Aptose Biosciences Inc. (NASDAQ:APTO) Q4 2022 Earnings Call Transcript

Aptose Biosciences Inc. (NASDAQ:APTO) Q4 2022 Earnings Call Transcript March 23, 2023

Operator: Hello and thank you for standing by and welcome to Aptose Biosciences reports for the Fourth Quarter and Yearend 2022 Conference Call. At this time, all participants on a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. I will now like to hand the conference over to Susan Pietropaolo. You may begin.

Susan Pietropaolo: Thank you, Towanda. Good afternoon and welcome to the Aptose Biosciences conference call to discuss financial and operational results for the yearend and fourth quarter ending December 31, 2022. Earlier today, Aptose issued a press release relating to these financial results. The news release as well as related SEC filings are accessible on Aptose website. Joining me on today’s call are Dr. William G. Rice Chairman, President and CEO, Dr. Rafael Bejar, Senior Vice President and Chief Medical Officer and Mr. Fletcher Payne, Senior Vice President and Chief Financial Officer. Before we proceed, I’d like to remind everyone that certain statements made during this call will include forward-looking statements within the meaning of US and Canadian Securities Laws.

Forward-looking statements reflect Aptose’s current expectations regarding future events. They are not guarantees of performance and it is possible that actual results and performance could differ materially from these stated expectations. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance, and achievements to differ materially from those expressed. To learn more about these risks and uncertainties, please read the risk factors set forth in Aptose’s most recent annual report on Form 10-K and SEC and SEDAR filings.. All forward-looking statements made during this call speak only as of the date they’re made. Aptose undertakes no obligation to revise or update these statements to reflect events or circumstances after the date of this call, except as required by law.

I’ll now turn the call over to Dr. Rice, Chairman, President and CEO of Aptose Biosciences, Dr. Rice?

William Rice: Thank you, Susan. I want to welcome everyone to our call for the yearend and fourth quarter ended December 31, 2022. First, I’ll provide a very quick overview of 2022. While the biotech market has been extraordinarily challenging, Aptose continued a steady march forward. We extended our cash runway to the end of Q1 2024. We continued building a talented and experienced team. We created and began testing a new formulation for Luxceptinib and most importantly, we made significant strides in the development of Tuspetinib for the treatment of acute myeloid leukemia or AML. When it comes to Tuspetinib or TUS as we call it, I want to emphasize its highly differentiated profile, having demonstrated the potency to achieve complete remissions in very ill relapse to refractory AML patients, while also being safe and well tolerated.

It’s extraordinary for an anti-leukemic agent to deliver formal responses in such an aggressive cancer without causing the typical toxicities of other agents and today we will unpack both the potency and safety attributes of TUS. It’s also important to highlight the AML population that has been treated with Tuspetinib to date in our Phase 1/2 dose escalation and dose exploration trial. These are typically third line, fourth line or beyond having failed the best available approved therapies and in many cases having failed various investigational drugs or prior hematopoietic stem cell transplants. These are incredibly difficult patients to treat and to reverse the disease progression. What makes these patients even more difficult to treat is extreme diversity of highly adverse genetic and epigenetic alterations, expressed by their disease.

If we recall the Admiral Trial from just five years ago, during which the commercial dose of gilteritinib, a FLT3 inhibitors was tested for responses in AML. The patients were second line, essentially had not seen other FLT3 inhibitors and had not seen venetoclax. In contrast, patients entering our trial are far more treatment experienced with half failing prior venetoclax, 60% failing prior treatment with hypomethylating agents or HMAs more than a quarter having failed transplants and half of the FLT3 mutant patients having failed prior therapy with the FLT3 inhibitor. Nevertheless, TUS has delivered responses with convenience once-daily oral dosing of tablets across four dose levels, 160 milligram, 120 milligram, 80 milligram and 40 milligram and no DLTs were observed with any of those active dose levels.

From a mutation-sensitivity perspective, TUS has shown an unprecedented breadth of activity. TUS delivers responses and FLT3 wild-type patients as well as it does FLT3 mutated patients. We also have seen responses in AML patients having the very difficult to treat TP53 mutations as well as patients with NPM1 and FLT3 co-mutations and patients having alterations in the DNMT3A, RUNX1, IDH1, splicing factors ASXL1 and MLL gene. But one of the most interesting observations is the activity in relapse refractory AML patients with RAS mutations. Mutations in the RAS pathway serve an an escape mechanism to generate resistance to many other drugs. However, we’ve measured a 42% overall response rate in patients with RAS mutations including a 29% CR/CRh response rate.

