Aethlon Medical, Inc. (NASDAQ:AEMD) ("Aethlon" or the "Company") today announced that it has entered into a definitive merger agreement (the "Agreement") for an all-stock transaction with North Immunology, Inc. ("North Immunology"), Nighthawk Merger Sub Corp., a wholly owned subsidiary of Aethlon, and Nighthawk Second Merger Sub, LLC, a wholly owned subsidiary of Aethlon. North Immunology is a privately held biotechnology company developing bispecific antibodies that target orthogonal inflammatory pathways in immune and inflammatory diseases ("I&I"), with the goal of delivering therapies that have the potential to offer best-in-disease efficacy, safety, and patient convenience.

The merger and concurrent private placement, which is expected to provide approximately $180 million in gross proceeds, are expected to position the combined company to advance the development of NOR-101, a potentially best-in-class half-life extended IL-13 x IL-18 bispecific antibody that is being developed for atopic dermatitis ("AD") and other immune-mediated diseases. Upon consummation of the transaction contemplated by the Agreement, the combined entity will operate as North Immunology, Inc. and trade on the Nasdaq Capital Market under a new ticker symbol NRTX.

The oversubscribed financing was supported by a syndicate of leading healthcare-focused institutional investors, including Bain Capital Life Sciences, Janus Henderson Investors, Deep Track Capital, Longitude Capital, Soleus Capital, Invus, Sirenia Capital Management LP, funds managed by Farallon Capital Management, Adage Capital Partners LP, and TCGX. The private placement is expected to provide North Immunology with approximately $180 million in gross proceeds (inclusive of the conversion of approximately $34 million of North Immunology's outstanding convertible promissory notes, together with any accrued interest, premiums and fees thereon, issued on or around the date hereof) and is expected to fully fund its operations into the second half of 2028.

"Monoclonal antibodies targeting type 2 inflammation have transformed the treatment of AD, yet the vast majority of patients still live with substantial disease burden" said Mohit Gupta, Co-Founder and CSO of North Immunology. "By simultaneously targeting type 2 and non-type 2 inflammatory pathways that drive AD, we believe NOR-101 has the potential to deliver a best-in-disease therapeutic profile."

North Immunology's Phase 1a study of NOR-101 is expected to begin in Q1 2027, with interim PK and safety data expected by mid-2027. North Immunology intends to rapidly initiate Phase 1b and Phase 2b studies for NOR-101 in atopic dermatitis in 2027 and deliver topline data for both studies in 2028.

"This merger and significant financing is expected to provide the capital and public-company platform needed to advance NOR-101 into clinical development," said Jonathan Barr, CEO of North Immunology. "We are encouraged by NOR-101's preclinical profile, including the promising bioavailability and approximately 42-day half-life observed in our non-human primate PK study. We look forward to executing on our clinical development plan, with multiple data readouts expected through 2028."

"We believe Aethlon stockholders will have a compelling opportunity to participate in the development of North Immunology's pipeline through their ownership interest in the combined company, while also retaining the potential to realize value from Aethlon's legacy assets through the contingent value rights," said James Frakes, Chief Executive Officer of Aethlon.

North Immunology was founded and incubated by ADAR1 Capital Management. "I am proud of the rapid progress our team has made in advancing NOR-101 since we founded the Company," said Daniel Schneeberger, co-founder and board member of North Immunology and managing partner of ADAR1 Capital. "We look forward to dosing our first clinical trial participant and building on this momentum as North enters its next stage of growth."

About the Proposed Transaction

Under the terms of the merger agreement, as of the closing of the proposed merger, the pre-merger Aethlon stockholders are expected to own approximately 4.75% of the combined company, and the pre-merger North Immunology stockholders (inclusive of those investors participating in the Private Placement) are expected to own approximately 95.25% of the combined company, which is expected to have a pro forma equity value of approximately $346.5 million (inclusive of the Private Placement). The percentage of the combined company that Aethlon's stockholders will own as of the closing of the proposed merger is subject to reduction to the extent Aethlon's net cash at closing is less than $0, as further described in the Agreement.

In addition, Aethlon stockholders as of immediately prior to the closing (the "Holders") will be entitled to receive additional financial consideration through a contingent value right (a "CVR") for each share of Aethlon common stock and preferred stock held, entitling the Holders to net proceeds (if any) received following the closing from a sale, license, transfer, divestiture or other monetization transaction with respect to Aethlon's legacy Hemopurifier® business (a "Parent Legacy Transaction"), the terms of which will be described in the Agreement and/or the Form 8-K to be filed in connection with the proposed transaction.

The transaction has received approval by the Board of Directors of both companies and is expected to close in the first quarter of 2027, subject to certain closing conditions, including, among others, approval by the stockholders of each company, the effectiveness of a registration statement to be filed with the U.S. Securities and Exchange Commission (the "SEC") to register the securities to be issued in connection with the proposed merger, Nasdaq's approval of the initial listing application to be submitted in connection with the proposed merger, and the satisfaction of other customary closing conditions.

The combined company plans to operate under the name North Immunology, Inc. and will be led by North Immunology's existing management team. North Immunology's existing Board of Directors, chaired by Daniel Schneeberger, M.D., MBA, co-founder of North Immunology and managing partner of ADAR1 Capital Management, will become directors of the combined company, alongside a number of new independent directors.