Good afternoon. My name is Dillon and I’ll be your conference operator today. I would like to welcome everyone to the Aptose Biosciences Conference Call for the Fourth Quarter and Year Ended December 31, 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. As a reminder, this conference call maybe recorded. I would now like to introduce Susan Pietropaolo. Please go ahead..

Thank you, Dillon. Good morning and welcome to the Aptose Biosciences conference call to discuss financial and operational results for the fourth quarter and year ended December 31, 2018. I am Susan Pietropaolo, Communications Representative for Aptose Biosciences. Joining me on the call today are Dr. William G. 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 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 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?.

one, they confirm MYC as the target of 253. Two, they demonstrate the difficult modifications a cell must acquire in order to become resistant to 253. And then, three, they aid in the selection of combination agent for future clinical trials. To date, 253 is demonstrated a robust safety profile in humans.

Most importantly, 253 does not call toxicity to normal bone marrow functions, differentiating it from other therapies that attempt to inhibit MYC.

In addition, preclinical results demonstrated the ability of 253 to induce apoptotic cell death in multiple types of blood cancer cells, including AML as well as in vitro synergy with various classes of conventional approved and investigational therapies for AML or myelodysplastic syndromes or MDS.

From what we've seen thus far, we believe 253 has the potential to benefit a large patient population across various therapeutic areas and we have begun our clinical development in AML.

So where are we in the clinical development of 253? I’m happy to report that in our Phase 1b open label dose escalation trial with 253, we successfully completed 28 day cycle of our first patient. As we explained in our last call, our protocol requires only one patient in each of the two lowest dose levels.

Our first patient received the lowest dose of 20 MYCs per meter squared, once weekly over 28 days. And the drug was tolerated favorably. In addition, we performed biomarker analysis from that patient and we observed evidence of target engagement.

During the 28 day cycle, the total amount of MYC gene expression in the PBMCs was reduced by more than 70% with a clear downward trend each week and a reduction in MYC gene expression and measured 24 hours after each dose.

Likewise, the p21 protein was induced an indication of cell cycle arrest and apoptosis, all of which is consistent with MYC target engagement. And yes, these are data from one patient only and at the lowest dose and there is no guarantee that such trends will be observed in the future patients.

Nevertheless, we're pleased to see these trends and to be moving forward to our second patient. As we mentioned on our last call, we are very carefully selecting patients for the first two dose levels. The first dose level is complete and now we’re screening for patient -- for our second cohort that will receive a dose of 40 mgs per meter squared.

The process to find the right patient with high-performance status takes time as relapsed refractory AML patients tend to be acutely sick and seeking a patient who likely can complete the second dose level with a favorable tolerability profile and without the need to expand at that dose level to additional patients.

We hope this careful approach will allow us to progress to higher dose levels more quickly. This Phase 1b study is expected to enroll up to 20 patients with refractory -- with relapsed refractory AML or high-risk MDS and then to transition to single agent expansion cohorts in AML and MDS as appropriate, followed by combination studies.

As mentioned previously, many B-cell malignancies also are reported to over express MYC and depend on MYC for survival. Consequently, we found that B-cell cancer cell lines as well as bone marrow samples taken directly from B-cell cancer malignancy patients such as CLL and ALL, are surprisingly sensitive to 253.

The MYC inhibition we observed with the first patient with AML also supports 253s potential to target MYC and B-cell malignancies. And if the data continue to warrant it, we will pursue an amendment to our IND to include such B-cell cancer patients in the Phase 1 clinical trial.

We currently have four clinical sites actively screening patients for the study. We are continuing to bring additional clinical sites online and expect additional sites to be initiated in the near-term. And we expect that dose escalation will continue to the end of the year.

However, to be consistent with our policy of transparency, we intend to provide meaningful clinical updates of this open label trial when appropriate during the year and hope to report data from this study at ASH in December. Finally, I wish to thank the clinicians families and patients for the willingness to participate in our APTO-253 trial.

These are very sick patients and we don’t want to lose sight of the fact that they are working with us to create better drug. Now let's turn our attention to CG-806 or 806, I will call it.

806 is Aptose's oral small molecule non-covalent kinase inhibitor that totally inhibits all wild type and mutant forms of the FLT3 kinase and all wild type and mutant forms of the BTK kinase. 806 truly is a first-in-class agent as a pan-FLT3/pan-BTK multi-cluster inhibitor.

And it is being developed for the treatment of patients with select hematologic malignancies, including patients with relapsed or refractory chronic lymphocytic leukemia or CLL, including the C-41 as mutant CLL population as well as for non-Hodgkin's lymphoma and patients with relapsed or refractory AML and MDS.

806 stands out, because it target specific cancer promoting driver kinases, such as -FLT3 and BTK. And it suppresses additional cancer survival pathways, such as the ERK, Akt, MYC, and H3S10 pathways in order to kill the heme cancer cells. Both in atypical safety sparing precision.

