Under the feasibility study protocol, Aethlon will enroll ten end stage renal disease (ESRD) patients who are infected with the Hepatitis C virus (HCV) to demonstrate the safety of Hemopurifier therapy. Successful completion of the feasibility study will set the stage for Aethlon to conduct pivotal studies required for market clearance to treat HCV and potentially other disease conditions.
Excerpt from Zacks Small Cap Research, Brian Marckx, CFA:
Since initiating coverage of Aethlon Medical back in March 2012 we listed several risks and concerns, some of which we felt precluded us from assigning a reasonable value on the company. Among the greatest concerns, which we felt had the potential to essentially stop the company in its tracks, were AEMD's outstanding and non-performing debt as well as the real uncertainty of whether FDA would ever green-light the company to run U.S. human trials. And while the debt issue remains an overhang, we feel that the company's success in continuing to raise financing (particularly financing that is subordinate to the debt) and ongoing progress with converting some debt to equity, provides us much more comfort that their still tattered balance sheet can continue to meaningfully improve. We also view, as we explain below, the IDE approval as major positive and while this does not necessarily get the company substantially closer to eventual U.S. commercialization, it removes the most near-term hurdle that AEMD had to clear for that to happen and one that had it not happened, in our opinion could have doomed the company.
For those reasons, we now feel the company's future is less uncertain (or near-term risks are at least meaningfully mitigated) and believe it's now appropriate to use a discounted cash flow model to value the company. We continue to expect somewhat insignificant revenue in the near-to-mid term, largely from the DARPA contract and the subcontract with Battelle. We also think there may be a small revenue contribution from compassionate use of Hemopurifier in India. But, as we noted in our previous updates, a favorable decision by the FDA on the IDE application to begin <_st13a_country-region _w3a_st="on"> U.S. studies would potentially provide some upside to our current financial estimates over the longer term. We have now built a 10-year DCF model through fiscal 2024. Our relatively lofty 15% discount rate is appropriate given our remaining concerns, and risks and hurdles that company will need to clear as well as the potentially lengthy runway until AEMD begins to generate meaningful commercial sales, which we still believe is contingent on launching Hemopurifier in the <_st13a_country-region _w3a_st="on">U.S. Based on our DCF model AEMD is valued at about $0.15/share. We are maintaining our Neutral recommendation. We feel that continued progress in hitting operational and financial milestones would provide additional de-risking and potentially further upside to the value of the company.
Full Zacks research news: http://finance.yahoo.com/news/aemd-recent-progress-helps-risk-110000781.html
About Aethlon Medical (OTCQB: AEMD)
Aethlon Medical creates innovative medical devices that address unmet medical needs in cancer, infectious disease, and other life-threatening conditions. Our Aethlon ADAPT™ System is a revenue-stage technology platform that provides the basis for a new class of devices the rapid, yet selective removal of disease promoting particles from the entire circulatory system. At present, The Aethlon ADAPT product pipeline includes the Aethlon Hemopurifier to address infectious disease and cancer, and a medical device being developed under a 5-year contract with DARPA to reduce the incidence of sepsis in combat-injured soldiers. For more information, please visit www.aethlonmedical.com.
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