Aethlon Medical (OTC:AEMD) jumped from development-stage to revenue-stage with the first milestone payment of a $6.8 million contract with the U.S. Defense Advanced Research Projects Agency.
The San Diego-based company, which has developed an anti-sepsis blood filtration system, was nearly ready to shutter its doors in September after another disappointing earning report with no sales to speak of.
"We have experienced continuing losses from operations, are in default on certain debt, have negative working capital of approximately $6,859,000, recurring losses from operations and a deficit accumulated during the development stage of approximately $51,058,000 at June 30, 2011, which among other matters, raises significant doubt about our ability to continue as a going concern," the company wrote at the time.
But Aethlon was singing a different tune just a month later, after it landed a lucrative federal contract to develop its Adapt blood filtration system, which selectively removes disease-enhancing particles from a patient’s bloodstream, for treating combat-injured service members.
"Therapies that evolve from our platform hold the potential to alter the health care industry by unlocking the ability to attack disease survival mechanisms that are beyond the reach of drugs," chairman & CEO James Joyce wrote in a letter to shareholders this week.
The DARPA deal also calls for the development of a new blood pumping strategy to reduce the need for patients to take anti-coagulants during treatment. The five-year contract is expected to add $2 million to Aethlon’s coffers during its first year.
"The Aethlon Adapt system will be tested as a core technology component of a therapeutic device that would prevent sepsis, a fatal bloodstream infection that is often the cause of death in combat-injured soldiers," according to the letter. "DARPA estimates the successful development of this device would save thousands of lives and billions of dollars in the United States each year."
More than 18 million cases of sepsis are reported yearly worldwide, resulting in more than 6 million deaths, according to Aethlon.
Joyce also touted the unveiling of the company’s targeted breast cancer therapy, built on the Adapt platform, called Her2osome. The therapy aims to support the immune system and help established drug therapies battle Her2+ breast cancer, an aggressive form of cancer caused by an over-expression of the HER2 protein.
Joyce closed his letter by addressing the disappointing Medanta trials in India, the company’s first clinical study of its Hemopurifier blood filtration system as therapy for Hepatitis C. While the device performed as expected, other factors surrounding the study slowed down progress.
"We believed the Medanta study would contribute to improving shareholder value. We were wrong," Joyce wrote. "Study delays, including protocol changes, patient recruitment challenges, and other mishaps instead contributed to an erosion of shareholder value."
Aethlon met with the FDA in July to discuss the possibility of initiating Hemopurifier studies in the U.S. That discussion let the company to modify its study endpoints to examine questions roused by the FDA.