Good afternoon. My name is Chris 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, 2019. At this time all participants are in a listen-only mode. After the speakers’ remarks there will be a question and session. [Operator Instructions] Thank you.

As a reminder, this conference call may be recorded. I would now like to introduce Ms. Susan Pietropaolo. Please go ahead..

Thank you, Chris. Good afternoon and welcome to the Aptose Biosciences conference call to discuss financial and operational results for the second quarter ended June 30, 2019. I’m 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, Executive Vice President and Chief Financial Officer and Dr. Jotin Marango, Senior Vice President and Chief Business 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..

Thank you, Susan. I too wish to welcome everyone to our call for the second quarter ended June 30, 2019 and a special welcome to our new shareholders some of whom I'm certain we have on the call today. Before we begin our review of the second quarter both Greg Chow and I would like to recognize the newest member of our Senior Management Team, Dr.

Jotin Marango who joined us in June as the Senior Vice President and Chief Business Officer. Joti is participating with us on his first earnings call today and will be available to answer questions at the end of the call.

As most of you know prior to joining Aptose, Joti was the senior biotechnology research analyst where he covered hematology and oncology with a particular focus on epigenetic and at molecularly targeted therapies.

He is particularly familiar with Aptose as we were one of the handful of companies upon which he had launched and during his research universe. Prior to his tenure on Wall Street, he also served as Chief Operating Officer at the Samuel Waxman Cancer Foundation and received his MD and PhD degrees from the Mount Sinai School of Medicine in New York.

Joti's depth of experience and his character greatly complement our existing team in corporate culture and we are delighted to have him join our team. So welcome to your first conference call on this side of the fence Joti. Now let's begin our review of the quarter.

Aptose has entered an exciting time in our evolution with two well differentiated small molecules now in clinical development.

CG-806 our first in class pan-FLT3, pan-BTK inhibitor estimates dosing in a Phase 1-AB dose escalation study and patients with beta malignancies including Chronic Lymphocytic Leukemia or CLL and non-Hodgkin's lymphoma that have failed or intolerant of standard therapies.

APTO-253 our MYC inhibitor currently in a Phase 1AB trial for patients with Acute Myeloid Leukemia or AML and Myelodysplastic Syndromes or MDS is the only know clinical stage molecule that can directly inhibit expression of the MYC oncogene a major driver of cancer cell proliferation.

On today's call we will bring you up to date on the status of both these clinical programs, brief you on other corporate highlights as well as our quarterly financials and then open the call to your questions. So let's start today with CG-806 or just 806 as I will call it.

Our highly potent, non-covalent inhibitor of all forms of the BTK and FLT3 driver kinase systems.

Although we refer to 806 as a FLT3 and BTK inhibitor it should be viewed as a mutation agnostic agent, because it totally inhibits all known wild type and mutated forms of FLT3 and all wild type of mutated forms of BTK, plus it suppresses multiple oncogenic signaling pathways operative in hematology and malignancies, yet with a precision that avoids targets typically associated with toxicity.

806 is not just directed at the ITD mutation of FLT3 or the C40-1S mutation of BTK. It is designed to treat the diseases that rely on multiple drivers in compensatory pathways, rather than treating only one particular target.

With compelling pre-clinical results 806 has captured the attention of many in this space and we are very excited to finally be in the clinic and to initiate the long awaited dosing of patients with 806.

The Phase 1-AB multi center open label dose escalation clinical trial of 806 is designed to assess the safety, tolerability, pharmacokinetics and pharmaco dynamic responses and preliminary efficacy of 806 and to establish the recommended Phase 2 dose.

Our clinical protocol calls for an accelerated titration in which we are required to administer 806 only to one patient at each of the first two dose levels, 150 mg and 300 mg twice daily unless unexpected side effects necessitate additional testing at those levels.

We were especially diligent in choosing the first patient for the study in an effort to increase the chances of successful completion of the 28-day dosing cycle with only one patient and we are pleased with the way the trial now is progressing.

As we announced in July, we initiated dosing of our Phase 1-AB dose escalation clinical trial of 806 in a CLL patient starting at the oral dose of 150 milligram BID or twice daily. This patient had failed ibrutinib, venetoclax, rituximab and idelalisib, so the patient is very heavily pretreated.

As of today we can report that the patient has received more than 50 doses of 806 and we have received no reports of drug related ADE or SAEs. Upon completion of the first dose cycle of this first patient, the Cohort Safety Review Committee will review the results from the patient the determine the net steps with the trial.