Indeed, 806 stands in a class of its own, distinct from other FLT3 inhibitors or non-covalent BTK inhibitors. During 2018, we completed all required ID [ph] enabling studies and a host of additional safety studies to prepare 806 for the clinic.

Due to the favorable safety outcomes of the standard GLP talks and xenograft studies, we took the added steps to conduct additional cardiovascular, respiratory, CNS and genotoxicity studies, which also demonstrated favorable safety outcomes.

In addition to our capsules for the clinic, 50 mg and 150 mg jolting capsules oral delivery have passed the initial 28 day accelerates stability testing and are well prepared to initiate dosing upon allowance of the IND. As most of you are likely aware, we submitted an IND to the FDA for 806, two and half weeks ago.

And we're planning first to conduct a Phase 1 trial with orally administered 806 in patients with relapsed or refractory B-cell malignancies.

This should include CLL, SLL and non-Hodgkin's lymphoma patients who failed or who are intolerant to spend therapies, including patients with B-cell cancers having the C41s mutant form of BTK or other mutations that render their tumors resistant to covalent BTK inhibitors such as ibrutinib.

Pending regulatory allowance of the IND, we would expect to initiate our first clinical trial with 806 in the second quarter of this year. In this trial with B-cell malignancy patients, we plan to determine the pharmacokinetic safety and tolerance properties of 806 with the twice daily oral administration regimen over 28 day cycle.

And plan to watch for clinical benefit and measure a series of markers of disease status.

These marker should include FDG Pet scans to look for tumor volume and cooling for phospho BTK and phospho FLT3 levels, and perform a plasma inhibitory assay or PIA assay, to determine if the plasma at different time points after dosing has 806 levels that inhibit the target kinases and suppress key oncogenic pathways.

We also plan to measure, say around CCL3 and CCL4 levels as well as certain to be a more DNA levels. To be clear, 806 uniquely and potentially inhibits both the wild type C41S mutant forms of BTK as well as the other oncogenic pathways used by B-cell cancers to survive.

And we expect to see robust clinical responses from 806 and its patient population. Now just as we stated with the action of 806 on wall type and mutant BTK, 806 also potently inhibits the wild type and all known mutant forms of FLT3 as well as the other oncogenic pathways used by AML cells to describe.

Because of these properties, we believe 806 can uniquely serve a broad spectrum of the AML population. And we wish to be thoughtful and deliberate in our approach to the treatment of AML patients, because AML patients tend to be acutely ill. We do not want to treat them potential -- with potentially sub-therapeutic doses of 806.

Rather we would plan to collect PK data from the B-cell cancer trial. And identified dose level that could represent a likely therapeutic dose for AML patients. Once identified, we plan to seek allowance from the FDA to move 806 into the relapsed refractory AML and MDS patient population in a separate Phase 1 trial.

And we plan to safety, tolerability and pharmacokinetics of 806 as well as potential clinical benefit in these patients. As we mentioned in our last call, we may consider performing a single ascending dose or SAD healthy volunteer study.

If the first dose levels in the B-cell cancer trial do not appear to deliver exposures that likely would be therapeutic for AML patients.

Then we may decide to perform a SAD study and healthy volunteers to quickly collect PK data that will allow us to model the PK properties of 806 in humans and selected dose that would likely be therapeutic for AML patients. We want to be very data-driven in this process and responsive to the request of the FDA.

Well, I’ve more to discuss on this matter in a few weeks. But be certain, that we’re taking the appropriate steps in accord with the FDA and the needs of the AML patients to select the appropriate starting dose for AML patients. As you can imagine, it's an important step for Aptose to initiate dose in the patients as soon as possible.

Likewise, it's important for us to articulate that the rational for developing 806 for both the CLL, B-cell cancer population and AML MDS population its right from our extensive preclinical program. As you know we’re now in our collaborative researchers have gone to Great Lakes to collect a preclinical data that differentiate 806 from other agents.

We present a data at ASH in December of 2018, exploring the mechanism of action of 806 and showing the drugs unparallel ability to totally inhibit all then forms of FLT3 and BTK and to suppress multiple oncogenic pathways.

They into a cribbling of the molecule cell, an avoidance of rapid emergence of drug resistance, which are fortunately -- unfortunately occurs with many other therapies. Indeed, 806 is not your standard FLT3 or BTK inhibitor.

And in vitro loaboratory efforts have been unable to generate drug resistance in AML or lymphoma cells after more than two years of continued exposure of cells to the drug in vitro.

Another data presented at ASH, the MD Anderson cancer center team compared 806 to the FLT3 inhibitor, lestaurtinib 806, but not lestaurtinib efficiently reduced the in vitro phospho FLT3 levels and potently killed FLT3 mutated cells, even the presence of mesenchymal stem cells.

