On March 27, 2018 Aptose Biosciences Inc. ("Aptose" or the "Company") (NASDAQ:APTO) (TSX:APS), a clinical-stage company developing highly differentiated therapeutics that target the underlying mechanisms of cancer, reported financial results for the three months and year ended December 31, 2017 and reported on corporate developments (Press release, Aptose Biosciences, MAR 27, 2018, View Source;p=RssLanding&cat=news&id=2340004 [SID1234525006]). Unless specified otherwise, all amounts are in US Dollars.
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The net loss for the quarter ended December 31, 2017 was $3.28 million ($0.12 per share) compared with $2.97 million ($0.23 per share) for the quarter ended December 31, 2016. Total cash and cash equivalents and investments as of December 31, 2017 were $11.4 million, or $13.3 million Canadian dollars, which, based on current operations and estimations, provide the Company with sufficient resources to fund research and development and operations into Q1 2019.
"2017 was a year of tremendous progress for Aptose," said William G. Rice, Ph.D., Chairman, President and Chief Executive Officer. "We achieved our strategic goal in bringing CG’806, our oral first-in-class pan-FLT3/pan-BTK inhibitor, from an early preclinical molecule to a stage where we are preparing to file an IND and initiate clinical trials in patients with acute myeloid leukemia (AML) and certain B-cell malignancies later this year. This required considerable scale-up manufacturing and formulation development, as well as pathway suppression analysis, xenograft efficacy, and pharmacokinetic and safety studies. Separately, we successfully completed formal root cause studies for APTO-253, our small molecule c-Myc inhibitor, as well as the manufacture of a new cGMP batch of drug supply sufficient for dosing AML patients in an ongoing Phase Ib trial. We look forward to completing the required stability and other studies with the new clinical supply to submit to the FDA, with the hope of having the CMC-related clinical hold released for a timely re-initiation of patient dosing. At the same time, we and our collaborators continued to perform mechanistic research on ‘806 and ‘253 and have generated data that compel us to advance both compounds clinically."
Corporate Highlights
Orphan drug designation and patent allowance granted for CG’806 – During the year, the USPTO issued a patent that claims numerous compounds including the CG’806 compound, pharmaceutical compositions comprising the CG’806 compound, and methods of treating various diseases. Furthermore, in December the FDA granted orphan drug designation to CG’806 for the treatment of patients with AML. The FDA assigns orphan drug designation to support the development of medicines for underserved patient populations. Orphan drug designation provides Aptose certain benefits, including market exclusivity upon regulatory approval if received, exemption of FDA application fees and tax credits for qualified clinical trials.
ASH presentations – In December, Aptose and its collaborators, The University of Texas MD Anderson Cancer Center and the OHSU Knight Cancer Institute, delivered multiple poster presentations and abstracts at the American Society of Hematology (ASH) (Free ASH Whitepaper) 59th Annual Meeting & Exposition. Researchers at MD Anderson elucidated the unique ability of CG’806 to kill a broad range of AML cells by suppressing multiple pathways, to overcome resistance seen with other FLT3 inhibitors, and to act synergistically with other agents. OHSU researchers evaluated the activity of CG’806 on patient primary bone marrow specimens through the Beat AML Initiative. CG’806 exhibited broad and potent single agent activity, and enhanced activity when combined with Bcl-2 or BET inhibitors, against AML and CLL patient samples. In addition, two abstracts on APTO-253, one describing its molecular target leading to suppression of c-MYC gene expression and the other describing its synthetic lethality comparable to olaparib in cells deficient in BRCA1 and BRCA2 function, were published online by ASH (Free ASH Whitepaper). Results demonstrate that, unlike olaparib, APTO-253 does not produce myelosuppression even at the maximum tolerated dose.
Completed manufacture of APTO-253 cGMP clinical supply – Aptose has completed manufacture of the cGMP clinical supply that will be required for the potential return of APTO-253 to the clinic. Stability, sterility, mock infusion, animal bridging and blood compatibility studies are currently underway. Upon successful completion of those studies, Aptose plans to submit findings to the FDA to seek release of the CMC-related clinical hold and allow resumption of patient dosing in the open Phase 1b trial in patients with AML or myelodysplastic syndrome (MDS).
CG’806 pre-IND progress – Aptose successfully manufactured CG‘806 drug substance and formulated drug product, and then performed animal dose range finding preclinical studies of CG’806 in rodents and dogs, and successfully dosed up to 1000 mg/kg/day, the maximum feasible dose, with no observable toxicities noted. Also, Aptose completed manufacturing 2.6kg of a drug batch that will be used for IND-enabling GLP animal toxicity studies.
