Susan Pietropaolo - SMP Communications William Rice - Chairman, President, and CEO Gregory Chow - SVP and CFO.

Joseph Pantginis - HC Wainwright John Newman - Canaccord Jotin Marango - ROTH Capital.

Good afternoon. My name is Victor and I will be your conference operator today. I would like to welcome everyone to the Aptose Biosciences Conference Call for the Second Quarter Ended June 30, 2018. At this time all participants are in a listen-only mode. After the speakers remarks there will a question-and-answer session. [Operator Instructions].

Thank you. And as a reminder, this conference maybe recorded. I would now like to introduce Ms. Susan Pietropaolo. Please go ahead..

Thank you, Victor. Good afternoon and welcome to the Aptose Biosciences conference call to discuss financial and operational results for the second quarter ended June 30, 2018. I am Susan Pietropaolo, Communications Representative for Aptose Biosciences. Joining me on the call today are Dr. William Rice, Chairman, President and CEO and Mr.

Gregory Chow, Senior Vice President and Chief Financial 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, but are not guarantees of performance and it is possible that actual results and performance could differ materially from the 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 20-F at 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?.

Thank you, Susan. I'd like to welcome everyone to our call for the quarter ended June 30, 2018. It's been a busy and productive quarter, I am happy to bring you up to-date.

We have had important progress in the development of both of our hematology product candidates, highlighted by the lift of the clinical hold on our small molecule MYC inhibitor APTO-253 and new compelling pre-clinical data on our small molecule pan-FLT3/pan-BTK inhibitors CG-806, showing great potency on patient derived hematological cancer cells.

Following these updates, Mr. Gregory Chow will review our quarterly financials. But before that I'll add a brief financial preview. Our cash position at the end of June was $18.5 million, given its runway into the second half of 2019, in contrary to prevailing belief we are not the midst of a financing at this time.

Then following the full financial update, we will open the call to your questions. So let's begin today with APTO-253, APTO is a small molecule inhibitor of MYC oncogene expression. As a quick background MYC disregulation is a common driver in many malignancies, including acute myeloid leukemia or AML. MYC is an attractive therapeutic target.

Repression of MYC expression by bromodomain or BET inhibitors, has proven effective at triggering apoptosis in leukemia cells. However, inhibition of bromodomain proteins can cause severe toxicities and myelosuppression due to the presence of bromodomain proteins on active genes.

253 is the only known clinical stage molecule that has the potential to directly target the MYC oncogene and inhibit its expression, rather than acting on the bromodomain proteins.

Aptose researchers have reported the ability of 253 to induce cell death for apoptosis and multiple blood cancer cell lines including AML, as well as in vitro synergy with various classes of conventional approved and investigational therapies for AML or myelodysplastic syndromes, MDS.

I am especially pleased to report that at the quarter, on July - on June 29th, we announced that the FDA notified us, the clinical hold on 253, had been lifted. As most of you are aware, our team have been working diligently to provide the agency with the information it needed to return 253 to the clinic.

We optimize the chemistry of the drug substance and the drug formulation, we optimized the drug product manufacturing process and successfully manufactured multiple prototypes and engineering batches of drug product. And finally, the GMP badge of drug product testing to serve as our clinical supply.

The drug substance and drug product past all release criteria, and it continued to demonstrate stability over time. All of those CMC related data, along with the animal PK bridging studies and mocking fusions studies were presented to the FDA. And we expected a response during the 30 day window because 253 has Orphan Drug Designation in AML.

After multiple communications and clarifications with the FDA, the agency released the clinical hold during that 30 day window, and yes, we were pleased with the outcome.

During the period that 253 was on clinical hold, our understanding of the molecule and its potential continue to evolve and we and our clinical investigators are especially eager to return 253 to the clinic.

We've provided all of the data to-date, as well as the revised protocol, patient consent from and investigators pressure to the Institutional Review Board or IRB for the centers that are preparing to begin the Phase 1b dose escalation clinical trial of 253.