Likewise, 806 has a profound proapoptotic effect on primary AML patient itself. And a patient derived xenograft or PDX model, midostaurin grafted with the FLT3 ITD plus DA35, dual mutated bone marrow cells from a FLT3 inhibitor resistant AML patient. That patient represents a very difficult to treat population.

Yes, 806 readily produced a leukemic burden, extended survival in the PDX model indicating that 806 may be useful in the treatment of an emerging population of AML patients that are resistant to other FLT3 inhibitors. Importantly, this may also serve as a path for rapid approval for 806. Data from Dr.

Brian Druker's group at OHSU demonstrated that primary cells from patients with diverse hematologic malignancies are highly sensitive to 806.

In particular, his laboratory measured the IC50 of 806 against more than 200 AML patient bone marrow samples and related to sensitivity of samples to the mutation profiles and RNAC gene expression profiles from those samples. As anticipated, appears that our patient samples were broadly sensitive.

And that FLT3 ITD samples were highly sensitive, as expected. Surprisingly in a new finding presented at ASH, he showed that primary cells from AML patients with the IVH 1 mutation found in estimated 6% of AML patients demonstrated high sensitivity to 806.

This unexpected finding further broadens r 806's potential use, have potential parents for rapid development. Also presented at ASH in collaboration with the OHSU Knight Cancer Center.

Stated value of 806 with more than 100 samples are freshly oscillated bone marrow from CLL patients, demonstrate that 806 exerted far broader activity and far greater cell killing potency kind of ibrutinib. In parallel studies, 806 killed a malignancy alone and B-cell lines with potency that was 50,000 to 6,000 times greater than that of ibrutinib.

The ability of 806 to kill malignant cells was further analyzed on cultured and primary malignant B cells in the presence of stromal cells unlike other agents, 806 maintain full potency.

806 was also shown to be significantly more potent than ibrutinib at inhibiting malignant B-cell information, migration and inducing Aptose's in the presence of stromal cells. Moreover, 806 potently killed cells resistant to ibrutinib.

Aptose's has reported new results from the 28 day GLP toxicology and toxicokinectics study of 806 which continue to demonstrate a highly high favorable safety profile. One of the more interesting preclinical studies that was initiated during the fourth quarter of 2018.

And continued into 2019 with a long-term preclinical study in Mice, bearing the MP411, FLT3 ITD AML. In this study, we demonstrated that am oral 28 day dosing of 806 could result in cures of my expectation and continue out to the end of the study at 120 days at doses that generated no observed toxicity.

Yes, 120 days, thereby demonstrating the effectiveness and the durability of 806. Earlier in 2018, our researchers also presented at EHA, the European hematology association and you see are the American Association for Cancer Research conferences.

All of our preclinical work is available on our Web site, but to quickly summarize the wealth of pre-clinical data, 806 is demonstrated superior potent -- potency and breadth of activity on AML patient samples relative to other FLT3 inhibitors. As demonstrated superior ability to kill B-cell malignancy, patient samples relative to ibrutinib.

It has demonstrated the ability to eliminate our cure tumors and animal models in the absence of toxicity. And has demonstrated a robust safety profile on all of our IND enabling studies to date. 806 checks a lot of boxes.

We and our scientific advisors are particularly excited about 806 and believe that it has the potential to serve the transformational agent for multiple hematologic cancers, including AML, CLL, and others. We are always proud to say that we work with clinical research teams that are second to none.

And all of them are eager to initiate dosing of 806 in patients. Toward the end, we are delighted to host a KOL or key opinion leader of the event in December, a featured Dr. Brian Druker, Director of the Night Cancer Center, an recipient of numerous awards. Dr.

Druker, who chairs our scientific advisory Board has been involved in the testing and development of 806 and many other hematology drugs. And he is among the most sought after in the claim researchers in the space. We often get to ask what differentiates 806 from other hematology drugs on the market or in development. Dr.

Druker's vast experience which includes the development of Gleevec, the first molecule to target a specific kinase, given him an important perspective on the current treatment landscape in AML and B-cell cancers. And we appreciate that he shared his enthusiasm about 806 with the analyst and investors an attendance and on the webcast.

The link to the webcast is on our Web site and if you havent listened to it, I will encourage you to do so. To wrap up on 806, I want to mention that in May of 2018 Aptose exercise its option to obtain exclusive license from CrystalGenomics to develop and commercialize 806 worldwide outside of China and Korea.

An additional agreement in June, extended that license agreement to include in China. We also continue to build IP around this important asset. In September, we're granted a European patent for 806 and its uses, and just last week we announced that we had a similar Austrian patent that was issued.

These patents add to previously issued 806 patents in the U.S and Japan, and are expected to provide protection at least until the end of 2033. In addition, earlier in 2018, 806 received a patent allowance in China and this represents an important market into the future for 806. I will now turn the call over to our Chief Financial Officer, Mr.

Greg chow who will review additional highlights and the financial results from the quarter..

Thank you, Bill and good afternoon, everyone. Before moving on to the financials, let me quickly touch on additional news highlights from the year.