In fact, one patient had a RAS mutation and a mutation and PTPN11, representing a dual mutation in the RAS pathway. We’ll continue to monitor the response rate in RAS mutated AML patients this year and determine if RAS mutated relapse refractory AML patients may represent a population of high unmet need for future accelerated approval trials. As Dr. Bejar will describe in further detail in a few minutes, we wrapped up our highly successful Phase 1/2 dose escalation and dose exploration trial. We’ve treated over 60 patients to date in that trial. We’ve assembled a strong safety data package. We selected safe and effective doses for our single agent and drug combination trials. We demonstrated the ability of TUS to dramatically reduce bone marrow blast in a high fraction of patients and to achieve formal responses.

And we initiated our ACTIVATE dose expansion study of TUS in a single agent and in combination with Venetoclax. In the ACTIVATE trial this year, we will enrich certain patient populations to receive monotherapy so that we can collect data to guide our conversations with the FDA to request an accelerated approval path for TUS in patients of high unmet need. In parallel with the ACTIVATE monotherapy dosing, we’ll treat a broad array of AML patients with a combination of TUS plus Venetoclax referred to as the TUS/VEN doublet. This TUS/VEN doublet is being conducted to support doublet combination registrational trials in second line AML patients and to serve as a bridge to a pilot study of TUS plus VEN plus a hypomethylating agent or the TUS/VEN HMA triplet in frontline AML patients.

While TUS clearly can deliver responses as a single agent, the ultimate goal in commercial success of success of TUS or any drug for AML will be in combination with other drugs. As of this week, we have begun enrolment of AML patients on the TUS/VEN doublet and we will place additional patients on this doublet throughout 2023. Once we gain experience with the doublet, we plan to initiate the TUS/VEN HMA triplet in frontline patients. The future of AML therapy will also revolve around cocktails of drugs in earlier lines of therapy to take patients into deep remissions. Such AML cocktails will require the blending of drugs that best conserve broad populations of patients, can deliver deep remissions and can be tolerated without cardiotoxicities, unnecessarily prolonged myelosuppression and other complicating side effects and this precisely describes TUS.

TUS is positioned to become the ideal partner for addition to the VEN HMA doublet because of its convenience as a once daily oral agent, its broad activity and its safety profile. Together data to date point TUS toward application as a monotherapy for accelerated approval in relapse to refractory AML as doublet therapy for accelerated approval in second line AML for use in triplet combination and frontline patients as well as the use in maintenance therapy and Dr. Bejar will provide you with additional color of these activities momentarily. Now let me turn briefly to Luxceptinib, many of you know it as CG-806. Lux as we typically refer to it, is our secondary pipeline program. Lux is a clinical stage small molecule oral FLT3 and BTK kinase inhibitor.

Lux’s ability to target kinases, operative and certain leukemias and lymphomas led us to develop it in patients with B-cell leukemias and lymphomas and in patients with AML. We already have reported Lux administered as our initial first generation or G1 formulation, delivered a CR in an AML patient and a CR in a DLBCL lymphoma patient, demonstrating Lux as a clinically active agent. You also are aware that we developed a new formulation of Lux and we call it the G3 formulation because it represents the third generation formulation. In single dose administrations during 2022 in AML and B-cell malignancy patients, we determine the G3 formulation achieved up to 18 fold greater absorption than the original G1 formulation. Because the highest dose of the original formulation was set at 900 milligrams, we initiated continuous dosing of G3 at an 18 fold lower dose level of 50 milligrams.

We continued to collect PK and safety data with G3 and AML patients and the preliminary results suggest continuous dosing of 50 milligrams G3 does indeed deliver roughly equivalent plasma exposures at 900 milligrams of the original G1 formulation. That was the target we hope to achieve with the 50 milligrams of G3 and next we plan to administer a higher dose of G3 to determine if it can achieve even greater plasma exposure levels. We’ll keep you posted on our findings and likely we’ll report preliminary data around ER. I also want to mention that Aptose and collaborators at UCSD, Dr. Manchu and Dr. Stephen Howell just published an article entitled Luxeptinib Interferes with LYN-mediated activation of SYK and modulates BCR signaling in lymphoma in the online journal PLOS One, in which we describe the ability of Lux to act on the B-cell receptor pathway at the level of the LCK and LYN or LYN kinases and to influence downstream BTK activity.