But the 15 clinical centers are expected to participate in the Phase 1b trial and we expect the dosing will resume for patients with the relapsed refractory AML or with high risk MDS. All going well, we expect to have our first patient on study during this third quarter, and hopefully to be in our third cohort at year end.

Regarding the 253 clinical study, this Phase 1b multi-center opened label dose escalation clinical trial is designed to assist the safety, tolerability, pharmacokinetics and pharmadynamic responses and efficacy of 253 as a single agent and determine the recommended Phase 2 dose. 253 will be administered once weekly over a 28 day cycle.

The dose escalation cohort of the study is likely to enroll up to 20 patients with refractory relapsed AML for high risk MDS. The study is designed to then transition as appropriate to single agent expansion cohorts in AML and MDS. As the year unfold, we will keep you updated with progress of the trial.

Although we are eager to move 253 quickly through these trials I'll remind you that we will be diligent and deliberate in our actions so the program does not experienced any additional unforced errors. Our mantra is to move with best possible speed, but not with haste. And we continue to gain insights into this molecule.

As we announced in June, preclinical findings published in two separate articles in peer review journal, molecular cancer therapeutics added to our knowledge of how 253 inhibits expression of the MYC gene and also reveal that 253 might also certain solid tumor patients with BRCA1 or BRCA2 mutations.

The first publication demonstrated that 253 inhibits expression of the MYC oncogene and deplete cells of the MYC protein, trigger the DNA repair and stress response pathway and promotes program cell death for apoptosis and AML cells and fresh bone marrow samples derived from patients with AML and other hematologic malignancies that often depend on MYC up regulation.

The data demonstrated a multifaceted mechanism of action for 253. Primarily through engagement of select G. quadruplex DNA structures, one of which is located in the promoter of the MYC gene and is uniquely suited to targeting hematologic malignancies.

The second publication expanded on data from a poster presentation at the 2018 American Association for Cancer Research or AACR Annual Meeting. This study identified a synthetic lethal interaction of 253 in cancer cells deficient in BRCA1 or BRCA2 function, causing these sales to be hypersensitive to 253.

The research team found the 253 stabilizes certain G.

quadruplex DNA structures, which can elicit the DNA damage repair response and exhibit synthetic lethality comparable to olaparib, an FDA-approved targeted therapy that acts against cancers in people with hereditary BRCA1 or BRCA1 mutations, including some ovarian, breast and prostate cancers, although through a different mechanism than 253.

The important thing here is that these findings revealed potential new solid tumor indications for 253, in which patients with defined mutations can be genetically identified. We will continue to explore this avenue and it could open the door for future partnering opportunities for 253.

In addition, a critical role for MYC has recently been identified in B-cell malignancies, particularly as those cells seek to become resistant to current therapies with improvement in other agencies. This two may become an additional avenue for development 253 in new indications.

However, MYC is well validated has a target in AML and such cells have exhibited particular sensitivity to 253. For these reasons Aptose is focused for now on development of 253 for patients with AML. So now let's turn to CG-806.

CG-806 as I will refer to you is a pan-FLT3/pan-BTK multi-cluster kinase inhibitor being developed as an oral agent for the treatment of patients with AML and certain B-cell malignancies.

Our preclinical work with 806 has demonstrated its superior both potency and breadth of activity on AML patient samples relative to other FLT3 inhibitors, its superior ability to kill B-cell malignancy patient samples relative to ibrutinib and a favorable safety profile.

We and our scientific advisors believe that 806 has the potential to serve the transformational agent for multiple hematopoietic cancers including AML, CLL and others. In our last call we spoke about our decision to execute early and exercise with option from CrystalGenomics and obtain a full license to 806 and attendant IP estate.

And that was executed in the second quarter. That option gave us global rights to develop and commercialize 806 for all indications outside of Korea and China. Subsequently in June we licensed rights to the China territory from CrystalGenomics, which includes the People's Republic of China, Hong Kong and Macau.

A strategic decision which gives us worldwide rights to 806 excluding only Korea. We continue to strengthen the IP around 806 and in July we along with CrystalGenomics announced that the Japan patent office issued a patent for 806. The granted patent claims various compounds including the 806 compound.