Early in 2018, we announced an exclusive global license agreement that provided oncology associated with India's life-sciences with the right to the development manufacture and commercialization of APTO-581 as well as related molecules from Aptose's BET kinase inhibitor program.

The deal has the potential to provide Aptose with up to a $125 million in milestone. This transaction provided a whole for noncore asset and it's the potential if bring new assets to patients a meaningful and non dilutive net funding for Aptose in the future. During 2018, we also added two value members to our Board of Directors. Ms.

Caroline Loewy and Ms. Carol Ashe. Both of these ladies were accomplished executive leaders in the biotech and pharmaceutical industries and we’ve already benefited from the breadth and depth of their experience. During the year, OI science driven and data driven, we presented the major hematology meetings, AACR, EHA and ASH.

And we continue on that track with two upcoming presentations at AACR in April this year. We’ve also submitted an abstract for consideration at the 2019 EHA meeting in June. We’ve reached a critical stage with two exciting compounds that may fill great unmet needs in hematology.

We know it is incumbent upon us to give our products the best chance of success, and so ultimately reflect the true value in Aptose. Now let's turn to the financial overview. We ended the quarter with $15.7 million in cash and cash equivalents and investments compared with $15.6 million at September 30, 2018.

Subsequent to December 31, 2018, we raised $6 million through the common stock purchase agreement with Aspire Capital and a nominal amount from the aftermarket facility with Cantor Fitzgerald.

Today we’ve over $18 million in cash and cash equivalents and investments, which along with the availability from the ATM and Aspire facility provides cash runway well into the first half of 2020? This comfortably allows us to initiate our clinical trials and collect meaningful clinical data without the need for a near-term financing.

During the quarter, we utilized approximately $5.6 million of cash in operating activities, which were attributable to increased activity surrounding 253 and 806 and general and administrative purposes. Moving on to the income statement, we had no revenues for the quarter.

Research and development expenses were $4.2 million for the quarter and this is attributable to increased 806 development activities which include completing the IND enabling studies for 806 and prepare the IND itself.

Continuing development on improving GMP formulations for 806 and 253 and increased salaries related to increased headcount and clinical operations to prepare for the CG806 clinical trials. General and administrative expenses for the quarter were $2.1 million.

This was -- this increase was primarily due to an increase in stock-based compensation and increases in administrative costs such as investor relations, technology, travel, office space expansion consulting fee supporting the growth of the company's operations and an increase in legal costs related to the patent filings now that we have worldwide rights to 806 outside of Korea.

Finally, our net loss for the quarter was $6.3 million or $0.17 loss per share. Before I turn the call back to Dr. Rice, I want to inform everyone that as of December 31, 2018 Aptose became a domestic issuer. Meaning our filings will be consistent with those of a U.S-based company.

We will be filing our annual reports on Form 10-K and a quarterly statements on Form 10-Q. As a result of this, the $100 million shop registration statement that we saw last year on Form F10 which is a foreign filing becomes obsolete. And we will be filing a new $100 million mixed-use shelf on Form F3 to replace that.

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

Bill?.

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

Thank you. Your first question comes from the line of Matt Bilger from Oppenheimer. Your line is open..

For taking my question. Congrats on all the progress. Maybe a little bit more detail on the first patient treated in the 253 trial.

Can you tell us if the patient is still on therapy, and if there's been any indication that the innovation of MYC is translating to early objective signs of activity? And also do the kinetics of MYC in addition, you’ve seen so far suggests that once weekly dosing is sufficient or might you think of potentially increasing the dosing frequency for optimal inhibition?.

All right, Matt Bilger. So the first patient on the 253 trial, this is an AML patient top performance patient. He was able to complete the 28 day cycle. We actually were quite shocked and pleased to see the reductions in MYC and the increases in p21 during that 28 day cycle. Again, we dose once weekly for four weeks.

And after each dose we observed 24 hours later a decrease in the expression of MYC in the PBMC samples where we collect total RNA from PBMC. So that patient is no longer on study. They completed the 28 day cycle. But at the end of that cycle, there was no real reduction in the in the blast counts of the patients, who was not doing poorly.

But they also had received no apparent benefit. At the time the physician-- the attending physician thought it was best to just move them off the studies, since we did not see any major benefit and that was done. However, couple of weeks later we gleamed the data on C-MYC and p21.

And what I would say is both that physician and the other physicians that are announcing the data, would be happy to continue patients as long as they’re doing well on this drug to see if their continued decrease is in the MYC, end of the year and to the cycle 2. cycle 3 and on.

So what I can say is the impact of MYC reductions was meaningful for us, it was meaningful for the clinicians that are treating these patients. Again, we were all shocked and related really to see target engagement and to truly see MYC inhibition in the absence of any bone marrow suppression or toxicity.