This relates to the role of Lux to act on B-cell cancers as well as inflammatory and autoimmunity processes. So please take a look at the article if you get a chance. Finally, we often get asked about potential partnerships for Tuspetinib. In January, during JPMorgan Week, we engaged in productive discussions with several big pharma and biotech companies that further helped to define our priorities and to solidify our clinical plans with Tuspetinib. It’s clear what we need to accomplish with the drug that has such an extensive commercial opportunity. We were pleased to see that we’re on the radar of these companies and interest in our program is growing. The treatment paradigm for AML is shifting toward doublet and triplet therapy and despite some successes, the current combination therapies are somewhat limited by toxicities as I mentioned previously.

The proven breadth of activity and superior safety profile of Tuspetinib, lends itself to combination therapy, potentially as the drug of choice addressing the most sizable markets in AML and clearly making Tus, excuse me, a perspective big pharma drug. The data we’ve generated to date have helped us to elevate clinical and commercial plans for Tuspetinib in multiple lines of therapy, including its use in doublet and triplet combinations and as maintenance therapy. Our Chief Medical Officer, Dr. Rafael Bejar, will speak about our recently initiated ACTIVATE clinical trial of Tuspetinib in AML as a single agent and in combination with Venetoclax as well as our extended clinical plans, which include triplet combination therapy. He also will be available for questions afterwards.

I now will turn it over to our resident KOL, our Chief Medical Officer, Dr. Rafael Bejar, to talk more about our Tuspetinib clinical plans. Raf?

Rafael Bejar: Thanks Bill. In January, we were thrilled to kick off the 120 milligram dosing of Tuspetinib in the monotherapy arm of the ACTIVATE Phase 1/2 trial. As most of you know, we have successfully completed dose escalation and dose exploration stages of our TUS Phase 1/2 trial, treating approximately 60 relapse refractory AML patients who were heavily exposed to multiple agents. In fact, as Dr. Rice mentioned, while we were wrapping up the dose exploration part of the study, we took the prudent step of putting additional patients on the lowest 40 milligram treatment group because of the FDA’s project optimist that emphasizes dose exploration during early development of oncology products. This experience gave us the additional data needed to support our monotherapy dose selection and was not worn out of the safety concern, rather as higher doses of Tuspetinib have shown an impressive safety profile.

Since we lost the 40 milligram dose level late last year, we have achieved two clinical responses in that low dose group, both AML patients with unmutated FLT3, including the most recent harboring a challenging TP53 mutation, one of the most highly adverse somatically mutated genes. Importantly, this is the second TP53 patient that has achieved a clinical response. The first was at the 80 milligram dose who achieved an unqualified CR as their best response. So we look to enrol more of these patients who with such a poor prognosis have a great unmet need in the ACTIVATE trial. The ACTIVATE expansion trial is designed to confirm monotherapy activity to patient enrichment of specific mutation defined AML population, including the TP53-mutant patients, as well as FLT3-mutant patients who have been failed by a prior FLT3 inhibitor, as supported by FDA fast-track designation and a clinically significant response rate to date.

These patients continue to have great unmet medical need and we believe that the ability to rescue these patients and perhaps allow them to receive the stem cell transplant we have now done with several patients in our study would allow us a quicker path to registration. In addition to being potential accelerated approval pathway to Tuspetinib, treating these subgroups will provide critical data to inform our continued development path. I am pleased to say that we have begun treating patients in the monotherapy arm of the ACTIVATE trial and that our growing network of clinical sites and investigators are engaged in enrolment and that this has been at risk. In the ACTIVATE expansion trial, Tuspetinib also will be tested in combination with Venetoclax.

Several sites now have regulatory clearance and both drugs in hand allowing us to initiate patient enrolment on the tested end combination earlier this week. Having the TUS/VEN combination arm open is an important advance as this represents an attractive treatment option for patients and their physicians leading them to enrol earlier in the course of treatment, increasing the likelihood of achieving a meaningful clinical benefit. So what is our timeline for our clinical trials? Because ACTIVATE is an open label trial, we will report data when available at appropriate forums. We will have an update around EHA in June, for example, as we usually do, but because data collection and verification does take time and ACTIVATE has only been open for a short while, this will be an incremental update.