Pharmaceutical compositions comprising that 806 compound. And usage for the treatment of various diseases including cancer. The patent is expected to provide protection until the end of 2033. This newly issued patent extends the 806 patent protection into an important market and is a welcome addition to the U.S. patent that was issued last year.

June was indeed a busy month for us and we are pleased to present 806 data at the 23rd Congress of the European Hematology Association or EHA Meeting, which took place in Stockholm, Sweden. The poster presentation compared to 806 with ibrutinib, a BTK inhibitor approved for the treatment of certain hematologic malignancies.

With respect to BTK binding mode, kinase inhibition profiles and cytotoxic activity in malignant cells derived from a bone marrow of B-cell malignancy patients and tested ex vivo. 806 exhibited a broader range and greater potency for direct killing of patient derive hematologic cancer cells than ibrutinib.

From our fellow science geeks and I know you're out there, kinase profiling reveal that 806 most potently inhibits kinases from the BTK FLP3 track and over a kinase clusters and Aurora kinase clusters and had similar potency against the BTK wild type and the BTK C481S mutant.

As appose to ibrutinib that was greater than 60 fold less potent against the BTK C481S mutant. CG-806 did not inhibit TEC, EGFR, HER-b2 or HER-b4, which are related to ibrutinib side effects. 806 directly killed 14 tested malignant B-cell lines, 2,000 to 6,000 times more potent than did ibrutinib.

Importantly 806 also killed primary samples derived from the bone marrow of CLL patients far more potently than did ibrutinib. The poster is available on our website for those of you who might wish to state the details further. This is an appropriate time for me to highlight the differentiation of 806 from ibrutinib and other BTK inhibitors.

Indeed, we consider covalent on BTK inhibitors to reside in one bucket of engines. The various non-covalent BTK inhibitors to reside in a second bucket of agent, and then 806 to reside in a completely separate bucket.

806 is more than just a non-covalent BTK inhibitor as it targets the wild type and mutant BTK driver kinases as well as to operate the rescue pathways represented by FLP3, the AKT mTOR F6K pathway, the Aurora kinase and downstream H3S TnCf genetic pathway and the Erk [ph] MYC pathway.

Such kinases and pathways are differentially operative in various B-cell malignancy cells. And 806 hit the sufficient number of these pathways to directly and potently kill a broad range of these cells.

Researchers often discuss the concept of indirect killing by ibrutinib and other BTK inhibitors that occurred via inhibition of BTK and BOK in the bone marrow supported cells, such as the stromal or nerve sac [ph] cells.

Causing these support cells to release chemical factors that instruct the malignant cells, such as CLL cells in the bone marrow to marginate from the supported lymphoid tissues and enter the blood stream where they longer receive support and stimuli and subsequently die.

806 also hit those same kinases and is expecting to insert the indirect killing effect as is seeing ibrutinib. However, 806 inhibits a sufficient number of kinase driven critical pathways in the malignant cells there it also causes direct killing of the cells.

That is why we see 806 potently killing such a broad range of malignant cells, collected from the bone marrow of B-cell cancer patients. Whereas ibrutinib is unable to directly kill broad range of such cells. These studies were conducted by Dr. Druker's program and they set apart 806 from all other molecules evaluated.

Separately, we continue to study the effects of 806 on AML cancer cells derived from the bone marrow of patients. Dr. Druker's lab also demonstrated that 806 openly and directly killed an AMF cell from patient bone marrow in a manner that is superior to all other FLT3 inhibitors tested.

Again this is because 806 is more than just a FLT3 inhibitor, as it suppresses multiple clinical pathways operative in the AML cells. In total, we worked with Dr. Druker to test 806 against nearly 600 patient derived samples.

We demonstrated the superiority of 806 to other agents and I'm unaware of any other company that has evaluated the drug so extensively, against this actual cancer cells derived directly from cancer patients. And we're working out another world class lab Dr.

Mike Andreeff at the MD Anderson Cancer Center also has evaluated 806 against the panel of oxygenic cells that along specific forms of FLP3 or BTK for their survival. And he and his team recently a PDS of patient-derived xenograft study with 806. The entire study with a PDX model was just submitted for presentation at ASH 2018.