But again that patient did received no observed benefit. So in terms of changing the frequency, it's difficult to change the frequency. If you're dosing IP. So at least for our -- end of the near future we want to understand the tolerability and the effect once weekly as we increase the dose level.

So that’s the next thing we have to do is begin increasing the dose levels hopefully we'll see stronger benefits of the patients going forward. If then safety allowed us then to increase the frequency, we would continue doing so. But in reality, hope this shows us is that 253 could be an active MYC inhibitor, without causing myelosuppression.

And that's saying a lot. I don’t think anybody's ever said that with any other molecule. And so what we're trying to do is position for the future. Ultimately, we want to have an oral drug that we can dose daily. That’s going to be for AML, for B-cell malignancies as well as some of the solid tumor indications that we're -- we want to pursue.

So the best way to answer your question is really to indicate that it's great to see this activity with IV administration and that is feasible in the AML population. But ultimately we want to get that once daily oral dosing to hammer these tumors as hard as we can and then to also expand out into other indications, I mentioned.

The additional solid tumors even with their specific populations that we can go after there.

So anything else, Matt?.

No, I think that makes a lot of sense. Looking forward to that data at ASH, I guess, you kind of alluded to..

Yes. Okay. Thanks for calling in. I still appreciate it..

Okay.

Can I take one more in there?.

I’m good with that. Yes, please..

Okay. Maybe we can do a question on the clinical strategy for 806. So given -- in light of the progress that some competing molecules have shown recently CLL and obviously the approvals that we've been seeing in FLT3 positive AML.

Do you believe that there is any opportunities for an accelerated approval pathway for 806? And can you speculate maybe on what dose indications or settings might be?.

Absolutely. So that’s something we spend a great deal of time trying to identify those subpopulations that are of high unmet medical need. For instance, you just put out -- you and your team put out the AML survey of the various heme docs. And a couple of things came out. One is that the -- there's an unmet need in patients who are unfit.

These are the older patients that its difficult for them to be treated and the induction therapy with the cytotoxin. So that’s the patient population that needs a strong targeted agent that’s also well tolerated.

Also, patients who are going for re-induction therapy, the physicians are looking for the targeted agents again, especially they can target the FLT3 and IND mutated patients. And it turns out our drug in target for both of those populations. There are a couple of other populations in AML that are emerging.

So as we mentioned a couple of new molecules have been and are on the docket for approval. If you look at the FLT3 inhibitors, so we have the midostaurin, ibrutinib and possibly a little bit later this year we might even see quizartinib. What that means we're starting to treat a lot of patients with FLT3 inhibitors, that’s great. It's extending life.

Downside of that is, you're also getting drug resistance in those patients. And we've already seen that once you get the drug resistance induction because of 35 or some of these mutations, none of the other FLT3 inhibitors work. So this patient population that is emerging, it's the FLT3 inhibitor resistant population.

And we’ve already demonstrated that. Our drug actually works on that population. And so we believe that could be a path for rapid approval. Also the fact that we hit this IDH-1 population and some of the IDH-1 inhibitor are out there. You’re starting to see both toxicities as well as the emergence of drug resistance there as well as with venetoclax.

There have been a number of papers, articles coming out showing mutations that occur in cells that are resistant to venetoclax and we believe our drug can treat those. That’s with the AML. On the B-cell side, clearly you got the population that have the C41S mutants that are resistant to all the covalent BTK inhibitors. We want to go after those.

There are other companies going after those two. But we believe that we can go after the patients that become resistant to covalent as well as other non-covalent BTK inhibitors because our drug works differently and hits a different set of kinases as well as the patients who are becoming resistant to the venetoclax in the CLL population.

So we see a number of different populations. We could go after there with high unmet medical needs with potential for rapid approval in these pathways.

Okay?.

Okay, great. I will jump back in the queue..

Thank you..

Thank you. Your next question comes from the line of Gregory Renza from RBC Capital Markets. Your line is open..

Hi, guys. Thanks for taking my question and congratulations on the progress..

Hi, Greg..

Thanks, Greg..

Yes, just to build on Matt's question with respect to the recent disclosures from competitor program, I was wondering if you could provide and help put that data into context aligned with 806 namely the response reduction that was revealed at first scan as well as based on the early characterization of 806 what are your views on some of the safety findings that had been revealed.

So any thoughts you have as 806 would be interested in your views. Thank you..

All right. Thanks Greg. I will see if I can unpack that one. So the competitor, I’m happy to name them, it's ArQule. So let me just say, we were thrilled to see the information released from ArQule.

There's been this question we’ve seen that the covalent inhibitors BTK inhibitors have shown benefit in the clinic, but really the non-covalent BTK inhibitors had not really shown true benefit to date. And there was a question, could they actually do so.

Well, the data coming out from ArQule are great for all of us, because it shows that a non-covalent BTK inhibitor can truly show benefit -- demonstrate benefit in these patients. So the way they show that, so they started at 5 milligrams, went up to 65 milligrams and they’ve seen increasing benefit in patients.