The planed second patient will receive oral doses of 300 milligrams BID and then we follow the bar sending cohorts to three patients each and a three plus three desire dosing scheme including 450, 600, 750 and 900 milligram BID with the intend to determine the recommended dose for patients relapsed refractory CLL in non-Hodgkin's lymphomas.

Once an MTD or a safe and biologically active dose has been identified as our recommended Phase 2 dose up to 100 patients may be enrolled for treatment and the expansion phase at that dose. As of today we have eight U.S. sites open for screening and enrolling patients for the study with 10 additional sites scheduled to come on Board soon.

For more specific information on the trial in the clinical sites enrolling patients you may visit clinicaltrial.gov. So how we will report data from this trial, first we have submitted abstracts and hope to present our findings including early clinical data of the American Society Hematology or ASH meeting in early December.

But we may also be able to report high level observation and progress prior to ASH or perhaps on our next quarterly conference call.

Finally pending collection and careful review of the initial safety data and predictive pharmacokinetic data in humans from the Phase 1 dose escalation trial in patient with B-cell cancers Aptos plans to seek allowance from the FDA to move into the patient population that include relapsed or factory AML and MDS in a separate Phase 1 trial.

And now I will remind you that we presented data at the 2019 European Hematology Association EHA meeting in Amsterdam. I mentioned the relative preclinical data supporting 806 and during quarter we present a poster at EHA that highlighted the En vivo anti-leukemic efficacy of 806 and is DLP Safety and toxicokinectic profile.

In a preclinical median genograph of human AML, 806 suppress leukemia growth and all doses tested throughout the 28-day period dosing. After dosing is halted, tumor treated with the lower doses of 10 Migs per Gig and 30 Migs per Gig resume leukemic growth, but responded again when 806 dosing was restarted.

In the mice treated with 100 Migs per Gig, five of 11 of 45% of the mice were cured through day 20 of this study. And in the 300 Mig per Gig dose 10 out of 11 or 91% of the mice were cured.

Even better retreating the uncured mice in these two dose groups for an additional 28-days beginning on day 88 led to rapid and robust anti tumor responses resulting in cures in one all 100% of retreated mice through day one 120.

Also, in the retreated mice neither drug resistance nor toxicity were observed and we demonstrated that even very large tumors can response rapidly to 806.

Also, as we recorded GLP 28-day safety and PK studies in mice and dogs showed no adverse drug related effects on body weight, ophthalmic, respiratory or neurologic examinations, clinical pathology, organ weight or microscopic evaluations.

And no drug related cardiovascular effects were noted in the 28-day GLP Tox or in a separate preclinical cardiovascular safety study. Our post ready generated interest from our industry peers as most of you are aware there is a significant activity in the hematology space particularly around BTK and kinases inhibitors out there.

So, Joti would you like to comment here on the differentiation of 806 from other hematology drugs commercialize and in development..

Certainly Bill, and thank you it’s great to now be part of the team. My belief in 806 as a differentiated and mutation agnostic agents in hematology and oncology is really one of the many reasons why I joined Aptos.

The ability of 806 to potently inhibit both the new types wild type forms of FLT3, and of BTK as well as other kinases with a precision that circumvent many of the toxicity differentiate this molecule from other approved hematology dugs as well as molecule in development.

On other hand lymphoma diseases our preclinical studies have shown 806 would be on average 1000 times more potent at directly killing B-cell cancer and improved mix, which is the current standard of care for a certain B-cell malignancies. And by the way all these studies are available on our website.

At the same time, minor malignancies 806 is approximately 100 times more potent in killing AML cell which specific mutation compared to quizartinib, a FLT3 inhibitor which is in late stage development or gilteritinib of FLT3 inhibitor that was approved into 2018. Additionally and importantly, 806 is able to also tackle FLT3 wild type leukemic cells.

In-line with this, we look forward to evaluate 806 in all patients with relapsed or refractory AML in India in upcoming common clinical trials.

So, overall the selected coverage of the molecular target in different tumor types suggest that 806 has broader capability across hematology and oncology in both the myeloid and as well as the lymphoid malignancies..

Thanks, Joti. As you can hear in Joti’s voice and the sirens in the background, we continue to believe that 806 exhibits the potential to be best-in-class and hope that our ongoing clinical trials bear that out. Finally it’s important to note that we continue to be vigilant and observe safety and tolerability in these patient populations.

