Q1 2021 Aptose Biosciences Inc Earnings Call

May 4, 2021

[music].

Okay.

Good afternoon, My name is Chino and I'll be a conference operator today.

I'd like to welcome everyone to the Upsells Bio Sciences conference call for first quarter ended March 31st I need to anyone.

At this time all participants are in a listen only mode. After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If he would like to withdraw your question. Please press the pound key.

Thank you.

A reminder, this conference call may be recorded.

I'd like to introduce MS. Susan Pietro Paolo. Please go ahead.

Thank you <unk> good afternoon, and welcome to the App total Biosciences conference call to discuss financial and operational results for the first quarter ended March 31st 2021, I am Susan Petro Paolo Communications representative for <unk> Biosciences, joining me on the call today are Dr. William G Rice Chairman press.

It Didnt CEO Doctor you already Morando, 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 from Canadian Securities.

<unk> laws forward looking statements reflect apoptosis current expectations regarding future events, but 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.

Rest to learn more about these risks and uncertainties. Please read the risk factors set forth in apoptosis. Most recent annual report on form 10-K N. S. C. On SEDAR filings also we're looking statements made during this call speak only as of the date, they're made aftosa undertakes no obligation to revise or update the statements to reflect events or circumstances. After the date of this call.

As required by law I will now turn the call over to Dr. Rice, Chairman, President and CEO of <unk> Biosciences, Dr. Rice.

Thank you Susan.

For the first quarter ended March 31 2021.

We continue to execute on our plan to develop first in class precision treatment for hematologic malignancies and we.

On the building the right team and creating transformational medicines is a deliberate and comprehensive process adult millennial question.

Regarding the team we're very.

Pleased to announce today the appointment of our new Chief Financial Officer, Dr. Miranda.

The support of a superb internal financing accounting team already has stepped into this role seamlessly.

With this research analysts background knowledge of capital markets and banking practices on Wall Street inside.

Was the ideal candidate and natural fit for this leadership position.

And Jody will be maintaining as chief business officer role you can read more about his background and our press release today as well as on our website.

In addition to Jody. We also recently highlighted the appointment of Dr. Jim <unk> as our Vice President Obama metrics as well as Dr. George Melco as our Vice President of regulatory Affairs and Dr. Robert Julian as our Vice President of chemistry manufacturing and controls.

All of these executives are highly experienced and skilled.

Proud to have joined outcomes to help build the right team of essential skill set for the future.

Because of our last call with just a few weeks ago and because we have the European Hematology Association or <unk> conference ahead of US on just a month today, we will provide you with a very brief clinical update.

As you know our plan of data disclosure from the past present and future Fitch present updated quantitative data on Ehow in June and then around the American Society of Hematology or Ash meeting later in the year on December.

So we have been and will continue to execute on our goal to release a continual no clinical data at the two premier hematology medical meetings throughout the year, Bihar and ash.

Regarding ehealth, we recently were notified that all three abstracts were debt debt. We submitted have been accepted for virtual poster presentations one for each of our ongoing clinical trials.

Again as I've mentioned prior those abstracts were merely placeholders.

They were submitted earlier this year with data, reflecting what was known this past December in 2020.

However at <unk>, we plan to present on all available data from all patients on all dose levels enrolled in our clinical trials.

As we continue to deliver on our dose escalation studies.

We'll have the opportunity to place more patients on drug and over longer periods of time.

Being able to treat more patients at higher dose levels will continue to inform us on the clinical profile and overall value of <unk> also referred to as CGM on <unk>.

Just looks.

Look forward to providing those further updates at <unk> and then in the second half of 'twenty one during cash.

And finally, the company is on track as our clinical trials continued to see strong patient flow in enrollment as we move through dose escalation now I'll ask Dr. Rafael Bejar, our chief Medical officer to provide an overview of our clinical activities breath.

Thank you Bill.

MTS has three ongoing clinical trials two studies of the kinase inhibitor looks at Lox, one in patients with acute myeloid leukemia, or AML and the other in patients with B cell cancers and.

And the third trial with our make repressor after two three in patients with AML and Mds I'll start by talking about up to 250 III.

