Aptose Biosciences Inc.
Q1 2021 Earnings Call Transcript

Published: 4 May 2021

[Operator:]

Good afternoon. My name is Tino, and I will be your conference operator today. I would like to welcome everyone to the Aptose Biosciences Conference Call for the First Quarter ended March 31, 2021. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. Thank you. As a reminder, this conference call may be recorded. I would like to introduce Ms. Susan Pietropaolo. Please go ahead.

[Susan Pietropaolo:]

Thank you, Tino. Good afternoon, and welcome to the Aptose Biosciences conference call to discuss financial and operational results for the first quarter ended March 31, 2021. I am Susan Pietropaolo, a communications representative for Aptose Biosciences. Joining me on the call today are Dr. William G. Rice, Chairman, President and CEO; Dr. Jotin Marango, Senior Vice President, Chief Financial Officer, and Chief Business Officer; and Dr. Rafael Bejar, Senior Vice President and Chief Medical Officer. Before we proceed, I would like to remind everyone that certain statements made during this call will include forward-looking statements within the meaning of U.S. and Canadian Securities Laws. Forward-looking statements reflect Aptose's current expectations regarding future events that 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 achievement 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 are made. Aptose undertakes no obligation to revise or update the statements to reflect events or circumstances after the date of this call, except as required by law. I will now turn the call over to Dr. Rice, Chairman, President and CEO of Aptose Biosciences. Dr. Rice?

[William Rice:]

Thank you, Susan. I'd like to welcome everyone to our call for the first quarter ended, March 31, 2021. We continue to execute on our plan to develop first-in-class precision treatments for hematologic malignancies. And we understand that building the right team and creating transformational medicines is a deliberate and comprehensive process, and not merely a flash in the pan. Regarding the team, we're very pleased to announce today the appointment of our new Chief Financial Officer, Dr. Jotin Marango, who, with the support of the superb internal finance and accounting team, already has stepped into this role seamlessly. With his research analyst background, knowledge of capital markets and banking practices, and Wall Street insight, Jotin was the ideal candidate and a natural fit for this leadership position. And Jotin will be maintaining his Chief Business Officer role. You can read more about Jotin's background in our press release today, as well as on our Web site.

[Rafael Bejar:]

Thank you, Bill. Aptose has three ongoing clinical trials. Two studies of our kinase inhibitor, luxeptinib or lux, one in patients with acute myeloid leukemia or AML, and the other in patients with B-cell cancers. In the third trial, with our MYC repressor, APTO-253, in patients with AML and MDS. I'll start by talking about APTO-253. Our MYC inhibitor, APTO-253, is being tested in a Phase 1 a/b trial relapsed or refractory AML and high-risk MDS patients. More than 40 years have passed since the discovery of MYC oncogene, estimated to contribute to at least 75% of all human cancers. And research and development efforts since that time have not yield a clinically useful MYC inhibitor, largely because of inability to selectively and effectively target the MYC protein. As a director inhibitor of MYC transcription, APTO-253 represents a novel approach for targeting this oncogenic pathway.

[Jotin Marango:]

Thank you, Rafael, and good afternoon everyone. We ended the quarter with approximately $112 million in cash, cash equivalents and investments compared to $122 million at December 31 2020. During the quarter, we utilized approximately $10.4 million of cash in operating activities, compared with $8.1 million for the same quarter last year. The increase is attributable to increased activities surrounding lux and 253 and general and administrative purposes. Moving on to the income statement, we had no revenues for the quarter. Research and Development expenses were $8.2 million for the quarter, compared to $5.9 million for the same quarter last year. The variance was primarily due to an increase in our clinical program costs, including our clinical trial of lux in AML, which did not begin until the fourth quarter of last year. G&A expenses for the quarter were $8 million, compared to $5.9 million for the same quarter last year. This variance was primarily due to an increase in stock-based compensation and an increase in personnel expenses, mostly related to new positions. Finally, our net loss for the quarter was $16.2 million or $0.18 per share. More detailed information can be found in our filings on EDGAR and SEDAR.

[William Rice:]

Thank you, Jotin. As we open the call for questions, please feel free to pose the question to any of us. Also, because we have a number of participants who wish to ask questions, we will respectfully ask each of you to limit yourself to one question. And we thank you in advance. Operator, if you could please introduce the first questions.