We continue to collected PK and PD biomarker data, we continue to upgrade our API and drug manufacturing activities and we seek potential for new indications for CG 806. Going forward, we will continue to update you on all these activities as its important for us to be in transparent on both the challenges and the opportunities ahead.

So now let’s turn to Aptos 253 or 253. As a mix inhibitor 253 may have brought into our cancer application among certain hematologic malignancies and solid tumor indication. But as you know, our initial development is focused on patient AML and MDS.

For our Phase 1 clinical protocol Two Part B is being administered once weekly over 28-day cycle of ascending doses in patients with relapsed or refectory AML or high risk MDS until the maximum tolerating dose is reach.

The study of design to then transition as appropriate to single agent expansion cohorts in AML and MDS followed by combination studies. We have recently announced that we completed dosing of the first two cohorts in the Phase 1 trial with only one patient required in the each of those first two cohorts.

Our first patient, an AML patient received the lowest dose of 20 Migs per meter square, once weekly over 28-days and the drug was tolerated favorably. Our second patient an MDS patient received a 40 Migs per meter square dose once weekly over 28-days and also tolerated the drug well.

Both patients completed the 28-day cycle and as we have recorded analysis of bio marker expression from those patients demonstrated reductions of the MYC gene expression and their peripheral blood cells with the downward trend each week during the first cycle.

Our second patient is continuing treatment and is now close to completing the third 28-day cycle at 40 Migs per meter square. Further protocol because there were no serious adverse events with our first two cohorts, we proceeded to our third cohort at 66 Migs per meter square which requires three patients.

Currently two patients have completed successfully their first 28-day cycle treatment, with a 66 Migs per meter square dose and the third patient is expected to begin dosing this week.

Assuming the third patients completes the 28-day treatment period with no DLTs at 66 Migs per meter square, dosing will continue to ascend until the maximum tolerated dose is reached. The next expected dosing level is 100 Migs per meter square. We have a number of clinical sites actively screening for AML and MDS patients for the next dosing cohorts.

For those of you interested in learning more about the trials specifics and enrollment criteria, please visit clinicaltrial.gov. We are pleased by the progress of the 253 trial and we want to answer questions about fine line and when we will report a new data. We call this is an open label Phase 1 trial.

In addition to pharmacokinetic and safety information, we will continually assess for any evidence of anti tumor activity of 253 by hematology and bone marrow evaluations in acute lukemeas and MDS. And of our core we have already gleaned and reported important PD data about the reduction of mix expression.

Similar to our plan with CG 06 we expect to be able to share high level observation from our ongoing at APTO-253 clinical trial at our next quarterly conference call and hopefully to present select data at ASH.

To wrap up on our product candidates, we are pleased to be treating patients with both 253 and 806 and are hopeful that clinical testament will prove then to be effective therapies for hematology malignancy patients greatly in need of new treatment options. We look forward to updating you in the year.

Indeed, we do expect to have early clinical data around the time of ASH. As we mentioned in addition to several preclinical abstracts we and our collaborative investigators have submitted clinically related abstracts drugs for both compound. I now will turn the call over to our Executive Vice President and Chief Financial Officer Mr.

Greg Chow, who will review the results of the quarter..

Thank you, Bill and good afternoon everyone. Before I get into the quarterly financial I would like to quickly go over some of the financial news highlights for the second quarter. In June, we announced the closing of a public offering of 10 million common shares to the price of $1.85 per share.

The financing also included the exercises full by the underwriters of their options to purchase 1. 5 million additional common shares. The gross proceeds from the offering before deducting the underwriting discounts and commissions were approximately $21.3 million.

We have completed this offering with additional quality institutional investors and we thank them for their support. As we mentioned in our last call, earlier in the quarter we entered into a new agreement with Aspire Capital, where Aspire is committed to purchase up to $20 million of common shares of Aptos for up to 30-month at our discretion.

Additionally, we enter into a new At The Market or ATM agreement for $40 million with Piper Jaffrey and Canaccord Genuity as co-agents. To issue and sell common shares of Aptos through ATM distribution on NASDAQ. This ATM replaces the previous ATM that the company had.

Both of these financing vehicle can be accessed under the service question about us and we determine the time, price and number of shares to be sold if any. We ended the quarter with $35.4 million in cash and cash equivalents and investments compared to $17 million at March 31st.