So one of the things they look at is the phospho BTK over total BTK. And even at the low doses they started seeing dramatic reductions in the phospho BTK, and that's great. But if you'll notice they didn't really see that much efficacy at the lower doses up until they got to the higher doses.

At the higher doses its 65 milligrams, they just reported that they had an 88% reduction in the tumor volume. They did [indiscernible] and this is in a CLL patient that have the C41S mutation that’s the population that they really want to go after.

And this patient in the [indiscernible] also failed one of the covalent BTK inhibitors at [indiscernible]. So it was great news. The question is if they saw BTK, phospho BTK inhibition at some of the lower doses, why did they not see benefit in the patients true benefit until the higher doses.

And it comes down to yes all of this can turn off the BTK, the phospho BTK, but to truly start having an antitumor effect, you have to get to the higher doses where they’re starting to inhibit the other kinases in there.

And so that's the reason, because these -- I think I described to people recently so if you got the BTK and you’re inhibiting it, so think of the BTK as the interstate, your drug inhibits that lane.

But then the -- suddenly the BTK C41S lane opens up and then the cell can survive or if you got a drug that can inhibit wild type and the phospho BTK, where is it going to go? Will you start going the surface treats? And the surface treats are all these other cell signaling pathways that the cell use to survive.

And if you have -- and those are driven by different kinases, so you have to start cutting off enough with those to really have the traffic effect or the antitumor effect. So it's clear that as they began to dose up, they were starting to hit more of those other kinases, they’re starting to have the antitumor effect. It was terrific.

But at that dose, they also had a great three rash. Typically we’ve seen that in the past when compounds will hit EGF receptor. And that causes gut and skin toxicity. So it may be that at the higher level they are inhibiting some of EGFR, some of the other kinases that are causing that.

So they did expand out to six patients, but it looks like they were able to recruit patients quickly and get on there. So I saw everything there's good news for us. Suddenly we are able to say, yes, the non-covalent BTK inhibitors work.

Yes, we are enabled to hit three, but you better hit -- excuse me, BTK, but you also better be able to hit those other kinases. And for us, we don't hit the EGFR. We've never seen anything that would indicate a rash. So in every way I think it's good news for us.

Did that answer your question, Greg?.

It sure did. Thanks, Bill. I really appreciate the color..

Yes, thank you for calling in..

Thank you. Your next question comes from Joe Pantginis from HC Wainwright. Your line is open..

Hey, guys. Good afternoon. Thanks for taking the question. First a question on 253 and then I guess I would call it a logistical question on 806.

Looking forward for 253, assuming clinical activity, Bill, can you discuss maybe what might be on your relevant combo wish list now that you’re accumulating more and more on the MYC inhibition side? What might be more exciting combo to you than others?.

Yes. Well, thank you, Joe Pantginis. I appreciate you call again. So for 253, one of the things that we learn from our mutation studies is, and again that’s the reason you do it is that the drug truly is hitting new MYC.

So we -- and in the past we thought, this drug is acting through a different mechanism, we might want to put it with a [indiscernible] inhibitor for AML. But that would not be the case now. So [indiscernible] inhibitors also get MYC. So we would want to develop a complimentary strategy.

Couple of molecules that we want to look at [indiscernible] clearly that’s a BCL-2 inhibitor. So it's you’re turning up anti-apoptotic activity, while still driving the proapoptotic activity with our drug. So we think that will be a great combination to go after and next we have a bit of data to support that.

Also some of the other molecules -- well the venetoclax is a well-tolerated agent relative to some of the cytotoxic agents. But at the same time we are going to be using cytotoxic agents going forward into the future. The [indiscernible] agents, so we feel and we’ve done combination studies in vitro.

And so we believe that there's a place for -- to put two part three along beside all those compounds. The -- and you have to really understand the rationale for our MYC inhibitor. So any time you treat with any drug, the cancer cells, hope they try to do is they try to find ways to survive, the cells do, the cancer cells.

So if you’re hitting one particular pathway, the cell tries to find ways to use these other pathways to survive, but always talk about the rescue pathway. It turns out cells do that by up regulating C MYC. Then the MYC goes out and starts interacting with all these other genes and allowing the cells to play with these other pathways to survive.

So we see that the -- if we can truly show we’ve MYC inhibition, it might have single agent activity, but ultimately having drug combination activities for them to rapid induction of resistance by other drugs, we think that's the path for two-part three. Ultimately, that hopefully has an oral drug in the [indiscernible] future.

Then you said you had a logistical question on 806..

Yes, thank you.

And it really comes down to what's on your punch list right now to be able to hit the ground running for when the study is allowed hopefully? And then also can you talk to the screening of patients and how it's probably likely easier to screen patients than it is for say like the 253 study?.

Oh, yes. This one is infinitely simpler. So we can go to the large institutions for two thoughts where we had to go to the large institutions. It's IV administration, specific patient population. So we have to go those institutions. But for a molecular 806, we are going to go to the community sites as well as the large institutions.