And I reported a glimpse of the study last week in Spain. To give you the reader's digest version an AML patient with a FLT3 ITD was placed on a trial and treated with [indiscernible]. The patients achieved a complete response during the first cycle. But then relapsed during the third cycle.

Genetic analysis of the bone marrow indicated the patient had acquired an additional mutation in FLT3 at the D835 tyrosine kinase domain side. Ex-vivo analysis demonstrate that quizartinib even at 10 micromal was ineffective at killing those cells. But low minimal concentrations of 806 induced apoptosis in the cells.

Doctor Andrea then implanted those patient derived cells or patient cells in a murine model thereby creating a circulating patient derives xenograft of PDX model. By day 27 the graft yielded extensive bone marrow disease and circulating human CD45 positive AML cells housing the FLT3 ITD and DA35 mutation.

And at that point a group of mice were treated orally with [indiscernible] or for five days on and two days off with various doses of 806.

On day 31, 38 and 50 the cryto [ph] blood leukemic burned continue to expand in the untreated mice but were reduced to essentially base line in the 806 treated mice and the spleens appeared normal sized in the treated mice as opposed to the extent of splenomegaly in the untreated mice.

The study highlighted the ability of 806 to treat AML cell that have become entirely resistant to other drugs and hopefully the full study will be accepted for presentation at ASH. Again doctor Andrea and his team are performing a series of very difficult studies and continue to differentiate 806 from other agents.

Said another away the data continue to place 806 in a distinct bucket well differentiated from other FLT3 inhibitors and from other BTK inhibitors.

A safe and potent agent that inhibits all forms BTK and FLT3 driver kinase and other rescue pathways including AKT/PI3K pathway, ERK and MYC pathway, H3S10 and [indiscernible] pathways is greatly needed for B-cell cancer patients for intoler, refractory or resistant to ibrutinib or other BTK inhibitors and AML patients in intoler, refractory or resistant to various therapies and we look forward to initiating clinical development of CG-806 as soon as possible.

So where are we in the development of CG-806. In our last call we reported that we had manufactured 806 road steps and performed animal dose range finding studies where we've successfully dosed animals over a five day period.

Tolerability in the dose range finding studies then let us to establish 600 mgs per kg per day in mice and 240 mgs per kg per day in dogs as our high doses for IND enabling 28 day GLP tox studies. Since that time we have completed the in-like dosing portion in rodents and dogs of the IND enabling GLP tox studies and the recovery phase is ongoing.

We're pleased that 806 continues to be well tolerated and that we have not observed any unanticipated toxicities. Analysis and reports for the complete study are expected this fall. We are still on track to submit the IND this year and then expect to initiate first in human Phase 1 study soon thereafter.

To remind you we plan to develop 806 for patients with various B-cell malignancy and for AML patients, the details of those clinical activity are still under development and we will disclose our strategies to you as the year unfold. I now will turn the call over to our Chief Financial Officer, Mr. Greg Chow who will review results from the quarter..

Thank you, Bill and good afternoon, everyone. Before I discuss the financial results for the quarter I wanted to say a few words about the Common Share Purchase Agreement that we entered into during the quarter. As previously announced in May we entered into a Common Share Purchase Agreement with Aspire Capital for up to $20 million.

This is the second agreement that we've entered into with Aspire and replacing the first one that we entered into last October, which we fully utilized this quarter. Under the terms of the agreement Aspire Capital has committed to purchase up to $20 million worth of common shares of Aptose. At Aptose's request from time to time until April 2020.

The terms of this agreement are similar to the first agreement and Aptose will control the timing and now they're sold to Aspire Capital. There were no launch derivatives or other share classes associated with this agreement. To-date we have not drawn down the second agreement.

This $20 million agreement with Aspire and the aftermarket facility that we entered into with Cantor Fitzgerald during first quarter provides Aptose with access up to $45 million of potential capital. Additionally Aptose has an effective shelf, which gives the company additional flexibility in funding operations.