In addition to the proceeds received from the public offering during the quarter, we also raised $4 million to a common stock purchase agreement with Aspire Capital, which exhausted that agreement.

During the quarter we utilized approximately $5.3 million of cash in operating activities, which were attributable to activities surrounding 253 and 806 as well as general and administrative purposes.

Based on current operations cash-on-hand and committed capital provide the Company with sufficient resources to fund all planned Company operations include Research and Development into the second half of 2020. Moving on to the income statement, we had no revenues for the quarter.

Research and development expenses were $3.5 million for the quarter and attributable to 806 and 253 clinical trial costs.

Manufacturing of drug product to our clinical trials including continued development or including GMP toleration for the 253 and 806 and personnel cost of headcount supporting clinical trials and manufacturing activities and research phase.

G&A expenses for the quarter were $2.9 million and our net loss for the quarter was $6.2 million or $0.13 per share. More detailed information can be found in our filings on EDGAR and CEDAR. I will now turn the call back over to Dr. Rice. Bill..

Thank you, Greg. I would now like to open the call for questions and hopefully you will have questions for all three of us. Operator if you could, please introduce the first question..

[Operator Instructions] And our first question comes from the line of Gregory Windsor with RBC Capital Markets. Your line is now open..

Hey Bill and team, congratulations on all the progress and thank you for taking my questions. Bill, I just wanted to start, just your and Dr. Marango as I mentioned of 806 differentiation and now as new data in the market emerge in CLL and B-cell and the BTK space evolves and now that 806 is gaining experienced and the clinic.

I just wanted to ask you to perhaps revisit that the 806 profile and your perspective on this differentiation and hone in a little further on your mention of going after patients mutation agnostically or otherwise, and certainly how that is affecting the patient selection in the trial underway? Thank you..

Alright, thank you Greg for calling and it’s great to hear from you. So I would start out answering the question, then I will ask Joti to also jump in.

So first of all, 806 has a very atypical kinase inhibitory profile, of course it inhibits all forms of FLT3 as we have talked about, all forms of BTK, but in the clusters for FLT3 it also inhibits the PDJFR alpha and CSF1R all those are receptors, it also inhibits the Track receptors and related are the red neck there.

So it's able to inhibit the initiation of those oncogenic signals at the cells surface.

It also inhibits the clusters of the intercellular kinase, the BTK clusters, BTK, BLK as well as some of the kinases in the [SARK] (Ph) cluster, SARK, SIC, [indiscernible] all of those that are driven through the B-cell receptor pathway, but it does not inhibit for instance TEC the tech kinase specifically that can often lead to toxicity.

And then separately it does affect at higher concentrations, it’s going to be [oral] (Ph) kinase is less important because so many companies now are going after the specifically oral aid, to try to inhibit MIC. So we do inhibit these pathways, these kinase of that I talking about. And some of those are driver kind of issues the FLT3 and the BTK.

But we also inhibit suppressing those other oncogenic signaling pathways, the MIC, the AKT some of the kinase pathways, SIC the B-cell receptor pathway. So we view this drug as very different from other molecules out there.

For instance, you know Joti earlier had mentioned gilteritinib and quizartinib, but those are targeting FLT3, we are not just targeting for three and AML, we want to inhibit FLT3 and whatever form comes along. But we want to actually kill the cells and treat the disease by inhibiting and suppressing the additional compensatory pathways.

The same is true in the CLL, the B-cell malignancy arena. Yes, we inhibit BTK. But if you look at some of the other drugs out there, they do too, hey inhibit the wall type and some of them are new wall type and C4E1S kinase. Well we inhibit those but we also again inhibt the other pathways in the cells.

So again, we are trying to treat the disease not just trying to treat a particular target. So that is why we believe that we have to view this as target or mutation agnostic in many cases, and it truly differentiates our molecule from others.

That allows us to go after all, all - patients relapsed, refractory with a AML or MDS, we don't have to restrict it down to just FLT3, ICD driven patients. And the same is true for the B-cell malignancy. Patients we can go after those that have CLL, FLL, MCL or various non-Hodgkin’s lymphoma, whether they have a mutation or not.

And even if they failed a variety of drugs, I mentioned to you the first patient on our CLL trial had failed ibrutinib, venetoclax, rituximab as well as the PI3K inhibitor. So we believe we can go after those types patients. So having said all of that, I'm going to turn it over Joti because I'm sure he has additional thoughts on that..