On <unk> inhibitor. After the two phase III is being tested in a phase one trial relapsed or refractory AML and higher risk Mds patients.

More than 40 years have passed since the discovery of <unk> estimated to contribute to at least 75% of all human cancers and research and development efforts since that time have not yielded a clinically useful make inhibitor largely because of the inability to selectively and effectively target to make protein.

That's a direct inhibitor make transcription after two financing represents a novel approach for targeting this oncogenic pathway.

I'm happy to report that we've completed the fifth dosing cohort of patients in the 150 milligram per meter squared dose level of after two five III and we began enrolling patients in the fixed dose cohort at 210 milligrams per meter squared.

We're pleased that our clinical safety review committee or CSR C favorite escalation of the dosing of our phase one trial.

After 253 is beginning to pick interest and we're eager to see where it will take them.

Now moving on to accepting them.

<unk> is like no other drug commercialized or in development is the only non clinical agent that potently inhibits both flew three MPT Kay with a precision that avoids known targets that are often associated with toxicity, we think a broad therapeutic potential across the spectrum of lymphoid and myeloid hematologic malignancies.

As we mentioned in our last call. We've completed four dose levels on our phase one trial of what's happening in B cell malignancies.

<unk>, chronic lymphocytic leukemia, or CLO, and non Hodgkin's lymphoma, or NHL, who have failed or are intolerant to current therapies.

Thus far what's happening is it well tolerated in patients treated at 150 milligrams 300 milligrams 450 milligrams and 600 milligrams twice a day over multiple cycles and it doesn't continue with no concerning drug related safety trends to date, including an expanded 750 milligram dose cohort the dose at which we continue to treat newly enrolled patients.

In parallel we are back on patients at doses below the 750 milligram dose level and we hope to dose escalate those patients to 750 milligrams when that level is shown to be safe.

For more specific information on the B cell malignancy trial on the clinical sites that are enrolling patients. Please visit Clinicaltrials Gov.

So now on to looks at net in AML.

With distinctive kinase selectivity, MX, potently and simultaneously suppresses swiftly and additional oncogenic signaling pathways upon which annual cancer cells rely for survival and drug resistance, which is why <unk> has always been a primary focus on our clinical plan.

It's important to remind you that all of the patients on our AML trial similar to our visa on trial are relapsed and refractory patients who have already been treated with the best currently available therapeutics in the case of patients with <unk> mutations often referred to as being with three positive from mute. The majority will have progressed after treatment with multiple for <unk> inhibitors, including <unk> III Might've story.

On granola.

And to wrap it up as well as a host of other treatments such as induction and consolidation chemotherapy multiple cycles will have met letting agents like the net <unk> and other investigational drugs, even patients who have undergone allogeneic stem cell transplants are eligible for our study so.

So the patient population is highly heterogeneous and tough to treat.

In our last call, we reported promising anti leukemic activity from looks at net which is driving enthusiasm among our investigators as early anti leukemic activity demonstrates lux is on active drug, but now we need to dose escalate as rapidly as possible in an effort to achieve greater drug exposures to act on multiple targets and pathways that may affect a broader population of AML patients with diverse Jeanette.

It can epigenetic background.

Towards this goal we reported in the last call that we had completed the 450 milligram. The IV dose cohort had initiated dosing in the second cohort receiving 600 milligrams PID Amy.

AML patients are now being treated in the 600 milligram B I D dose level and to date in the drug has been well tolerated in this patient population.

We continue to find that luxe is generally well tolerated with no toxicity signals are trends to date, we believe could prevent further dose escalation is tolerability profile is very important because it is allowing us to reach higher dose levels that hopefully could treat the heterogeneity of diverse relapse refractory AML patients.

For more information on the AML trial and clinical sites that are recruiting patients. Please visit clinical trials Gov.

We're pleased by the progress across our clinical programs and that the safety and Tolerability of both drug candidates looks at net and after the two phase III are allowing dose escalation in all three of our ongoing trials as we treat more patients at higher doses, we are generating additional pharmacokinetic and pharmacodynamic data, we look forward to providing further updates at the <unk> and ash meetings this year.

I will now turn the call over to Dr. Jodi Marengo, our Chief Financial Officer, and Chief Business Officer, who will review financial results for the first quarter Jody.