[Operator:]

All right. First question comes from the line of John Newman from Canaccord. Your line is now open.

[William Rice:]

John may be on mute, we don't hear any .

[Operator:]

John, your line is now open.

[William Rice:]

Operator, perhaps you'd come back to John in just a few moments. He may be on mute or he may be having difficulty.

[Operator:]

Okay. So, for the next question we do have Gregory Renza from RBC Capital Markets. Your line is now open.

[Gregory Renza:]

Hey, Bill and team, thank you very much for holding the call, taking my questions, and looking forward to the update at EHA. And Bill, just one question with just some layers around sort of the expectations on the data that's coming up with EHA, perhaps you could just provide that context that we have an appetite for. But also, perhaps just reminding us on the backfilling and the intra-patient dose escalation, and going below -- the enrollment going below the 750 mg BID. Just curious if you can remind us of the rationale there, and how we should sort of think about that being laid out for us and for the scientific community during the conference? And then, lastly, related to that, just how important, Bill, is this for the trajectory of the company, the update that we're anticipating, especially having data in AML as well as with the CLL and NHL trial? Thank you very much.

[William Rice:]

All right, thanks, Greg, and glad your line was working there. A couple of things, you asked about the layers around the expectations. We're trying to be very careful. What we're telling everybody is what we disclosed at our prior earnings call around the clinical trials was all that we're providing until we get to EHA. All the quantitative data will be provided at EHA around all the clinical trials. Most people are interested in luxeptinib, or lux, and we'll present all the data at that time for both the B-cell malignancy trial as well as the AML trial. So, your other question was in terms of backfilling. So, in the B-cell malignancy trial we are dosing patients at 750 milligrams BID, that's in the dose escalation portion of the trial. But in addition we are backfilling. We drop back to, so at this point, 600 milligrams has been determined to be a safe dose. So we dropped down one dose below that and began treating patients at 450 milligrams. And it's a way that we can compare two generations of our formulation. The first-generation G1 is a hand-filled capsule, but in order to be able to supply it for the trial, going into the future, we had to create the machine-filled capsules, we call that, G2. So, we treat the patients for two weeks with one, two weeks with the other. Evaluate the pharmacokinetic properties. And then, providing everything goes well, that we move the patients up to 600 milligrams. So, that provides us with actually two strategies. One is to get more patients on study, and also to compare the G1 and the G2 formulations as we go forward.

[Gregory Renza:]

Thanks, Bill.

[William Rice:]

Okay.

[Operator:]

Next question comes from the line of Alethia Young from Cantor Fitzgerald. You are now live.

[Emily Bodnar:]

Hi, this is Emily on for Alethia. Thanks for taking our question. I was wondering as you're now dosing those 600 milligram dose group in the AML study, how are you seeing the dose response there? And do you have any updates on what you're thinking as the appropriate dose level moving forward? Thank you.

[William Rice:]

So, we're providing no information on that dose level at this time, because we feel as though we may actually be under embargo, because the -- all of the -- the abstracts have been accepted for EHA. So we're just trying to be careful about that. So, we're not providing any additional data until we get to the EHA. And in terms of what the final dose level will be, we will continue to dose-escalate as long as the drug is well tolerated. Thus far, as Dr. Bejar mentioned, it has been well tolerated. We don't see any reasons, at least at this point in time, that we would need to limit the dose escalation. And that the point that we can identify a maximum tolerated dose for a dose that we believe is biologically effective and safe. We'll then select that then for a phase 2 dose to move forward. Dr. Bejar, did you want to add anything to that in the trial?

[Rafael Bejar:]

No, I think that's exactly accurate, Bill.

[William Rice:]

Thank you.

[Emily Bodnar:]

Thanks.

[Operator:]

Your next question comes from the line of Matt Biegler from Oppenheimer. You are now live.

[Matt Biegler:]

Hey, guys, thanks for the question. Jotin, congrats on the new expanded role. I guess kind of a broad strategy question here, and I don't want to jump the gun, Bill. But given that there are already at least a couple of FLT3 inhibitors on the market. Do you think there's an avenue for accelerated approval of luxeptinib based on response rates alone, maybe in an expanded variation of this trial? Or maybe just kind of more broadly, how do you think about the development strategy going forward? Thanks.