So we already have IRB approvals at some of these -- what are they called, not general but regional.

Some of the regional IRB [indiscernible] so that we’ve been on the ground developing all the activities for 806 making sure that we're getting IRB approvals ahead of time, so that once we get the IND allowed, we can transition into the lab -- excuse me, into the clinic quickly.

We’ve already been out and we’ve -- and if we can get this the IND allowed soon, we likely will have 6 to 7 sites up and screening in April. It's that quick being able to go onto these community sites and that also puts pressures on the larger institutions to get through their IRB, so that they can put patients on.

So we’ve expanded out our clinical operations team in-house as well as [indiscernible] group. And so across-the-board we've been building out to make sure that as soon as that IND is allowed, hoping it will be allowed soon. That’s up to the FDA that we can hit the ground running on this one.

Whereas with 253, there had to be a number of modifications in the IND. We have to go back and take it back to the RRBs and it cost us months getting back into the clinic. We hope and we expect that’s not going to be the case with 806..

That's really helpful. And I guess just part -- real quick on that is some -- based on our discussions a lot of people are obviously or not obviously per se, but to me it's obvious.

They’re timing at the bid now for with regard to the potential for this drug So being able to have at least that many sites being available in April and then looking to expand, do you think we might be able to see clinical data this year presumably at ASH?.

Oh, yes. We would fully expect that. So as you said jumping at the bid, so we had an investigator's meeting. It's the very end of January and the first of February. And we had clinical sites and the investigators, nurses from all over the country. And when we show them the data, so we are able to show them confidential data.

And they were literally shocked at the potential of 806. We actually had in some of the various clinical sites, the investigators competing to be get to be [indiscernible] PI of the institutions. So we think that these should be up and rolling very quickly, the investigators want a drug like this. So there's a real need for it.

And so we’re finding sites that are saying they can get us not only AML patients, but many of the CLL and B-cell malignancy patients that we are going to need. So I’m not going to disclose whose sites are, because I don’t want to anyone else running there. but hopefully we will get this up running quickly.

We expect if we can get into dosing in the second quarter. That we should expect to have both AML and B-cell cancer data by ASH. You have to submit it by the end -- 1st of August. So hopefully we can get a placeholder, continue to collect data. And then if we have some revealing data, then maybe even put in for a late breaker. So those are the plans.

And let's hope it all flows out..

Great. Thank you, Bill..

Thank you..

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

Hey, guys. Thanks for taking my question. Just had two.

The first one is, how many clinical sites do you ultimately anticipate having operational for 253? And then second question is in terms of both 253 and 806, how do you think longer-term about the potential for partnership opportunity potentially outside the U.S? Is that something that you’re -- would be interested in at this point or which is just like to keep all that stuff in house? Thanks..

All right. Thanks, John for calling in. In terms of number of clinical sites for 253, we now have four that are actively screening for patients. And again these are the major sites that have many patients. We’ve actually looked at a lot of patients coming through, hopefully we will get that second patient on very soon, high performance patients.

So right now it's four. We expect to begin to ramp up to 13 to 15 as we get out toward the end of the year. But again, that’s the major institutions you can't do that type of drug development out in the community. As for 806, hopefully in April by the end of the first quarter, we could easily be in double digits for the number of sites.

10 or more by the end of the second quarter. And then second half of the year increasing that on up to maybe even 15 to 20. We have a lot of sites that want to get in. And when you start talking about the community sites, just a single IRB may bring you 5 to 7 sites in a region. So we'll just have to watch and see how many we have.

It also -- you have to remember that’s going to include B-cell malignancies and AML. So you have to -- a number of additional sites, some specialized in the B-cell malignancies like CLL, some specialized in the AML. So ultimately you're probably looking toward that number. And then into the beginning of next year as we get into the expansion phases.

Now in terms of partnerships, the good news is for 253, we're starting to show target engagement and we hope to continue to show that as we dose escalate. And also to demonstrate that it's a safe molecule that has MYC inhibition. So once we get that, that puts us back in the stage that partnership discussions will be on the table.

Right now we know the people want to see strong clinical data, target engagements and well-tolerated. So that’s something that we clearly would -- we would engage in those discussions. It may turn out to be a regional or may turn out to be a global type of deal structure depending on how the data emerge.

As per 806, we are in no hurry to partner that compound. We think the molecule has tremendous upside potential once we demonstrate proof-of-concept in the clinic both the B-cell and AML. Right now if were to look at partnership, no one could legitimately write us a check for what we believe the value of the drug is now. No one would do that.

They couldn’t justify it. But hopefully second half of the year and in first part of next year, we start seeing these -- the clinical responses that changes how we want to look at partnering this drug and ultimately we will need to. If this were only an AML drug, a small company can commercialize that.

But if this drug had the potential we believe it does in a number of indications, and we want to be able to take it into certain solid tumor indications because we know there is going to be activity there or we have data suggest it will be.