We would expect to have more complete data, particularly for the monotherapy arm at the European School Hematology Meeting ESH at the end of October in Esther, Portugal. Expect more data including from the TUS/VEN combination cohort to then be updated at ASH in San Diego in December. So 2023 will be a busy year for us. Having tested Tuspetinib in specific genetically-defined populations, we would expect to have sufficient patient data this year and then segue into Phase 2 registrational studies to support accelerated approval. As Dr. Rice mentioned, we are including relapse or refractory AML patients with unmated FLT3, what we often call wild-type patients that have other adverse mutations, exploring safety and activity in these patients with Tuspetinib treatment, both as a single agent and in combination with Venetoclax, identifying meaningful activity and other adverse subgroups could lead to other options for accelerated approval.

The paradigm for the treatment of AML is increasingly moving towards combination therapy and we hope to position Tuspetinib as a preferred agent for combination and use in earlier lines of treatment. It is our hope and based on our data thus far, it is our expectation that we will move forward to Tuspetinib in a triplet combination and in maintenance settings. Dr. Naval Daver from MD Anderson, who’s been one of the investigators pioneering AM accommodation therapies with Venetoclax is our lead investigator on up to date and as eager as we are to see what Tuspetinib can do in this setting. We’ll also highlight a few comments from Dr. Harry Erba of the Duke Cancer Institute during a recent KOL event. He noted that this drug may be better suited for the combinations that we hope to develop than anything we have right now, and he was excited about the apparent lack of mild suppression noted in our clinical study to date and he emphasized that a drug-like TUS will have a position mostly because of his better toxicity profiles than the drugs we’re using now in terms of mild suppression.

Clearly we agree wholeheartedly with Dr. Erba and we believe that potency, breadth and anti-emetic activity, along with the safety profile make to spend of the ideal drug for combination therapy and scalable commercialization. On our website, you can see our projected timeline for our ongoing and planned clinical trials. I want to thank our clinical team for their hard work and execution and getting both arms of ACTIVATE expansion study up and running. We certainly look forward to sharing the data with you. Now I’d like to turn the call over to our CFO, Fletcher Payne for an update on our financial status, Fletcher?

Fletcher Payne: Thanks Raf and good afternoon, all. Before we start speaking about the financials, I’d like to introduce to you the newest member of our finance team, Brooks Ensign, who is VP and Controller of Aptose. Mr. Ensign has more than 20 years of pharmaceutical industry experience in accounting, finance, corporate development and he is served as this position for multiple public and private companies. Mr. Ensign has a Master’s and holds an MBA from Harvard Business School and a Masters in Accountancy. We’re pleased to be able to recruit quality people like him and we’re very happy to have him here at Aptose. Let’s review the fourth quarter and yearend financials. As most of you know from following Aptose, we take a discipline approach to cash management and always look the prioritize our clinical activities without sacrificing quality of our programs.

These efforts have extended our cash runway into 2024, and our cash management policies and actions taken have helped us avoid the financial impact of Silicon Valley banks fallout. Now, let’s review our cash position. We ended 2022 with approximately $47 million in cash, cash equivalents and investments, a decrease of $4.8 million as compared to the previous quarter. During the quarter, the net loss was approximately $10 million, translating into approximately negative $0.11 per share loss, down from $24.3 million, loss from the comparable period in 2021. As identified in the income statement, we had no revenues during the fourth quarter of 2022. Research and development expenses were $6.8 million for the quarter down, $20.2 million from the same quarter in 2021.

Research and development expenses for the full year period ended December 31. 2022 were $28.1 million as compared to $46 million for the comparative period, a decrease of $18 million. That decrease was due to several factors, including a $12 million licensing fee paid for the previous year to acquire global development rights for Tuspetinib, which comprise a $5 million cash payment and a $7 million worth of common shares. Additionally, there were lower cost for the Lux program and 253 program, as well as lower personnel costs. These savings were potentially offset by costs for the Tuspetinib program that was adopted in 2022. G&A expenses were $3.6 million for the quarter as compared to $4.1 million for the same quarter of 2021. G&A expenses for the 12-month period ended December 31, 2022 were $14.5 million as compared with $19.5 million for the comparative period, a decrease of approximately $5 million.

The decrease was primary due to a decrease in stock-based compensation expenses offset by higher compensation expenses, travel expenses, and professional fees. As of March 23, 2023, Aptose has 93,005,278 common shares outstanding. More detailed information can be found in our filings on Edgar and Cedar. Now I’ll turn the call back to Dr. Rice.

William Rice: Thank you, Fletcher. As we open the call for questions, please feel free to pose a question to any of us. Operator, if you could please introduce the first question.