[William Rice:]

Hey, Matt, thanks for calling in. So, I'll respond briefly, and then I'll ask both Jotin and Raf if they want to jump in. As we look at the patients that come on to these trails, these relapsed refractory patients, as Dr. Bejar mentioned, they have failed essentially everything. So, what we'll be looking for are sub populations of patients that we can identify either genetically or in atypically that we hope will be responsive to the drug. And that we could then move forward toward the more rapid path of approval. So the way to do that is if we can identify multiple patients then that respond to that subgroup, and then take them into an expanded Phase 1 dose expansion. And then if all goes well there, then you can move in to the registration studies. But yes, we definitely believe those types of patients are available. And then just -- we have to show the activity as a single agent of our drug at that time. And I'll ask also Jotin and Dr. Bejar if they want to add to that.

[Jotin Marango:]

Dr. Bejar?

[Rafael Bejar:]

Sure. I would echo Bill's statement there, is that one thing we're not seeing is a lack of patients on study. There certainly are patients that need additional therapy beyond those things that are already available out there. So, the fact that there are other FLT3 inhibitors out there has not really yet met that need. I think we do have the opportunity to find patients to treat. And I think if that is successful and goes well, that there certainly is a path forward in that regard.

[William Rice:]

Thank you.

[Jotin Marango:]

And nothing to add from me. Thank you for the kind words, Matt. Perhaps I will only say that since we are still in a dose escalation study, and have not yet even moved -- identified a final dose or design and communicated anything about expansion cohort, I would say that we are still in the early innings here. So, at this point I'll just second what Raf and Bill mentioned about the path forward.

[Operator:]

Next question comes from line of Matthew Cross from Alliance Global. You are now live.

[Matthew Cross:]

Hey, guys. Good to be speaking with you all again so soon, and looking forward to a busy month of EHA and ASCO, in June. I guess, between this call and your last, we've kind of covered the basis on expectations for lux at EHA. But I'll ask about APTO-253, and as that could use to advance in the clinic a little bit more behind the scenes, I was wondering if you could shed any kind of further light on the direction for that program, because you've presented some pretty interesting data hinting at pharmacologic activity, and now in the fifth cohort without any note where there's no worthy safety signals, I was wondering if you could kind of recap what you view as the progress marker you're hoping to reach before we're finding the path forward here to consider combinations or expansion studies and so forth. I don't know if Bill you mentioned, whether we would see some of a data update on 253 at EHA as well, but wanted to get kind of a status update on that. And given that, I think we're seeing some increased interest in targeting MYC with CDK9 inhibitors out there and other modalities, I was curious if 253 is becoming a little bit more of a priority, while the lux trials press ahead? Thanks.

[William Rice:]

All right. Hi, Matt. Good to hear from you again. So, yes, in terms of 253, we do have an abstract that's been accepted presentation of EHA, we do plan to present the data. We even mentioned today that we had completed with the dose level five, and we're moving into dose level six. We continue to follow the pharmacokinetics to the molecule. And what we're hoping to see is a couple of things, one is that we get extended exposure over multiple days. Remember, this is dose once weekly. And we're hoping to see that the pharmacokinetics maintain higher exposure levels over the period of two to three days. We've already seen an increase, we moved up from dose level pretty dose level five. And we hope that continues. We've also said that in the past, we've seen reductions of MYC. One of the things that we have to look over here is what we do is we collect a total PBMC fraction from patients at different times. And we look before treatment after treatment to evaluate the MYC expression of it. So hopefully in the future, we'll be able to, or at least we're trying to develop methodologies that allow us to look at the malignant cells themselves, rather than just looking at the mixture of normal and malignant cells. We have seen reductions in MYC. We hope to be able to see that continues. We don't escalate. But yes, we remain excited about 253. And you're right there is a growing interest in MYC, because it's involved in so many lignans and some of the other inhibitors out there that that we're hopefully targeting MYC. We're actually targeting it through indirect means. And I know they had associated toxicity for hoping this drug, which is a direct repressor of the MYC gene, and show activity, show reductions in MYC, sustain levels in the plasma. And then we'll have to see what a MYC inhibitor does, because no one truly understands what a pure MYC inhibitor can do in the clinic. Is it going to deliver single agent responses? We hope so. But even if it does not, then it could be a molecule that can be used in combination most likely. So that's where we are in our thinking, and we'll present the data that we have EHA. And thank you for the question. And perhaps Dr. Bejar might want to add to that.