And now onto the financial information. We ended the quarter with $18.5 million in cash and cash equivalents and investments compared to $16.2 million at March 31, 2018. During the quarter we utilized approximately $9.3 million of cash in our operating activities compared with $4.1 million for the first quarter in 2018.

This increase in cash was due to increased activities surrounding 253 and 806 and primarily due to the one-time license fee payment to CrystalGenomics to acquire rights of CG-806 in amount of $2 million to acquire worldwide rights excluding China and Korea and subsequently $3 million for the rights in China.

Since the beginning of this year we've raised $15 million from the first committed equity facility with Aspire Capital and approximately $5.4 million through the aftermarket facility with Cantor Fitzgerald. We'd like to note that Aptose only have common stock securities outstanding and has no warrants, debt or other securities outstanding.

Moving on to the income statement we had no revenues for the quarter. Research and development expenses were $7.8 million for the quarter compared to $1.1 million for same quarter in 2017.

This increase is primarily due to a combined total of $5 million paid to CrystalGenomics to acquire worldwide rights outside of Korea for 806, increased expenditures on the 253 program including the manufacture of the GMP drug supply and the related stability and testing for return to clinic, increased 806 development activities including GMP manufactured API and drug supply to be used in the GLP animal tox studies and the clinic and the upfront payment of the GLP animal tox study, continuing development on improving GLP formulations to 806 and 253 and finally increased salaries related to increased headcount in clinical operations to prepare the return of 253 to the clinic.

G&A expenses for the quarter were $2.5 million compared to $1.4 million for the second quarter in 2017.

This increase is primarily due to fees associated with setting up the second Aspire common stock purchase agreement and higher patent filing fees, increased headcount and an increase in other administrative cost, which is Investor Relations, technology and travel supporting the growth in the company's operations.

Finally, our net loss for the quarter was $10.3 million or $0.30 per share compared to $2.6 million or $0.11 per share for the quarter ended in 2017. Excluding one-time items specifically the $5 million license fee payment to CrystalGenomics net loss for the quarter would have been $5.3 million or $0.16 per share.

I'll now turn the call back over to Dr. Rice..

Thank you, Greg. I like to open up the call for questions. Operator if you could please introduce the first question..

Our first question comes from the line of Joe Pantginis from HC Wainwright. You may begin..

Hey guys, good afternoon, thanks for taking the question. One question on both drugs, if you don't' mind. First Bill, how does the data - regarding 253, how does the data in the PDX model that you just discussed and thanks for that. And you presented in Spain differentiate 806 from other drugs for the treatment of AML.

I don't know if you could do a little more compare and contrast? Thanks..

Yes, I'll do that, so it sounds like you had now questions on two drug, different first. So the PDX model. So, you will recall that when we start - first started evaluating CG-806 we note inhibit FLT3.

And so we tested against the FLT3 ITD and against every mutant form FLT3 available out there we tested against the purified protein and it inhibited all of those in the picomolar to low nanomolar range. We can put each of those mutants into the arsogenic [ph] cell and the drug killed all of those cells in the picomolar to very low nanomolar range.

And what we are doing is, we are able to kill the cells, even when they have these I call them the bad boy mutations that we tend to see in the clinic especially those in the tyrosine kinase domain. So in particular patients who have FLT3 ITD mutation and then acquire the second mutation tyrosine kinase domain. Those are very difficult to inhibit.

If you look at the activity of other drugs, other FLT3 inhibitors against those particular mutations with the dual mutations. The other drugs were just not effective where as we found that 806 remained effective. And it sounds great to be able to test that with cell lines and then we would into patient samples.

Remember all those we took hundreds of AML patient samples, saw a very broad activity and very potent activity, better than any other FLT3 inhibitors. But then to really prove it before we go to patients. What we are able to do and I would say we this is Dr. Michael Andrea from MD Andersons and I give him and his group all the credit for that.

They identified this patient who fell the clinical trial, they identified the - pulled up in bone marrow and found that the patient indeed had acquired the second mutation. At the DA 35 site. And so the FLT patient felt therapy. And then they tried to test it against quizartinib or some of the other FLT3 inhibitors and they just didn't work.