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Q&A Session

Operator: Our first question comes from the line of Matthew Biegler with Oppenheimer. Your line is open.

Matthew Biegler: Oh, hey guys. Thanks for the update. Just two from me; I’m wondering is it too soon to guide on patient numbers for that October update yet from the APTIVATE trial? And then just curious about some of the comments Raf made about the doublet versus the singlet Tuspetinib and APTIVATE. I’m just — I’m curious if you’re concerned that it might be challenging to enrol the monotherapy arm given that there is a doublet or kind of how are you approaching that or how are you thinking of kind of weeding out patients from one to the other? Thanks.

William Rice: Yeah, thanks Matt. This is Bill. I’ll start on that. Your second question is really easy, doublet versus monotherapy. We’ve had exceptional uptake, rapid uptake and I think the word that Dr. Bejar, you was brisk uptake as the monotherapy, we got it up and running first this year and it’s been great enrolment pace and we’re just now beginning to enrol the doublet. In terms of the numbers of patients and all, I’m going to turn that back over to Dr. Bejar. We’ll be careful not to really bracket them too much, but we’ll try to give you a sense, Raf?

Rafael Bejar: And just to follow up on Bill, your earlier point about the enrolment to both the doublet, I think is going to be more appealing to investigators in the monotherapy in general, but once both arms are open and both options exist, there’ll be a random assignment. So we are hoping that not only do we get more patients on, because there’s more enthusiasm for the study, but the patients may actually come on earlier in the course of therapy because there is a sub combination option available to them. So we will focus on both through the end of the year and we’ll give you more clarity when we get to that point. In terms of numbers of patients it’s, like I said, it’s hard to put an exact number on it, but I would say enrolment has been very good and there certainly will be some, again not breaking too much, maybe tens of patients on the monotherapy arm and hopeful, somewhere between 10 patients and 20 patients on the doublet arm by the time that we read out near the end of the year.

Operator: Our next question comes from the line of Soumit Roy with Jones Trading. The line is open.

Soumit Roy: Hi everyone. Thank you for the update. Could you give us a little bit more color on the different dose cohort size you’re enrolling currently between 40, 80, 120, and then the 100 patient you mentioned, what split is monotherapy and doublet?

William Rice: Hey, Soumit, this is Bill Rice. So yeah, we have completed the dose escalation and dose exploration trial. And so Dr. — I’ll ask Dr. Bejar to give you a breakdown on the numbers of patients there, and then he can talk about the APTIVATE.

Rafael Bejar: Right. So as of the ASH meeting, when we had not yet opened APTIVATE, we had treated 60 patients between the dose escalation and what we call the dose exploration. We since treated additional patients in the dose exploration arm primarily at the 40 milligram dose level to further characterize that better before APTIVATE was opened where we were then dosing patients ideally exclusively on APTIVATE studies became online, we were able to do that. The dose level that we started APTIVATE at, so the monotherapy was 120 milligrams, that may change as we learn more about the PK and the activity of the drug that we may move to 80 milligrams for the monotherapy dose seeing it at the level of activity, although it’s not something we have implemented. For the combination study, 80 milligrams will be the starting dose that we’ve signaled before in combination with Venetoclax and as always, that is also subject to change based on the data that we received.

Soumit Roy: All right. So how are you thinking of presenting the data midyear or later second half also? Are you going to do with this from the APTIVATE trial, like the traditional or response rate or CR rate over a number of patients treated? And alongside you’re going to show long term, if any, durability data from the dose escalation expansion part of the trial?

Rafael Bejar: So traditionally, we have done that kind of more complete update at major medical meetings like EHA and ash, and I think that that will definitely hold true for ASH. I do think that EHA will be a more incremental update. So there may not be that much level of detail just because to be honest the cut-off date for data to present at EHA is about now. So we won’t necessarily have a lot more to say than we have said earlier this year in that regard. So we will do an incremental update. We’ll certainly highlight any activity or issues that arise in the study around EHA, but expect that larger data package with some of the more detail that you just described to have on later in the year.

William Rice: Just to add to that, we will have certain scientific findings at EHA that we’ll be presenting. That’s the plan as well as some of the additional data as you said, as we follow some of these patients that have been on the dose escalation dose exploration, we’ll be able to provide that. But then as Dr. Bejar said, we just started the APTIVATE trial and we’ll present the data that are available. It won’t be a huge number of patients by that time, but we’ll present what we have.

Soumit Roy: Thank you, and congratulations on all the progress.

