During the early months of 2010, Aethlon advanced its core hepatitis C program with manufacturing progress and steps towards early commercialization in India and helped lay the groundwork for studies in exosomes, which could lead to use in the treatment of certain types of cancer. Aethlon successfully completed a pilot production run of cartridges in conformance with Good Manufacturing Practices, a set of quality control standards necessary for regulatory approval, identified a commercial-scale manufacturer, and confirmed its freedom to commercialize the Hemopurifier in India. Several academic collaborators began studies of the Hemopurifier’s ability to remove exosomes, particles secreted by tumor cells that may suppress immune response to tumors and possibly some pathogens. We continue to rate Aethlon Medical a Speculative Buy with a 12-month price target of $1.00 per share.
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AEMD’s Hemopurifier® focuses on hard to treat pathogens such as HCV, and incurable targets such as HIV, bioterror and pandemic threats, and cancer. This huge market for diseases not cured with a vaccine provides an enormous opportunity for the Company’s Hemopurifier to reduce a patient’s viral load so that standard of care treatments can be extended with increased effectiveness.

HCV and HIV represent huge global patient populations at over 170 million people and 33 million infected respectively. Human studies show the use of the Hemopurifier is effective in successfully reducing viral loads in both HCV and HIV patients presenting a proven treatment strategy for not just HCV and HIV sufferers, but also for the 8 to 11 million people that are infected with both diseases. Additionally, the market for the Hemopurifier is constantly expanding, as evidenced by the recent outbreaks of H1N1 influenza or “swine flu”, H5N1 influenza or “bird flu”, West Nile Virus, and other evolving pandemic threats.

To give an idea of the potential of AEMD’s Hemopurifier treatment, consider the latest deal between Vertex and ViroChem Pharma, consummated on March 12, 2009. Vertex paid ViroChem Pharma $376.8 million ($100 million cash, 10.7 million VRTX shares) to gain access to Vertex’s experimental stage HCV drug candidates VCH-222 and VCH-759.

Aethlon Medical, Inc. (“AEMD” or the “Company”) is establishing the industry to treat infectious disease & cancer with therapeutic filtration devices. The Company has developed a medical device called The Hemopurifier®, which selectively removes infectious viruses and immunosuppressive proteins from the bloodstream, even before the occurrence of cell and organ infection.

The Hemopurifier® is a candidate first-line therapy for the vast majority of viral pathogens that are resistant to or untreatable with drug or vaccine therapy. The device also serves as an adjunct therapy to enhance and extend the benefit of both established and candidate drug therapies. In either application, the Hemopurifier® provides a dual benefit of action; an antiviral benefit by inhibiting viral replication through the direct removal of infectious viruses, and an immunotherapeutic benefit by removing proteins known to kill-off immune cells required to fight infection. In human studies, the Hemopurifier® has demonstrated safety and effectiveness against Hepatitis-C Virus (HCV) and Human Immunodeficiency Virus (HIV). The device has also been documented to capture a broad spectrum of bioterror and pandemic threats, including the H1N1 influenza virus. Aethlon has also discovered the Hemopurifier® captures exosomes that are secreted by tumors to kill-off immune cells in cancer patients.

Investment Highlights

• Hepatitis C program: During the past several months, Aethlon successfully completed a pilot production run of cartridges in conformance with Good Manufacturing Practices, a set of quality control standards necessary for regulatory approval, identified a commercial-scale manufacturer, and confirmed its freedom to commercialize the Hemopurifier in India. Development of treatment protocols there is under way.
• Exosome program: Several academic collaborators began studies of the Hemopurifier’s ability to remove exosomes, particles secreted by tumor cells that may suppress immune response to tumors and possibly some pathogens. This work, assigned to Aethlon’s subsidiary, Exoxome Sciences, is a potential source of value outside the core HCV area.
• Swine flu program: This program moved to the back burner in consequence of the moderate nature of the swine flu season.
• Financial condition: Although Aethlon’s balance sheet remains weak, with negative working capital of $4.3 million as of December 31, 2009, the Company has raised $850,000 since the beginning of CY2010 and believes it will be able to continue raising enough new capital to fund operating requirements of about $150,000 per month for now.