Yes, thank you Greg for the question. And, and Bill summed it up very nicely. On the acute leukemia side. Greg, as you know there are two agents that are approved both ibrutinib and [mitosorine] (Ph) the target specific FLT3 positive disease and quizartinib in late stage development. However, these are all indicated for disease with FLT3 aberrant.

However, what we have seen in the preclinical studies is that our agent 806 is able to target effectively, and to blast that have a aberrant history as well as wild type history. So interpreting this and looking forward to the clinic and to the market all AML should really be susceptible to this agent. Now the same is true on the lymphoid side.

Targeting BTK. We have heard certainly enough about this emerging subset of the disease posted ibrutinib treatment, the 481S mutation, which presents resistant disease, presents testing clinical and commercial opportunity.

However, what are the preclinical data shows that the agent is as effective in targeting these cells as well as the cells with [indiscernible] basically.

So this presents an opportunity that is wide on a cynical side within each tumor itself across the entire tumor the mutation agnostic for each target and then across hematology which is on the myeloid side AML, NBS but also the lymphoid, CLL and potentially - beyond into non-Hodgkin's lymphoma..

Not just [indiscernible] developed in both indications both categories.

Alright so Greg, did that answer your questions sufficiently?.

It sure does, I greatly appreciate the color and just one more from me and I will hop back into the queue. Just looking at the back half of this year and you mention of ASH, I think I also heard some commentary on the potential disclosures over earnings call or prior to ASH.

Just curious how your team is thinking about those, the disclosures what inputs we should be considering as far as what may or may not be revealed ahead of ASH. Thank you very much..

So we want to be careful to set expectations. These are Phase 1 trials, so clearly we are looking for safety tolerability, PK, pharmacodynamic responses.

We will always watch for any other types of activities that occur in patients, but we really want to set the stage for free to expect the types of data that would come out of the Phase 1, and then we will see what additional data comes from there.

Joti would you want to add to that?.

No. thanks again..

Alright. And that is true with both 806 and 253..

And our next question comes from the line of John Newman with Canaccord Genuity. Your line is now open..

Hey this is [Chris] (Ph) on for John. Hey guys.

Just wondering if there was a feel for what dose levels could show activity for either 806 or 253?.

So let's start on 253, in the past we had said that we hope we are getting into an exposure level at the third dose level that we might start seeing something in patients. Having said that, even at the lowest dose level we saw target engagement and biomarker movement with 253 you know so we saw the MYC inhibition as well as P21 induction.

So we saw that at the lower dose levels, dose levels one and dose level two, we now have also performance studies in patients from dose level three, we are also seeing inhibition of MYC there. We are actually starting to get some very interesting findings in some of these patients.

I'm not willing to discuss those yet, because overtime we want to make sure that anything we might observe is durable, it's not just something you see at the end of one cycle and don't see it the next cycle, but we do hope that we began to start seeing something at the third dose level of 253 and at the 100 Migs per meter square dose level for again we expect to see even more activity there.

With 806, I'm going to be very careful, because we do not yet know the [oral bio] (Ph) availability, the exposure levels in humans. We can try to predict based on exposure levels that we saw in mice and exposure levels we would get in dogs. But we just don't what is the percent for oral bio ability in humans yet.

We will be getting some of those data soon, that will allow us to better predict when at what dose level.

But I wouldn't want to predict it after just one dose level, we want to see a couple of different dose levels so again I would like to see the 150 and 300 look lipid exposures there, begin to be able to then make predictions as to the full exposure levels and the pace of pharmacokinetics.

It's not just the CMX form AUC it’s also reaching steady state, when do you achieve that. How long does it stay there, does it mention levels. So I want to see the pharmacokinetic profiles understand those before I make any full predictions on when I think we are going to see efficacy there. Fair enough..

Yes. Very fair, thank you, I appreciate it..

Okay thanks Chris.

Was there anything else?.

Alright. Thank you. And our next question comes from the mind of Matt Biegler with Oppenheimer. Your line is now open..

Hi, this is [indiscernible] on for Matt. Congrats on the progress. And thanks for taking your questions.

We are wondering if you could provide us with any more details on the first patient dose in this trial? Was this patient C481S mutant patient?.

So, we have actually asked the question, we do not have data as to whether or not this patient has the C481S mutation. So we do know that the patient fails ibrutinib, venetoclax, rituximab as well as the I always mispronounce idelalisib, it’s a PI3K inhibitor.