Thank you Ralph 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 <unk>, III 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.

Nickel program costs, including our clinical trial of <unk> 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 from the same quarter last year.

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 <unk> 18 per share.

More detailed information can be found in our filings on Edgar and SEDAR.

I will now turn the call back over to Dr. Rice Mills.

Thank you Jody.

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 question.

Alright, guys.

At this time I would like to remind everyone that if you would like to ask a question. Please press Star then the number one on your telephone keypad low, possibly just a moment from inside of the Q&A roster.

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

John maybe on mute, we don't hear anything.

John Your line is now open.

Yes.

Okay.

Operator, perhaps you could come back to John in just a few moments.

Maybe on mirroring may be having difficulty.

Okay. So for the next question, we do have Gregory <unk> from RBC capital markets. Your line is now open.

Hey, Bill and team. Thank you all very much for holding the call taking my questions and looking forward to the update at Ehealth.

Just one question with just some layers around sort of the expectations on the data that's coming out with Ehow, perhaps you could just provide that that that context that we have an appetite for but also perhaps just reminding us on the back filling and yet.

Intra patient dose escalation and theyre going below.

The enrollment going below the 750 <unk> just curious if you can remind us of the rationale there on how we should sort of think about.

That being being laid out for us and for that the scientific community. During the conference and then lastly related to that just how important bill is this toward the trajectory of the company that the update that we're anticipating especially you know having data in AML as well as with.

The CLO NHL trial, thank you very much.

Alright, Thanks, Greg and I'm glad your line was working there.

Couple of things you asked about the layers around expectations.

We're trying to be very careful what were 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 eat all the quantitative data will be provided he offer around all of the clinical trial. Most people are interested and looks after net or Lux and we'll present all the data at that time for both the B cell malignancy trial as well as debt.

AML trough. So your other question was in terms of backfill. It so in the B cell malignancy trial, we are dosing patients at 750 milligrams B I D death in the dose escalation portion of the trial, but in addition, we are back billing we drawback too. So at this point 600 milligrams. So it has been determined to be a safe day.

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 G. One is a handfield capsule, but in order to be able to supply for the trial going into the future we have.

To create the.

Machine build castles, we call that Youtube. So we treat the patients for two weeks with one two weeks with the other.

<unk>.

The pharmacokinetic properties and then providing everything goes well do 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 <unk> and the G. Two formulations as we go forward.

And then in terms of.

<unk> you had asked me about the importance of it.

What we try to emphasize is we do not see any particular meeting as a binary decision we try to present a continuum of data throughout <unk>, and then going into the second half of the year.

Cash so we'll present all the data that we do have.

For all of that all patients all clinical trials all dose levels.

Both on E on and as.

We get into the higher dose levels for longer periods of time I will present at ash later in the year.

Thank you Greg.

Thanks Bill.

Next question comes from the line of Alicia Yap from Cantor Fitzgerald.

<unk>.

Hi, This is Emily on for Alethia, Thanks for taking our question.

I was wondering as Youre now dosing the 600 milligram dose group in the AML study how are you seeing that.

Dose response, there and do you have any updates on what youre thinking on the appropriate dose level moving forward. Thank you.

So we're providing no no information on that dose level at this time, we will because we feel as though we may actually be under embargo because all of the.

The abstracts have been accepted for Ehealth. So we're just trying to be careful about that so we're not providing any additional data until we get to the ehealth.

And in terms of what the the final dose level will be.

We will continue to dose escalate as long as the drug is well tolerated thus far as Dr. Bernhard 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 at the point that we can identify a maximum tolerated dose or <unk>.

A dose that we believe is biologically effective and safe.

We will then slip that in for a phase II dose to move forward.

Dr. <unk> do you want to add anything to that on the trial.

No I think that's exactly accurate.

Thank you.

Thanks.

Your next question comes from the line of Matt Biegler from Oppenheimer Your in our lives.

Hey, guys. Thanks for the question.

That's on the new expanded role on.

I guess kind of a broad strategy question here on I don't want to jump the gun belt, but given that there are already.