Global license agreement with OHM Oncology – Earlier this month, Aptose announced an exclusive global license agreement that provides OHM Oncology with the rights for the development, manufacture and commercialization of APL-581, as well as related molecules from Aptose’s dual bromodomain and extra-terminal domain motif (BET) protein and kinase inhibitor program. Aptose will retain reacquisition rights to certain molecules, while OHM will have the rights to develop and sublicense all other molecules.
Financial Results
Effective December 31, 2017, we changed our presentation currency to US dollars from Canadian dollars. All amounts included in this document are in US dollars unless disclosed otherwise. The change in reporting currency was accounted for on a retrospective basis as if the US dollar had always been the Company’s presentation currency. Accordingly, the financial statements for all the periods presented have been translated to the US dollar.
The decrease in the net loss during the year ended December 31, 2017 compared with the year ended December 31, 2016 results mostly from our decision in January 2017 to refocus our resources on our CG’806 development program and towards determining the root cause of the manufacturing issue with the APTO-253 program. Expenses were lower due to the cancellation of the LALS/Moffitt collaboration, lower costs associated with the APTO-253 program, and offset by increased development activities related to the CG’806 development program which were nominal in comparable periods, other than the license fee that was paid in June 2016 to acquire an option on the technology.
Research and Development
Components of research and development expenses
In the 2016 comparative period, we paid $1.0 million to CrystalGenomics, Inc. ("CG") for an option fee related to the CG’806 technology and in that period began research and development activities for this program;
An increase in research and development activities related to our CG’806 development program. Activities in the current year ended December 31, 2017 included formulation studies and PK studies and the manufacturing of a first batch of the drug substance to be used in dose range finding studies, the initiation of the dose range finding studies, and the initiation of the manufacturing of a GLP batch of drug substance to be used in the toxicity studies. CG’806 program expenses were nominal in the comparative period as the technology was licensed to us in June 2016;
Reduced expenditures on the APTO-253 program. In the year ended December 31, 2017, we completed the root cause analysis and determined the cause of the manufacturing issue, established a Corrective and Prevention Action plan to ensure the clinical supply can be manufactured in a reliable manner, and the initiation of manufacturing of a new clinical supply. In the comparative period, we were actively manufacturing a clinical batch and preparing to return APTO-253 to the clinic; and
Savings from cancellation of the LALS/Moffitt collaboration which was active in the year ended December 31, 2016. There are no costs related to this program in the year ended December 31, 2017.
General and Administrative
Components of general and administrative expenses
General and administrative expenses excluding salaries, decreased slightly in the year ended December 31, 2017, compared with the year ended December 31, 2016. The decrease is mostly the result of lower travel costs, consulting and rent costs in the first six months of the fiscal year related to cost containment initiatives taken in the prior fiscal year and offset by higher investor relations, professional fees and travel costs in the three months ended December 31, 2017;
Salary expenses in the year ended December 31, 2017, were slightly lower in comparison with year ended December 31, 2016. Savings from reduced headcount were partially offset by higher bonuses recognized in the current period; and
Stock-based compensation decreased in the year ended December 31, 2017, compared with the year ended December 31, 2016, due to large forfeitures in the three months ended March 31, 2017 and also due to grants in the prior periods having a greater fair value than the grants issued in the year ended December 31, 2017, and therefore contributing to higher stock-based compensation in the year ended December 31, 2016.
FOURTH QUARTER RESULTS OF OPERATIONS
The changes in research and development expenses in the three months ended December 31, 2017 as compared to the three months ended December 31, 2016 result from the following:
An increase in R&D activities on our CG’806 program as described above;
A decrease in R&D activities on our APTO-253 program as described above;
Savings from cancellation of the LALS/Moffitt collaboration as described above; and
Higher salaries expense mostly related to additional clinical research staff hired at the end of the year to prepare for returning APTO-253 to the clinic.
higher investor relations, professional fees and travel costs in the three months ended December 31, 2017;
higher salaries related mostly to a bonus adjustment in the comparative period; and
stock option grants issued in the current year with a lower grant date fair value than the comparative period.
Conference Call and Webcast
Aptose will host a conference call today, Tuesday, March 27, 2017 at 5:00 p.m. EDT to discuss results for the three months and year ended December 31, 2017. Participants can access the conference call by dialing (844) 882-7834 (North American toll-free number) and (574) 990-9707 (International) and using conference ID # 8873259. The conference call can be accessed here and will also be available through a link on the Investor Relations section of Aptose’s website at ir.aptose.com. An archived version of the webcast along with a transcript will be available on the Company’s website for 30 days. An audio replay of the webcast will be available approximately two hours after the conclusion of the call through April 3, 2018 by dialing (855) 859-2056, using the conference ID # 8873259.