Operator: Our next question comes from line Joe Pantginis with H.C. Wainwright. Your line is open.

Joe Pantginis: Hey guys, good afternoon. Thanks for taking the question. So Bill was wondering maybe if you could do a little benchmarking for the audience about your regulatory plan for the monotherapy arm in APTIVATE, you talked about, since it’s mono, potential accelerated approval. So, based on your internal thoughts, regulatory consultants or what have you, can you benchmark how many patients do you think you’ll need for the FDA to be happy with? And more importantly, can you benchmark essentially a response rate or a CR rate to beat?

William Rice: Ah, boy, number of questions there. So first of all, I’m not going to go too much out on a limb because soon we are going to be having the FDA and we’ve already articulated that to the street. So we’ll be speaking with all the parameters you just mentioned for the monotherapy as well as the doublet data that are coming out. We want to make sure that as we go to the FDA, by then, we will have a number of patients that are already on the monotherapy, the APTIVATE trial, make sure that we’re doing everything that we should determine if there are additional parameters we need to measure, so that when we go to them with the data later in the year, we’ll have everything that we need and hopefully the data will be supportive of going toward a an accelerated approval, whether that’s a monotherapy, a doublet, we’ll see how those data emerged toward the end of the year and Raf, is there anything else that you wanted to add to that in terms of regulatory?

Rafael Bejar: No, I think that’s a good way to put it. I think that we do need to have that meeting with the FDA to really align ourselves, and depending on what features we agree upon that, that’ll change the scope of the study. But certainly an accelerated proof of study would be a much smaller study than you would have to do if you did a randomized multi arm study.

William Rice: Yeah. And then also a little bit later in the year, as we collect data on the doublet we want to be able to go to the FDA, present the data there, and hopefully have the ability to move into the triplet trial. Does that answer your question?

Joe Pantginis: No, it does. And I guess maybe just a little on the — for the listeners and everyone and investors in general, benchmarking, you would look at from an efficacy standpoint,

William Rice: Yeah. So Ref, do you want to put that in context relative to the ADMIRAL trial? And Joe, thanks for the questions.

Rafael Bejar: Yeah, exactly. I think that that’s the way you need to view it is, what population are we treating and what expectations might they have from alternatives if Tustin wasn’t available. And remember, these are patients who, if they have FLT3 mutated and have seen FLT3 inhibitors, they’ve likely been through at least two lines of prior therapy. So they’re coming to us third line or beyond. In the second line setting, with the study at the early — at the interim analysis for gilteritinib, the CR/CRh rate was 21%. Now, later, that matured, especially with the inclusion of patients whose best response was measured after transplant. But at the point of that interim analysis that led to the approval of the drug, that was 21% in second line in patients, largely naive of other therapies.

So we would argue that a meaningful number in the third line setting would be significantly less than that. Perhaps, as low as half of that, or somewhere between half to that range, given that the alternatives for those patients at that point are going to be even less effective than they might have been in the second line setting as they were in the Admiral study where the chemotherapy response rate for CR was about 11%. So, that’s the ballpark that we’re working with and what we come down with, with the FDA, I think, we’ll then shape the scope of the study, the size, and so on and that’s the discussion we’re going to have.

Joe Pantginis: Great. Yeah, but the bar is fairly low for that patient population, as you said. Many of them will have already failed, other FLT3 inhibitor, venetoclax and more and more patients that are coming along now, especially in the US are having our much more experience with prior drug therapy. And so these patients are very difficult to treat. So we think the bar will not be exceptionally high but we also believe we can achieve it.

Operator: Our next question comes from the line of Edward Tenthoff with Piper Sandler. Your line is opus.

Edward Tenthoff: Great. Thank you very much and congrats on all the progress. It’s going to be an exciting year. I think most of the questions on 235 or 539 were asked, but I wanted to ask on lock’s sort of higher level how this fits into the treatment para or how this treats into your development plans. And specifically, what are expectations here? Is this a drug that you would consider partnering? Does it ultimately have comparability, maybe even with 539? Thanks very much.

William Rice: Hey, thanks Ted, for the questions. Yeah, we don’t get that many questions on Lux anymore but we’re still excited by the drug. Now that we have our new formulation, and especially as we go up to that next higher dose level, that’s the plan now, and we hope we get higher exposure as we go into that. But in terms of what we would like to do with this molecule, first of all, I must say that Tuspetinib is our top priority among everything and it has to be because it is delivering, it’s more advanced, it’s delivering, but Lux, as we move forward, we’d love to see that we’re getting the exposure that we want, and that the pill burden is also much less cost of goods, much less. If we continue to see activity in AML, we have done studies where we’ve put Tus and Lux together, and they are not antagonistic.