So we know the patient failed all those either for in tolerances for just they were refractory to the drugs. But we don't know if true resistance occurs there and if mutations exist. We have asked the question, but we do not have such data. But you can see it's a heavily pre treated patients.

We were happy to get that patient out, and especially CLL patient. So we are thrilled to finally have this drug in the clinic. So far, I think, yes, I think tomorrow is likely the last dosing day, the 28-day dosing of this patient. So by that time they would have received what 56 doses of the drug.

We will be measuring the pharmacokinetics and all but then we hope to be able to then transition into the next dose level.

I think that is about the most that I can say about the patient, we are going to be measuring a variety of biomarkers, the Fox related target proteins, plasma inhibitory assays [indiscernible] many of these as we can, depending on how much samples we get from the clinical sites. So we will be measuring those but we do not have the data yet.

We are just happy to be in the patients center and to start collecting data now. And by the way, we thank you for being on the trial. It would be great to see you soon. And we thank everybody for being on not on the trial. Sorry. On the call today. Yes..

Okay. Okay. Fair enough.

Can you also comment on how frequently the tumor scans are being conducted per protocol?.

I think per protocol, I believe it's every third. I believe that is right. I will have to look that. But I believe it's every third cycle. But if we actually see something interesting, or something is going on with the patient, we have performed some of these earlier with other patients in the past. So yes, I will have to look it up.

So I think Joti is trying to look it up now. But I think it's every third cycle, but I will have to get that to you..

Okay, and then final question.

We are wondering if there had been any changes in the game plan for enrolling AML patients into this trial? Are you still on-track to expand the trial at the end of the year?.

Well we hope so. We are going to collect the data from PK from the first patient and, and then take a look at it and, and there is always variability around one patient. So you would like to have at least two patients, so try to get that one on and get the PK data as soon as we can.

And then depending on what it says, then we would plan to take those data to the FDA, if the data show that we are getting exposure that gives us the confidence that there is going to be activity in AML. Again, because we do not want to treat AML patients, they are very sick, some therapeutically. So right now, we are still on-track for that.

And if that changes, we will let you know, but it just depends on the PK data that come out of these first couple of patients. That is why we are very data driven, to put it bluntly and we will follow the data. We hope it's earlier, but we will make the right decision based on the data..

Okay great. Thanks for taking our questions..

Thank you, and our next question comes from the line of Matthew Cross with Jones Trading. Your line is now open..

Hey guys, congrats on the rapid pace of execution thus far with the 806 and 253 and a big welcome to Joti of course.

We have had a couple here, first I wanted to touch a little bit more on what you started on here Bill about the biomarkers that you are looking at for CG-806, given that you know you are testing in a number of different sub indications and with the collection of targets that are being hit by 806.

Could you go into a little bit the rationale for the specific ones you are looking for and I think you mentioned CCL3 as one of these [epitomic] (Ph) factors, I suppose given that your - patients is CLL, just what do you view is most appropriate to assess kind of indications of 806's activity, initially when we might be looking at some data that could be sub therapeutic..

Alright. Well, thanks for calling in Matt, and Joti says hi there too. Okay so what do we look for these patients, there is a diversity of these patients, it ranges from the chronic leukemia to the various lymphomas, different regions of the body, but all of these are affecting either bone marrow, blood and or the lymphoid tissues.

So one of the things that we like to do is scan. So you want to do various types of scans depending on which type of tumor the patient has and the location, you want to try to get a scan to see if you can get tumor volumes estimate. And then also determine whether or not you are cooling the tumor, so that is more of the FTG path type of assay.

So yes the path can give you tumor volumes but if you include the FTG path on top of that then you can get not only tumor volumes whether or not your drug is actually cooling the tumor such that there are less metabolic activity in the tumors. So those are important indicators.

On other types, so we want to know are we affecting the B-cell receptor pathway, couple of ways we look at that. We collect samples, we hope to be able to measure possible BTK that is an ELISA based assay, [indiscernible] if we get enough samples. We have already shown in CLL cells.

Even in those that are co-incubated with nurse like cells that our drug can turn off the possible relation of SYC, BTK, AKT pathway, various pathways in these CLL cells. So we hope to get enough samples from the patients that we can look at the activation state of those various kinase [indiscernible] forms of kinase.

If possible we would love to be able to look at HERCK, it just depends on how much samples that we get.