A couple of flit three inhibitors on the market do you think there is an avenue for accelerated approval of looks at net based on response rate alone maybe in an expanded.

On a variation of this trial or.

Maybe just more broadly how do you think about the development strategy going forward. Thanks.

Hey, Matt Thanks for thanks for calling in so I'll mentioned I'll respond briefly and then I'll ask both yoga and RAF if they want to jump in.

As we look at the patients that come on to these trials as relapsed refractory patients. So as Dr. Hart mentioned they have failed essentially everything so what we'll be looking for are subpopulations of patients that we can identify either genetically or in a typically.

That we hope will be responsive to the drug and debt. We could then move forward toward the more rapid or path.

Of approval so the way to do that is if we can identify multiple patients than debt to <unk>.

On to that subgroup and then.

Into an expanded phase one dose dose expansion and then if all goes well. There then you can move into the Registrational studies, but yes, we definitely believe those types of patients are available.

And it just we have to show on the activity as a single agent or our drug at that time and I'll ask also Jody and Dr. Bejar, if they want to add to that.

Okay.

That's the day huh.

Sure.

Echo the statement there is that one thing we're not seeing is a lack of patients on study. There certainly are patients that need additional therapies beyond those things that are already available out there. So the fact that there are therefore three inhibitors that there has not really yet at that need I think we do have the opportunity to find patients to treat and I think if debt is successful and goes well because there certainly is a path.

Forward in that regard.

Thank you.

And nothing to add from me. Thank you for the kind words net.

I will only say that since we are stealing a dose escalation study.

And have not yet even move identified.

A final dose or designed and communicated anything about expansion cohort I would say that we are still in the early innings here. So at this point I would just second what Ralph on Bill mentioned about the path forward.

Yes.

Next question comes from the line of Matthew Cross from Alliance Global.

<unk>.

Hey, guys good to be speaking with you all again, so soon and looking forward to a busy month of <unk> in June.

I guess between this call on your last we've kind of covered the bases on expectations for <unk>.

But I'll ask about after 253 and as that continues to advance on 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.

You presented some it's a pretty interesting data hinting at pharmacologic activity.

Now on the fifth cohort without any noteworthy is noteworthy safety signals.

I was wondering if you could kind of recap what would you view as the progress marker youre, hoping to reach.

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 you would see some from some of enough of a data update on $2 three or <unk> 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 Mick with CDK <unk> inhibitors out there and other modalities.

Was curious if 253 is becoming a little bit more of a priority while the luxe Charles press ahead. Thanks.

Alright.

Matt Good to hear from you again, so yes in terms of <unk> III.

We do have an abstract has been accepted for presentation at the heart, we do plan to present the data, but we Havent mentioned today that we had completed the dose level five and are moving into sales growth.

We continue to follow the pharmacokinetics of 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 dosed once weekly and we're hoping to see that the pharmacokinetics maintained.

Higher exposure levels over the period of two to three day, we've already seen an increase from moved up from dose level reported.

But with volume and we hope that continues but we've also said that in the past we've seen on productions Nick.

One of the things that we have to look over here is what we do is we collect a total PV M C fresh from patients at different times, and we look for treatment after treatment.

To evaluate the MC expression levels, 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 formal and malignant cells.

Have seen reductions in net we hope to be able to do that continuously dose escalate, but yes. We remain excited about 253 and Youre right. There is a growing interest in big.

Because it's involved in so many lignin.

And some of the other inhibitors out there that will hopefully.

Getting mixed directly targeting it through indirect means I don't know they had associated toxicities were hoping this drug which is a direct repressor of the MC G and show activity show reductions in mix sustained levels in the plasma and then we'll have to see what I'm Mick inhibitor does because no one truly understands.

What a pure.

Pure Mick inhibitor can do in the clinic and they're 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 lucky.

That's where we are on our thinking and we'll present the data that we have at Ehealth and thank you for the question and.

And perhaps Dr bejar might want to add to that.

Again, I Echo what you said Bill I think makes it really attractive target in.

I would also say that while we are now in the fixed dose cohort we have several other cohorts above that that we could go to with the current protocol. So we will have the opportunity to explore even higher dose levels.

We look forward to seeing what we find there.

It's a really good book thank you.