And then they show that our drug inhibit them both ex-vivo and in that PDX model. So that gives us great confidence that this positions 806 to be the best FLT3 inhibitor out there and in fact we believe it's going to be ultimately the best drug for AML out there it is still preclinical and we know that with all the caveats to go it.

But these types of data give us confidence to go after even the toughest of the AML patients out there. So I hope that answers your question effectively..

No, it does Bill, thank you. And I apologize, I believe I misspoke as I think I said 253, when I meant 806, but my question regarding 253 is obviously you have had a broad set of interactions, as you were looking to get the drug off of clinical hold with the FDA.

So I was curious was there any interaction that you had with the FDA during the 30 day response period when you submitted the final response if you will to get it off hold..

Yes we did we had several interactions going back and forth, it was a very productive interaction and again, I give tremendous credit to the FDA, great individuals they know what they are doing, they know where to ask the questions.

So, the questions related back to you'll recall that the original formulation was based upon an HCL [ph] salt of the drug. It was than formulated in four excipients and it required being frozen for stability. Well, we moved away from that drug product and we now have a drug substance that is no longer the HCL salt it's the free base.

We moved one of the excipient so that instead of four it's now three. And it's also stable at room temperature. So in many ways this looks like a new formulation.

And so that was the basis for the discussions back and forth and we didn't - and the FDA wanted to be certain that we articulated that to the clinical site, investigators and the patients indicating that it really does represent differences from the original formulation, it's no longer the HCL salt, so no longer has one of the excipients and they wanted just to be certain as we disclosed that and that we have an entirely new cohort so the first cohort was with the HCL salt, now we have an entirely new cohort as we're naming it with the new formulation.

So there was nothing negative about that, it was just procedural. And we give the FDA great credit for that..

Very helpful. Thanks a lot, Bill..

Thank you Joe, appreciate the questions..

And our next question comes from the line of John Newman from Canaccord. You may begin..

Hi guys, thanks for taking the question.

and congrats in terms of getting - can you hear me?.

Yes..

Okay, great. Thanks for taking the question, Congrats for getting through a clinical holding it was a long process.

Just wondered Bill if you could talk to us a little bit about what dose escalation is going to look like for 253? I think that previously for the old formulation you had reached a level where you thought you might start to see activity, but if can recall correctly, the exposure levels with this formulation might be a little bit better.

So just wonder if you could refresh my memory on that?.

Your memory? So with the original formulation, we started off with 20 mgs per meter squared, one patient, advance to 40 mgs per meter squared one patient. And thereafter we went 3 by 3. The next cohort was 66 mgs per meter square all of those refined.

And then when we got to the 100 mgs per meter squared that's where we told you that we had expected to get into the therapeutic exposure range. But unfortunately that's where we had the participation and the infusion back, so we never got to test that. So we went back created this new formulation and your memory is correct.

We performed PK studies in breast [ph] at least four times now. and every time the new formulation has given us three 3x plasma exposures over the original formulation. So now, we are starting over with that same dose schedule. Remember I said that FDA see this as really a different formulation.

So we're starting over 20, one patient than 40 one patient and then 3 by 3 thereafter. Interestingly, if we start out at this 20 mgs per meter squared, if the 3x exposure is real in human, then we're already at the exposure level that we saw at that prior third dose level at the 66.

And then as we go up to the 40 mgs per meter squared, we're well beyond what we was expected in the fourth cohort with the original formulation. So we believe this is a superior formulation that is to be proven in the clinic, it has better exposure, it has better solubility, better stability. We don't have to freeze it, it's easy to work with it.

So we believe all the way around, it's a better formulation, we believe we can dose escalate and get much greater exposures quicker than we would have with the original and we are eager to get it into the patients.

Did that answer your question John?.

Yes. And I have just one follow up question kind of going even further back. I think if I remember correctly, the original formulation even though it was being dosed probably at a sub-optimal level.

If I can remember correctly, when it was tasted in lung cancer, which was years ago, even though the dosing was probably not optimal and the formulation obviously was not. There were still a little bit of activity seen there, if I can remember correctly. Just wanted to double check that..