We also mention CCL3 and CCL4 those are factors that are released from the cells when the B-cell receptor pathway is activated and so it’s been shown that certain other BTK inhibitors or drugs that turn off the B-cell receptor pathway can inhibit the production of CCL3 and CCL4.

We have actually confirmed that in vitro, our drug does cause that, inhibits a CCL3 and CCL4 production from the CLL cells and then other companies have used those as indicators in the clinic too. You can just measure those in the serum, so we plan on doing all of those.

And in the end there is one other that we are trying to do and we hope we get enough serum or plasma, it’s a inhibitory assay. So you collect plasma from the patients at different times after they have been dosed. You hope there is enough of your drug in the plasma sample to actually have an anti tumor effect. You hope that is true in the patient.

But if you then take that plasma back to the laboratory, and you put it on, let's say, some sort of B-cell, a cell line in the laboratory. You want to see if you are turning off the pathways, the important pathways in those cells in culture.

So it's an indirect in vitro assay, but it does tell you give a sense of whether or not you have enough of the agent in your bloodstream, that can have an effect on these pathways. So we will be doing all of those, but it also depends on how much sample is available for each patient. And that can vary..

Alright, great. I really appreciate that little look decent detail. And I will be keeping an eye out for all those measures. But I think stress the amount of sample you get to do is obviously very important. And then there is. Another one for - sorry, go ahead..

No, no. Please go ahead, Nick. Question..

Thanks. Sure thanks. So the second was about 253. Now, you have got up to I guess five patients that are going on with dosing.

With the preliminary MYC inhibition insights I guess now available at three different look dose levels, is there anything you can say about maybe a trend that you have observed between those some degree of inhibition? And I guess, given how upstream this target is there kind of a range you are hoping to see to maintain tolerability? Or is this really kind of really explored exploratory, given the uniqueness of the molecule where DLTS are reasonably expected to kind of guide the determination of a Phase 2 dose?.

Number of questions there. So in terms of the patients, we HAVE seen in the basement of MYC at all three doses levels.

And I think in the average of 70%, to 80% inhibition of MIC, in the patients, I think we had already talked about and recorded that we saw MYC inhibition from the first patient on the first of those levels, we actually seen that on the third dose level now.

We are also collecting samples further out in time so hopefully, we will be able to see longitudinally overtime whether or not the MYC is inhibited, the P21 is induced. So those are some of the major markers.

As to whether or not you need a certain amount of MYC inhibition to have an anti tumor effect that is really unclear because nobody in the past has really been able to effectively inhibit MIC, without having toxicity associated with it. So we think inhibiting MYC is important, we have spoken with some of the experts in that field.

And they say that even a 50% reduction in MYC can have a major effect on patients. We don't know if that is true. So when we point those with a drug, we will just have to watch. But we haven't seen a reduction in MYC that is associated with toxicity. And this has been a very well tolerated drug thus far.

It's been in a number of patients, we have never seen mono suppression. So we haven't seen toxicity to normal bone marrow cells. So when we might expect a DLT that is difficult to know and we also have - our new formulation is also different from the prior one. So we just don't know at this point, when to expect that.

But at least for now, I can tell you no drug related events that have caused us any type of concern to this point. It's been very well tolerated thus far 253. And we are looking forward to dozing up..

Fair enough, so great to hear the system been so good thus far, just trying to make sure that we are not coming up on any potentially kind of well documented level of MYC inhibition where you start to see that that tolerability become an issue. But as you said, I think you are kind of really paving the way for a more direct inhibitory approach.

So we are looking forward to seeing the results. Thanks, guys..

Yes. We are looking forward to reporting it..

Thank you. [Operator Instructions] And our next question comes from the line of Pasquale Sansone with HC Wainwright. Your line is now open..

Hi guys, thank you for taking my questions, can you hear me okay? So a couple of questions, one on CG-806 so basically I understand you will have like 17 active sites, can you please give us more color on the speed of the enrollment, specifically how long will the enrollment take..

You know that, when we first started to get into this everyone said there was going to be a tremendous concern being able to get enough patients. Our first patient took longer than we had hoped for, part of that is we are really trying to also be careful that we got the right patient, because we only have to have one patient on the two lowest doses.

You want to be very careful and get a patient that you feel confident to make it through the 28-day dosing and that you can also measure the parameters.