[Rafael Bejar:]

Again, at echo what you said down, I think it makes a really attractive target. And I would also say that, while we are now in that sixth dose cohort, we have several other cohorts above that we could go to with the current protocol. So we will have the opportunity to explore even higher dose levels. And we look forward to seeing what we find there.

[Matthew Cross:]

It's really a good quarter. Thank you.

[William Rice:]

All right, and thank you, Matt.

[Matthew Cross:]

Yes, thanks Bill, and Rafael. Appreciate you. I'll refresh my memory and talk to you next month.

[William Rice:]

Okay. See you there.

[Operator:]

Your next question comes from the line of Soumit Roy from JonesTrading. You are now alive.

[Soumit Roy:]

Hi, everyone. Thank you for taking the question, and congrats again Jotin for the extended role you're getting into. One question on the physicians as you're in the from the AML trial, what is the trend among the physicians? Are they going to the CR patients? Would they go towards transplant within a month or two? Or what has been your conversation with the physicians what they intend to do with these patients? And the second is you have alluded previously that the elderly patients in earlier lines are flip to mute and tell the elderly able patients there is no single agent drug approved for these patients. Do you see your drug migrating to that elderly patient as a monotherapy? Or do you think that could be a combination between them? Just any thought.

[William Rice:]

All right. Thanks, Soumit. So, first of all, everyone keeps congratulating Jotin. So, for doubling up his work so we thank him also. Now just congratulate him and thank him. Yes. So let me also mention the - so you brought up the elderly flip through Newton population, no single agent drug that's approved. We are very hopeful that our drug will show activity and that patient population. Yes, as you mentioned, it's very difficult to treat these patients. We hope to see single agent activity, but then ultimately all drugs are going to be used in combination for that patient population as well as others. And so I'm going to ask Dr. Bejar to both expand on that and also address your question about the email trial when you get CRS and the possibility of transplants.

[Rafael Bejar:]

Yes, thanks Bill. I think you're exactly right in the sense that as we move forward with therapies in AML combination is where we're going to end up particularly in the frontline. It's going to be very similar, I think to the situation with multiple myeloma, where now that they have several drugs available in different classes, certain combinations make absolute sense. We know for AML in particular it might be even more important to try to achieve the permissions early, especially if patients are capable of receiving consolidation therapy like allogeneic transplant. So, we don't think that single agent activity is going to be the future of upfront treatment in AML. You're going to want drugs that have low toxicity profiles that will be able to combine nicely with other agents that are reactive in the disease to allow for those safe combinations that might put patients into a deeper, more sustained, perhaps even curated permission in that first line of therapy. Patients who are relapsed or refractory unfortunately are not really much more difficult to treat. They tend to be resistant to so many drugs that the only real consolidation therapy that makes a big difference in these patients' lives is allogeneic transplant. So on our study, if patients were to achieve a CR and they were eligible for a subsequent transplant, they would certainly move in that direction. This hasn't gotten. So we give necessarily this is what the investigators are prone to do, and it's appropriate. However, many patients on our study that are eligible to participate are not necessarily good candidates for allogeneic transplant. So those patients would need to have a continued therapy to keep them in a remission for as long as possible. And hopefully, that lasts a substantial amount of time since they won't have a likely curative consolidation option available to them. So patients will be offered transplant if they can, and if they can't, they'll continue on study as long as they can.

[Soumit Roy:]

Got it. Thank you again and I'm looking forward to the data on next month.

[Operator:]

Your next question comes from the line of John Newman from Canaccord. Your line is now open.

[John Newman:]

Hi, guys. Thanks for taking my question. I'm sorry that I missed you before. I apologize if this question is already been asked. Question I have is just curious Bill regarding the luxeptinib work, in AML. If the plan here is to dose expand a cohort when you see additional responses or additional activity, or do you just plan to continue to dose escalate until there's some potential limitation on safety, just kind of curious as to how you're thinking about that?