No you are correct. And that was at a dose I think of about 120 mgs per meter squared. And it was on the wrong dosing schedule, they were dosing every two weeks rather than weekly. It was in the wrong patient populations that are not necessarily sensitive to the drug at least as far as we know.

So now we're very hopeful that we're getting the 3x exposure, we're in patients that tend to - AML cells that tend to be more sensitive. And again we're hopeful we'll see activity there. But your memory was correct, we actually did see activity in the lung cancer patient, c-Myc may have been involved there.

We don't know, we don't have samples from those patients, I wish we had, we would have wanted to look at those. But it's a good memory. So again all this gives us hope, we seeing activity in the clinic here..

Great, thank you..

Thank you, John..

And our next question comes from the line of Jotin Marango from ROTH Capital. You may begin..

Hi, thank you for taking my question and congratulations on the reversal of the hold. My question about 253, the dosing was just answered, but I'll ask you a question about 806, Bill, from one science geek to another.

So as you know, on the BTK side of things, the resistance that we saw to the full run rate ibrutinib spawned a whole new field of reversible inhibitors and you are part of that now.

Now on the FLT3 side of things, we are just starting to see resistance emerging to the original mitosporin what do we know about why AML would be resistance to FLT3 inhibition? Is there anything that we know yet about this resistance at the molecular level or maybe at the patient level? And is this now starting to look like a development path which is potentially faster similarly what we saw on the BTK side? Thank you.

,.

Actually you're right on target well done Jotin.

So the patients who are getting treated with many of the FLT3 inhibitors, for instance, the patient I mentioned earlier that was on a trial that was on sorafenib, the patient was on sorafenib and he decided it sorafenib is a FLT3 inhibitor, but it's also a dirty molecule, so it doesn't inhibit FLT3 that well.

So what arose that additional DA 35 mutation. We're seeing more and more of those DA 35 mutations rising from patients that are on quizartinib and even on midostaurin.

But midostaurin is a little bit of a different story that is a - and I'll call it is a very dirty kinase inhibitor it's originally developed for a really different kinase, but they kind of had FLT3 inactivity and they actually pushed it through for AML. It is extending the lives of patients and that's a great thing.

But resistance is beginning to occur. Some of those resistance mutations are occurring in FLT3, but interesting is you're starting to see some of the other pathways popup protecting the cells.

And this is what I'm always talking about is if you don't have a drug that is effectively a multi-drug therapy all in one and you don't get enough of those critical pathways, then you're going to get drug resistance. We hope 806 is able to do that.

And we expect as more and more patients are being treated with midostaurin and they are that we're going to see more of these resistance populations popup. And that is the population that we definitely we want to go after and hopefully in combination with other drugs too. So another good catch on the 806 there..

Thank you..

[Operator Instructions]. And our next question comes from line of Ret Brown [ph] from Lazard Asset Management. You may begin..

Good afternoon guys and thanks for taking the question.

Bill, I was hoping you could maybe help put into context for us how you see the differentiation and potential positioning of 806 versus some of the other second gen BTK inhibitors that are in development such as Beijing's acalabrutinib?.

So everybody's asking me to geek up to that. So let's put 806 in comparison so you mentioned the Beijing compound. And that is a covalent BTK inhibitor. So it's in many ways it's similar to the ibrutinib and the acalabrutinib those are co-inhibitors. But they don't maintain strong potency against the C481S mutant.

So I see the Beijing compound as being - as going after that same population trying to compete with ibrutinib and acalabrutinib. And I think that's probably a major path that they are going to pursue in China. I just don't know how effective that's going to be in the U.S. unless they can truly differentiate themselves in terms of side effect profile.

Now the other BTK inhibitors that have been spawned once. Well, again the original BTK inhibitors were covalent and out of that you got the emergence of drug resistance that C481S and that found this population of non-covalent BTK inhibitors. [indiscernible] ours does fall in many ways into that bucket it is a non-covalent BTK inhibitor.