And thank you Matt.

Yes, no. Thanks, Bill on RAF I appreciate you refresh my memory on.

Talk to you next month.

Okay.

Your next question comes from the line of Summit ROI from Jones trading you on all lines.

Hi, everyone. Thank you for taking the question and congrats like anybody for extended role Youre getting into.

One question on the.

On the physician in the from the AML trial, what is the trend among the physicians are they going to do.

The risks the CR patients would they go towards transplant within a month or two on what has been your conversation.

Conversation with the physicians, what they intend to do with these patients.

On the <unk>.

Secondly, as you have alluded previously.

The elderly patients in earlier lines.

Flip from you can tell the elderly AML patients there is no.

Single agent drug approved for these patients do you see your drug migrating to that person as a monotherapy already or things that could be a combination with ease up on.

On your card.

Alright, thanks, so much.

So first of all everyone keeps congratulating you Ot so for doubling up his work. So we thank him also just from.

Thank you, yes. So let me also mentioned the so you brought up the elderly flow through mutant population no single agent drug. That's approved we are very hopeful that our drug will show activity in that patient population.

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. Bexar to both expand on that and also address your question about the email trials when you get <unk> in the past.

Building on transplants.

Yes, Thanks, Bill I think youre 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 situations with multiple myeloma.

Now that they have several drugs available on different classes certain combinations make absolute sense, we know for AML in particular might be even more important to try to achieve deep remissions 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 upfront treatment in AML youre going to want drugs that have low toxicity profiles that we'll be able to combine nicely with other agents that are already active in the disease to allow for the safe combinations on mitral patients into a deeper more sustained perhaps even curative permission on that first line of therapy.

From a relapse or refractory unfortunately, not only much more difficult to treat they tend to be resistant to so many drugs that the only real consolidation therapy that makes it a big difference on these patients' lives is allogeneic transplant. So on our study if a patient were to achieve a CR and they were eligible for a subsequent transplant. There would certainly be I think moving that direction. This isn't guidance that we give nessus.

Shirley this is what the investigators are prone to do.

It's appropriate however, many patients on our study that are eligible to participate or not necessarily good candidates for allogeneic transplant. So those patients would need to have a continued therapy to keep them in remission for as long as possible.

And hopefully.

Debt less a substantial amount of time since they won't have it likely curative consolidation options available to them. So.

So patients will be.

Offered transplant, if they can and if they can't they'll continue on study as long as they can.

Got it.

Thank you again on looking forward to the data on next month.

Yeah.

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

Hi, guys. Thanks for taking my question, sorry that I missed.

Before.

I apologize if this question's on Ethernet question I have is just curious bill.

Regarding the exceptional work.

AML if.

If the plan here is to dose expand.

Our 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.

Thanks, John I'm glad you got your line fixed so no no one else had asked that question.

So.

As we had mentioned earlier, there's a three by three study in which you have to have three patients remember we started not at the very lowest dose of 150, we actually started at 42 dose that we thought might have activity and from that point on it's three by three so you have to have three patients that have completed safely.

True.

But we also have the ability to put additional patients on their own.

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 the deep relapsed refractory patients. It's much more than just flip through that drives. These patients. It's other pathways. So we were very happy that we saw response at the 450 milligram.

<unk> level. It all comes down to the right right drug right dose the right patient and so that patient at risk.

On it.

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 will be able to see additional responses, we get to the high.

Third dose level so.

The concept of possibly back filling and we've seen other trials that do that for instance, you might have looked at the Gilbert neutral language states expanded out of each trial.

At each dose level, where they saw a response.

That was on a very different patient populations with time, none of those patients had ever in the past <unk> three inhibitor never failed. So the patients were getting now are much more.

Factory to a variety of different drugs. So we want to get as much drug as we cant impossibly and I'm going to ask Dr. Bexar too to expand on that.

Yes, I can so yes. They go through their traffic. It's a good example on some of those patients had seen might've storing and frontline, but non had seen it for three inhibitor in the relapse refractory setting which of course many patients now would receive the standard of care. So it is a it is a very different patient population.

And then too.

Many of the.

Q1 2021 Aptose Biosciences Inc Earnings Call

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