[William Rice:]

No, thanks, John. I'm glad you got your line fixed. So no one else had asked that question. So as we've mentioned earlier, it's a 3/3 study in which you have to have three patients. Remember we started not at the very lowest dose of 150. We actually started at 450-dose that we thought might have activity. And from that point on is 3/3. So, you have to have three patients that have completed safely between the trials, but we also have the ability to put additional patients on there. And we did that for the purpose of trying to get as much data as we can as quickly as possible. But I think what's more important is to remember that these deep relapse refractory patients it's much more than just flip three that draws these patients into other pathways. So we were very happy that we saw a response at the 450 milligram dose level. It all comes down to the right drug, right dose, and the right patient. And so that patient had responded. But then going forward, you want to get as much drug into the patients as you possibly can to hit as many of these pathways. And so we're trying to get to the higher dose levels as rapidly as possible. We want to make sure we do so safely, but we're going to try to continue to dose escalate as quickly as we can. And hopefully we'll be able to see additional responses we get to the higher dose level. So the concept of possibly backfilling and we've seen other trials that do that. For instance, you might've looked at the trial in which they expanded out at each trial at each dose level where they saw a response that was in a very different patient population at the time. None of those patients had ever in the past seen a FLT3 inhibitor, never failed them. So the patients we're getting now are much more refractory to a variety of different drugs. So we want to get as much drug as we can impossibly. And I'm going to ask Dr. Bejar to expand on that.

[Rafael Bejar:]

Yes, I can. So, yes, it's a good example. Some of the stations had seen my distortion in frontline, but none that had seen it FLT3 inhibitor in the relapse refractory setting, which of course many patients now would receive the standard of care. So it is a very different patient population. And then to remind me of the other part of the question, Bill.

[John Newman:]

Well, it's just do we plan to continue to dose escalate or we just going to do it?

[William Rice:]

Yes, so there's two aspects of that. I think one is Bill's point was exactly right, the FLT3 may not be the only target that matters and that additional targets may be important. And those may have different drug response relationships. So pushing to higher dose levels may actually see differences in the eventual outcome for patients, we want to be able to explore that, even for the FLT3 mutant patients. And of course, for these FLT3 patients that are also eligible for a study, higher doses of drug may be necessary to target those oncogenic pathways that are targeted by lux. And we wouldn't want to miss out any opportunity to explore that simply because we started seeing responses, for example, in patients that might have FLT3 mutations. So we want to be able to dose escalate as long as it is safe and we're seeing increased exposures to higher dose levels, and might necessarily be the first ones where we start to see any sort of activity.

[Rafael Bejar:]

Yes, just to remind everybody, even the patients with FLT3 wild-type very often, they'll have over expression of FLT3 or they'll be responding to an over expression of the FLT3 ligand. And so we're hopeful that those patients also will be able to respond, because our drug doesn't give it to wild-type. John, thank you for the question.

[John Newman:]

Just one additional question…

[Rafael Bejar:]

Yes. It's just difficult to hear you.

[John Newman:]

Sorry. Just one additional question, if I may. Not sure that this would be necessary. But does the design of the study allow for dose interruptions or dose reductions? And then also, does the study allow for that dose to be re-escalated if necessary? Just curious if you have those types of, that type of flexibility built into the study just in case you need to adjust the dose, maybe temporarily, and then keep the patients on drug? Thanks.

[William Rice:]

That's something that. Oh yes, please go ahead.

[Rafael Bejar:]

I can tackle that, I think. Often, when you have a patient who experiences a toxicity there's uncertainty as to whether it's drug-related or not, the drug is appropriately held or reducing dose until that can be determined. If that toxicity resolves quickly, or it turns out that with further study wasn't really to the drug, it would make sense to penalize a patient. And we do have the capability to allow them to re-dose escalate. And we also have the ability to alter or hold the dose if patients take interacting medications or things of that nature. So there is a flexibility built into the study.

[John Newman:]

Okay, great. Thank you.

[Rafael Bejar:]

Thank you, John.

[Operator:]

And I'm currently showing no further questions. I'll now turn the call over back to Dr. Rice for closing remarks.

[William Rice:]

All right. Well, thank you everyone, for joining us this afternoon. Although we have a lot of work ahead of us, we're very gratified by the progress of our two clinical programs, luxeptinib and APTO-253. And that we've been able to recruit new patients and to escalate the dosing and our clinical trials rapidly. That momentum continues, and we look ahead to what promises to be a very exciting year for Aptose. We also want to thank the clinical team, our investigators and our patients for their help in this important work. We also appreciate the support of our shareholders and analysts. And we look forward to updating you on our progress next month. Thank you, and enjoy your evening.

[Operator:]

Thank you, ladies and gentlemen. That concludes today's conference. You may all disconnect and have a wonderful day.