All of us are very effective against the wild type and that C481S mutant of BTK. So the differentiation really is going to come down to what other pathways are you able to target and inhibit effectively in a broad group of cells from patients. So that you can minimize the incidence of drug resistance and also minimize the side effect profile.

We believe that pathway that we hit with 806 are going to differentiate us very well from all of the other covalent and non-covalent inhibitors. We believe it's going to give us better activity.

And once we get into the clinic, we want to go after patients who have failed all forms of drugs from the B-cell malignancies, whether it would be immunotherapies or covalent or non-covalent BTK Inhibitor, because we think we differentiate and that's why we put 806 in a completely different bucket from the covalent or non-covalent BTK Inhibitors.

Was geek ness, or do you need a little more?.

No, thank you. That was very thorough. Thanks again..

Thank you..

And our next question comes from the line of Lewis Alberc [ph] from DRW. You may begin..

Hi, thanks for taking the question. I'm obviously not without obviously, but I am not a science geek.

So I have a question about the market in terms of, what the space is with 806 that you are planning on carving out essentially, I mean, relative to ibrutinib and some of the other molecules sort of what sub-sector of that market or are you looking at focusing on or would you view this as something that could be used broadly in competition with ibrutinib?.

Well, we're going to develop this drug both for AML and for B-cell malignancies. So let me start with the AML first, and we don't have to geek out too much things with this. So for AML, our does escalating trial, once we get into AML we're going to try to go after all patient with AML, not just those with the FLT3 ITD.

So we're not going to fraction that population immediately. We want to get through the dose escalation trial as soon as possible, identify a recommended Phase 2 dose and see it response. After that we'll take a look at the data and see what populations might we want to go after to get more of a rapid data set and a rapid approval.

This is what Jotin Marango was going after a few minutes ago. Are those going to be some of these AML patients that have just failed [indiscernible] in the other FLT3 inhibitors it very well could be. Is it also going to be the older population that does not tolerate well many of the other drugs because our drug is well tolerated that very could be.

So we want to ultimately going after all populations in AML and we believe that we'll be able to do that. But you have to also go after the patient population where you believe you can get most rapid approval and then maybe in the sub-populations that we just discussed. Now from the B-cell malignancies.

Again, the dose escalation we want to go into all patients who have with all the different B-cell malignancies that have felt either the covalent or non-covalent BTK inhibitors or the other types of drugs used to develop to treat these malignancies. So we'll broadly go after through the dose escalation.

But we'll also be looking for sub-populations where we see the best activity.

I actually presumed that once we get out to the point where we began to perform the expansions after the dose escalation portion of Phase 1, it's going to be in patients who had felt ibrutinib the covalent and the non-covalent inhibitors and we should be able to go after those patients directly.

And that would differentiate us from all the others that would be a very rapid path for approval. And then we'll begin to expand that into the broader populations going forward. The other thing that we want to do is, and this is a little bit more speculative at this point.

It assumes we're able to get a strong database on safety in adults, we have a lot of interest from clinical sites go after the pediatric population certain B-cell malignancies and that's something we want to look at that may be through investigator initiatives, clinical trials are with INDs from other institutions, but we also have interest there.

So we will allow the data as we always do to drive us. But those are the groups that we're most likely looking at to get the most rapid approve..

Yes. Thank you very much. It's very helpful..

Okay, thank you..

And I'm showing no further questions at this time. I'd like to turn the call back to Dr. Rice for closing remarks..

All right. Well everyone thank you for joining us today. We thank all of you for your continued support, your deep questions especially as we prepare to reinitiate the patient dosing in the 253 clinical trials with the first clinical supply.

We do remain confident in the potential of 253 is an important option for patients with acute myeloid leukemia and other hematologic malignancies. We also look forward to recording our progress of this program as the year goes on. And also keep announced for the continued considered advancement of 806.

We hope to be able to put out information towards the end of the year on the preclinical data, the talks data I know we are waiting to see that so keep your open for that and hope to be able to present some deep data ASH. Also please note our recent webcast and presentations can be found on our website at www.aptose.com.

And once again we always thank you and have a good evening everyone..

Ladies and gentlemen thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a great day..