We are going to have to be able to partner with a larger company that can expand the clinical activities as well as commercialization. So that's where we want to be able to get clean as much value as we can, build value as quickly as possible, but then find the right partnership to maximize the clinical development and commercialization of the drug.

And to take good care of our shareholders. Like everything flows so well..

Okay, great. Thank you..

Yes. Thank you, John..

Thank you. [Operator Instructions] Our next question comes from the line of Mathew Bilger from Oppenheimer. Your line is open..

Hey, guys. Sorry I have one follow-up. I saved my nerdiest question for last. It's actually a three part question on your AACR abstract as it relates to CG-806.

And I was intrigued by 806's activity in IDH-1 mutants and I'm just -- I'm wondering if we know now whether that activity is due to direct inhibition of IDH-1 or if its via some other mechanism?.

Okay. So for that one, yes, we are nerd out on that one. So IDH-1 is not a kinase. So that was a shock to us. So when IDH-1 becomes mutated, it effectively remodels the epigenetic background of the cells.

And so we assume what is happening is that it's begun to reprogram some of the other pathways required for survival that are -- that -- and those pathways now are sensitive to 806. So again, IDH-1 is not a kinase. We don’t leave our drugs directly targeting it. Although we have -- we don't have any data on that yet, we will try to get that.

But, yes, it's going to be interesting to study how we're killing those cells and which pathways we’re hitting. So that’s nerd number one.

What’s nerd number two?.

Do you think that given the mechanism of action, obviously, hasn’t been completely characterized yet, but do you think that you would then potentially have a different adverse event profile than the IDH-1 inhibitor that we know is out there, TIBSOVO? And I know the differentiation syndrome is a pretty common adverse event associated with. So ….

Yes, I believe the mechanism of cell killing would just be pretty much like the other ones. If you look at the kinases that are hit by 806, what you can see is that you’re hitting specific pathways that are driving the cells towards specific types of cell death.

And we see that across the board in the AML, the B cells, we've looked at all different types of heme malignancy cells that that we've gotten. So I would assume that it's going to be the same type of cell death induction. I don’t foresee that we’d see any negative impact on those patients, anything beyond any other patient for toxicities.

It's been a very well-tolerated drug. So I suspect we should be able to kill those cells and still maintain a reasonable safety profile. I know some of the other -- some of the IDH targeted drugs. They have greater toxicities and side effects. So hopefully we can get around that and also venetoclax is active in those cells.

So we know our drug when you put it in combination with venetoclax, it's just phenomenal activity on all types of heme malignancies. So that’s another pathway to go for those types of patients..

Got it. That’s interesting.

And do you know -- is there a lot of overlap between patients with IDH-1 mutations and FLT3 mutations or might this really expand the CG-806's potential in AML?.

I don’t fully know the answer to that. So the ones that we look back -- look at, so these are cells -- these are all derived from patients. And we had a couple of hundred AML patients, and then out of that we had again about 6% of those are the IDH-1 mutant patients. If we looked at those patients very clearly part of is hypersensitive to our drug.

At this point, I don't know any of those have an additional FLT3 mutations in them and if there are more or less sensitive. I don't think that really would affect the mechanism because if it had the FLT3 mutations, our drug would work through that pathway as well as again the other pathways that are induced by the IDH-1 mutation.

But again it's all these cells use similar pathways. So you have to remember all the B-cell malignancies, all the AML, the myeloid and the lymphoid, they're all derived from the stem cells in the bone marrow. And they all use many of these underlying pathways for survival.

They just use different ones to different degrees in each cell type depending on the genetic background. So I suspect that the type of cell killing will be pretty much equivalent across-the-board. The only one where we see it is absolutely distinct is if you have the FLT3 ITD.

If the cell have the ITD, no matter what other mutations are in it, our drug works through a direct apoptotic a bit. But if you’ve any other form of FLT3 wild type or any other mutant, then it's --we see it working through different mechanistic activities and different pathways. So I will assume that would be the same in the IDH-1 mutant..

Got it. Thanks so much for the help..

Glad to nerd out with you. Okay..

Thank you. And I’m currently showing no further questions. I will now turn the call back over to Dr. Rice for closing remarks..

All right. Well, I just want to thank everyone for joining us this afternoon. 2018 was a very productive year for Aptose and we’re on the path now to deliver important milestones during 2019. There are many employees and collaborators to thank for their diligence and efforts in helping us get to this juncture.

And we also want to thank our shareholders for your substantial support, and we look forward to communicating with you on the progress of 806 and 253 clinical programs. And also want to again mention that our website www.aptose.com has links to all of our presentations and webcast and the preclinical data that we mentioned today.

So, operator, would you please conclude the conference call..

Thank you, sir. Thank you, ladies and gentlemen, for attending today’s conference. This concludes the program. You may all disconnect. Good day..

Thank you..