They also, we know have different activities against different kinases. So it may turn out to be like some of the other indications where you have multiple kinases that hit different patients with different mutation profiles. But most likely we likely will move it more toward the B-cell arena and also toward inflammation and autoimmunity because we’ve been, as you can tell from the publications we’ve been digging into that area, understanding it, there’s still a need because this drug is different from the other non-COVID and BTK inhibitors. It hits a different set of kinases. It has different activities, and we believe that if we’re able to combine it, for instance, with some of these other drugs that are being developed for the B-cell malignancies like the Venetoclax for instance, then we believe we can see real activity there.

So there are paths for it that do not interfere with Tuspetinib. Does that answer your question?

Operator: Our next question comes from the line of Li Watsek with Cantor Fitzgerald. Your line is open.

UnidentifiedAnalyst: Hi everyone. This is Rosemary Ann for Lee. Thanks for taking my questions. Just a couple here. Firstly, are you able to give some color around early activity that you see from the monotherapy arm in APTIVATE, and then on the RAS pathway, can you talk a bit more about where you can go with this finding if RAS correlates with any other mutations potentially, and whether you see mono or combo therapy potential here?

William Rice: Thanks Rosemary. So, thanks Rosemary for coming on. So I’ll start with this and then maybe Dr. Bejar wanted to jump in. So in terms of early activity, again it is very early in the APTIVATE trial on the monotherapy and as we said in our press release, we are beginning to see what we call an initial anti-leukemic activity. You’ll remember we’re very conservative on what we see in terms of what we’re seeing in the clinic. So yes, if you’re asking us we do see some level of blast reductions, we’re not going to be talking about how much or what we’re seeing or the number of patients. It’s just very early. But are we seeing hints of activity beginning? Yes, it’s early, but we are. You also ask about the RAS mutations.

I find this one very exciting to tell you the truth because many of the other drugs out there, one of the major scape pathways for other drugs is the RAS pathway. But we’ve seen activity, CR, CRHS, these are real responses. Inpatients have NRAs, KRAs, and also other mutations within the RAS pathway. So it’s a real need that I don’t think people have highlighted enough in AML because there hasn’t been a really a good drug to treat these. But, I’m hoping we get more of these patients. I’m hoping that we see activity in these patients and maybe this will be another indication that we can look toward as an accelerated approval. But the data we’ll have to point us in those directions. I’m going to turn over to Dr. Bejar and see if he has any additional comments.

Rafael Bejar: I think that was well put. I think what is exciting about the activity in RAS mutant patients is that RAS mutations in the relapse setting really mean something different than they do in the frontline setting. Even drugs like Venetoclax, you can get responses in patients who have NRAs in that frontline setting. But when patients relapses typically with an expanded NRAs clone or a new NRAs clone or FLT3 clone, that activates that signaling network. So, the ability to target patients that have NRAs mutations is exciting not only to treat potentially refractory patients, but also to treat patients in the frontline and prevent the development of resistance through that pathway. So we’re hopeful that it has benefits in both patient populations.

And Bill, to your point about the activity and the activate study thus far, I’ll just point out that patients began enrolling and APTIVATE in January. It takes a month before their first assessment takes — preliminary marrow assessment takes place, and then another month before the confirmatory biopsy takes place. So we’re just about at that point now for the earliest patients enrolled. So all we can really say is that we’ve observed activity in terms of peripheral blast productions and looking at early looks at the bone marrow only, but we’ll have more data around that as you get further along.

William Rice: So, Rosemary, did we answer your questions?

UnidentifiedAnalyst: Thank you.

William Rice: All right. Thanks for coming on.

Operator: Our next question comes from the line of Gregory Renza with RBC. Your line is open.

UnidentifiedAnalyst: Hi guys, it’s Anish on for Greg. Congrats on the progress and thanks for taking my question just on TUS and considering the different AML mutations or subpopulation studied and with the data to date and which type are you seeing the most responses? And as a follow up in which subtype are you seeing greater response with a 40 milligram dosing regimen versus those that require greater exposure/higher dose for a response with tests? And how might these findings inform regulatory next steps? Thanks so much.

William Rice: Yeah, good question. But Rafael, do you want to jump in on this one?

