our last call that we have treated one COVID-19 patient so far under the single-patient emergency use pathway, which allows treatment without prior FDA approval for critically ill patients. I used the term uneventful to describe that treatment, which may not have been clear. Due to privacy, we cannot discuss the patient's full treatment course or expect that a single case provides meaningful efficacy data. However, I can share that we completed eight six-hour hemopurifier treatments over nine days with this patient, successfully confirming the device's use in this context. We remain open to treating additional patients under this pathway before our formal trial launches. I will stop here and hand it over to Chuck for comments on recent events and anything I said, then we will return to Jim for the financial discussion and questions.

Thanks, Tim. In follow-up on our oncology early feasibility study, as Tim mentioned, the primary endpoint of this trial is safety with a secondary endpoint including a clearance of exosomes, as he has just mentioned. Also as Tim mentioned, the literature suggests that a major mechanism associated with failure to respond in cancer is mediated by exosomes; as Tim also mentioned. And with that, I'll turn it back over to Jim, just want to emphasize those two points.

Thank you, Chuck. And good afternoon again, everyone. At September 30, 2020, we have a cash balance of approximately $14.5 million. Our consolidated operating expenses for the three months ended September 30, 2020 were approximately $1.77 million, compared to approximately $1.7 million for the three months ended September 30, 2019. This increase of approximately $70,000 or 4.1% in the 2020 period was due to an increase in general and administrative expenses of approximately $212,000 which was partially offset by decreases in professional fees of approximately $106,000 and in payroll and related expenses, approximately $37,000. The $212,000 increase in our general and administrative expenses was primarily due to a $143,000 increase in lab supplies, in connection with our ongoing effort to continue to build an inventory of hemopurifiers for clinical trials that Tim and Chuck Fischer just mentioned; and also to a $54,000 increase in our clinical trial expenses themselves. The $106,000 decrease in our professional fees was primarily due to a $94,000 decrease in our legal fees and a $60,000 decrease in our accounting fees, which were partially offset by a $38,000 increase in scientific consulting expenses. The $37,000 decrease in our payroll and related expenses was due to the combination of a $159,000 reduction in stock-based compensation expense and a $122,000 increase in our cash-based compensation expense. The cash-based compensation expense was in turn due to additions to our headcount and to salary increases. There was no other expense during the three months ended September 30, 2020 while in the three months ended September 30, 2019, other expense could primarily consisted of approximately $4,000 of losses on share for warrant exchanges. As a result of the changes and expenses that I just noted, our net loss before non-controlling interests increased to approximately $1.77 million for the three months ended September 30, 2020, for $0.15 per share, from approximately $1.71 million for the three months ended September 30, 2019 or $1.29 per share. We included these earnings results and related commentary in a press release issued earlier this afternoon. That release included the balance sheet for September 30, 2020. And the statements of operations for the three months and six-month periods ended September 30, 2020 and 2019. We will file our quarterly report on Form 10-Q following this call. Our next earnings call will coincide with the filing of our quarterly report on Form 10-Q in February 2021. And now, Chuck, Tim, and I would be happy to take any questions that you may have. Operator, please open the call for questions.

We will now begin the question-and-answer session. The first question comes from M. Marin with Zacks.

Thank you. I have a few questions, which is, we're all reading about what's going on right now in terms of spikes in COVID cases. So can you talk a little bit about how, if at all, you see that impacting your timeline on the clinical trials?

This is Tim, and thank you for the question, Marin. It's a great question. You've probably read a lot about how the pandemic has affected clinical trials, especially international ones. However, I believe the impact differs for the two indications. Regarding the cancer trial, we don't anticipate any impact. Patients with advanced head and neck cancer cannot afford to wait for treatment; they will continue coming into the clinic for their treatment, specifically with KEYTRUDA in our study. Therefore, I don't think it will alter the progress of that trial. On the other hand, for the COVID-19 trial, many centers are very busy and seeing an influx of patients. As we've mentioned previously, the pandemic's progression varies; we have established 20 sites to ensure we can open in areas where patients are located. Currently, we are observing a second wave in the northeast, while a significant number of patients are being treated in the Midwest. In California, particularly in Orange County where our first COVID trial site is active, we expect to see a continued influx of patients. Furthermore, it's important to note that there are many trials underway using vaccines, drugs, and therapeutic antibodies. However, our trial design targets the sicker patients, particularly those in the ICU or on ventilators, which means we’re not competing with most of the other studies for patients. It's an important issue, but I believe we're well positioned to handle it.

Okay, thank you. Now also you mentioned during your prepared remarks, you talked about additions to headcount. Can you just give us a little bit more color on that? Is that primarily to support the clinical trials?

It's to support a number of things. The part of this that people tend to forget is that in order to run clinical trials and develop products, you need a product. You actually need a drug or in our case, we need hemopurifiers, which we're currently manufacturing under GMP conditions to support our clinical trials. One of the major things that we have to be in a position to do is to scale up manufacturing and to advance it so that we have a product that potentially could be a commercial product if and when we get approval. So we are adding headcount, not huge numbers, but we announced earlier that we hired a very experienced vice president of product development and manufacturing, Tom Taccini, who is already making substantial contributions. We do need additional people to work on the manufacturing side, but in addition, earlier this year before the pandemic really struck, our primary clinical program was the program at the University of Pittsburgh, which is the single-center trial enrolling 10 to 12 patients. That doesn't require a huge amount of headcount or operational staff, but now that we're running or initiating a multicenter trial in up to 20 centers, we do need additional clinical operations personnel. Those are the two primary places where we're increasing headcount. Again, that's not going to be huge numbers of people, but we do need adequate resources to address both of those areas.

Okay, thanks. My last question, you have a sizable cash balance at the end of the quarter. Could you just remind us of your thinking in terms of everything that you're currently involved with? If you could give us some color on where you see that taking you?

Let me hand that to Jim because that's his daily, Jim. Sure. That's a good question, Maura, that we focus on quite a bit. Historically, we've burned about $1.3 million in cash a quarter. That was the case in the June quarter, and in the previous June quarter. In fact, our cash only went down by $1.2 million, from $15.7 million to $14.5 million in the September quarter. But I think we've been pretty clear that we are modestly expanding our headcount. We're investing a lot of money for our little company into building purifier cartridges for the clinical trials. So our burn rate will increase on purpose, but not offensively. I wouldn't want anybody to take the $14.5 million we have right now and divide by 1.3 and see we have three years of cash because our burn rate is going to increase. But on the other hand, these initial safety trials are not small numbers of patients. Not that many treatments for patients, so they're manageable. We're not in a position where we have to raise cash with horrible terms. If and when we raise cash, it may be with a strategic investor or opportunistic terms. We hope to be in a stronger position than we've been in the past on the fundraising front. I'm sorry, I can't be more specific.

That was helpful. Thank you.

My pleasure.

This concludes our question and answer session. I'd like to turn the conference back over to Tim Rodell, CEO for any closing remarks.

Yes, thank you, Greg. So just once again, thank you all for dialing in again. Thank you for your continued interest and support. We look forward to talking to you again on the next quarterly call. Between now and then, stay safe and be well, thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.