Rafael Bejar: Yeah, I can, start that. That is a great question. I think that that is something that we’re very interested in learning. We’re limited by a few things. First is patient numbers, but even after treating 60 plus patients, you don’t necessarily have that many patients in any particular genetic subgroup when you open a study to all comers. So we don’t have large denominators with which there be highly accurate about our response rate, but we do see activity in these patients that have these mutations that we would like to have activity against, including NARs. We’ve again, seen two patients with TP53 mutations that have activity. These are all patients that are predicted to not do as well because of these adverse mutations that they carry.

It could be subsets of populations with greater medical need, but to be fair, all relapse refractory AML patients are a population of great unmet medical need as many — can’t be cured as conventional therapy, they need to go to some sort of stem cell transplant at that point. So the ones of interest, I think I mentioned NRAs TP53 FLT3 patients that have exhausted for three inhibitors prior, but there may be others, and it may be combinations of mutations that matter, for example, MPM1 and FLT3 mutations, we’ve seen a reasonable response rate in that patient population as well. In the APTIVATE study by enrolling additional patients will really give us the confidence that we understand what those response rates are to different populations. You had asked about differential activity, the 40 milligram dose level.

We’ve reported that there were two responses at that dose level. So again, very small numbers, not really enough to discriminate whether, 40 was enough for some patients, but not enough for others. I think we’ll have to really look at the DK more to define what the optimal dose is there, even though we’re thrilled to see activity at the 40 milligram dose level.

Operator: Our next question comes from a line of John Newman with Canaccord. Your line is open.

John Newman: Hi guys, thanks for taking the question. I was wondering as you move forward with the APTIVATE study in terms of the potential for accelerated approval, would you expect that you’ll be focusing on a specific mutational type or would you be focusing more broadly? Thanks.

William Rice: Yeah, I’ll start and then Dr. Bejar can come in. Thanks John, for coming on. So as we look at the patients being treated with monotherapy, clearly we want to enrich for certain of these populations. The ones that Dr. Bejar had mentioned, those that had failed prior FLT3 inhibitor, those have TP53 mutations. Now that we’ve seen some of these data with RAS, we’ll ask the investigators if we can try to find patients more like that and hope to get enough of these patients to be able to go to the FDA and say, Hey, there’s a real signal here. We’d like to move forward for the accelerated approval. But I also want to emphasize the doublet is very important for us because showing that your drug works well and is well tolerated in combination with venetoclax, that’s what’s going to launch us into two different pathways.

One is it’s going to position us for the triplet and to go towards frontline patients, and that is ultimately where we want to go. And we think it’s our drug is going to be the ideal drug to combine with the HMA because of all the reasons that Dr. Bejar articulated. But it also will allow us then to decide how to move forward in doublets. So we’re looking at ways to have the VEN/TUS patients for and hopefully we could design it so that we could have an early look at the data accelerated approval as we continue to bring patients on for full approval in a doublet trial. And I’m sure Dr. Bejar can say it far more eloquently. So would you like to jump in? Yeah.

Rafael Bejar: It won’t sound as good as coming from you, Bill, but, I will say that Admiral study’s actually a good model for what you might be able to do in a second line setting. Say for example, with a Tus-venetoclax doublet where you have a study that’s powered to eventually read out overall survival, but that includes an incremental and interim analysis that could be compelling enough to seek approval so that is one option. With the monotherapy study, of course, you don’t have anything compared to. So, we’d just be shooting for a target response rate at that point.

John Newman: Yeah. So thanks for giving us the opportunity to talk about those a little bit, John. Any other questions, John?

Operator: Thank you. I’m currently showing no further questions in the queue. I’d now like to turn the call back over to Dr. Rice for closing remarks.

William Rice: I want to thank everyone for joining us this afternoon, and thank you for all the interest in Aptose, the drugs and the data that we’re generating. We’re gratified as we look in the rear view mirror of 2022. And we see the clinical progress of Tuspetinib and the strides we’re making with the G3 formulation of Lux. Yet our eyes now are really looking forward to 2023 and beyond, and we’re eager to share data with you during the coming year. Again, we talked about being able to present data at the conferences, but also at the earnings calls as well as in as banking meetings. So we want to thank our clinical team, our investigators, our patients for their help and this important work. We appreciate the support of our shareholders and analysts, and we look forward to keeping you updated on our progress the rest of the year. Thank you, and have a good evening.

Operator: Thank you. Ladies and gentlemen, that concludes today’s conference call. You may disconnect and have a wonderful day.