Going forward, we have a number of sites that are actively looking searching for screening patients, getting ready for the next dose cohort, as I mentioned the last day of dosing, I believe if all goes well is tomorrow for our first patient, but then you don't put the next patient on immediately.

This is going to be the first patient who has received this drug, we are collecting all the data, all the PK safety data, we are taking it to the Drug Safety Monitoring Board the Committee and then we are going to make certain that we really scrub the data so that if anything comes up we can tell the FDA.

We are looking at safety want to make sure the molecule is very well tolerated. Thus far it has been, we have seen no drug relates AEs or FAEs in this patient very well tolerated, but we want to make certain we collect all the data from the clinical sites and then get it before our Committee and then dose up.

I suspect that next patient will be able to go on quickly after we get through the committee and the sites that we are talking are very motivated to get patients on here, because they are excited to get patients on this drug.

There are so many patients out there that still are failing all the other drugs, I mean we hear great comments about many of the other drugs out there. But patients will fail every therapy out there eventually. And so there is a need to, for those patients to go on these studies.

It's a long winded way of saying, I hope we will be able to approve reasonably quickly, I don’t see any reason why we should not at this point..

Okay, thank you. And maybe you already covered this, when we will expect some initial data readouts for the trial..

What we have said is that we expect to be able to present some data at ASH, which is in early December of this year, if we have certain meaningful data that we are able to present between now and then, we have to have confidence in the data, it has to be in enough patients that we feel confident, we are seeing trends, we don't want to put out a flash in the pan.

So we may be able to put out additional information on our Q3 earnings call, and then we will be at various conferences, between now and then, but ASH is most likely the timing or even after the first of the year. So those are the first times -..

Alright, and when we talk about safety of CG-806 I was wondering if you can give us more color to the molecular mechanism behind CG-806 favorable safety profile specially as opposed to peers..

So I'm not fully certain I understand the question. So based you talking about the structure and the various target that is inhibited..

Yes, and also based on your preclinical data.

So how do you think your drug could be safer as compared to other non-covalent BTK inhibitors?.

We can only address that in a couple of different ways. And ultimately, the answer is going to be in humans. But one of the ways is, we profiled against all the major kinases. And we see kinases that we hit are involved in these key acrogenic pathways. And that tells us it should be able to kill cancer cells.

But we are not seeing all the other targets - it's not hitting all the other targets that are typically associated with cancer. I mean, with safety problems. Various receptors, [indiscernible] I mentioned earlier is a kinase that you can get [indiscernible] certain toxicities, HER-B2 and EGFR.

So these are known targets that some of the other kinase inhibitors will inhibit but ours doesn't. So at a molecular level, we do all those studies, then you go into animals, and you don't escalate as high as you can. So we have exceptionally good activity in animal models.

As I mentioned, we are able to pure up to 100% of these animals with AML at our high dose, with no observed toxicity initiative over 120-days in a mouse model and you end the model at that point. So it's very well tolerated there. In our GLP talk studies, were never able to get a dose related adverse event.

At the very highest dose level in dogs it look like we might be seeing a slight reduction in bone marrow. So possible bone marrow suppression. But it was such a small amount, it was reversible, but it was a such a small amount of reduction, it was not considered adverse.

So if I had to predict I would expect that the DLT in humans ultimately not be bone marrow suppression, but that is conjecture and it's based on the data that we have seeing. Now some of the most molecules, the kinase neighbors can also post cardiac tox, we have gone out of our way to try to demonstrate whether or not this drug is safe.

And we have never seen any adverse event in any cardiac safety study that we performed. So that is how we make the judgment - presented. Yes..

Fair enough. And my last question on the 253 trial. So I know you are basically testing to try to [indiscernible these patients.

So platform 21 in unique expression, what other molecular markers are you looking at?.

We really haven't disclosed all the other various markers that we are looking at. But we are looking at 18, 20 different genes internally. Why don’t we do that? Because we know MYC affects us many other genes downstream. You want to know if there are various pathways and processes in the cells that are affected.

So are we looking at those genes? yes, we are. We are not going to be reporting that out anytime soon. But that those are PCR based assays looking to expression levels. But the MYC and the P-21. Those are the major markets we are looking at.

And then your typical hematologic parameters, clinical parameters you look for, in all these patients, bone marrows, blast. So that is something else we look at is, if you are going to look at the neutrophils counts in the bloodstream, are they higher, are they lower.

Are they derived from the malignant clones? Are you decreasing blast in the bone marrow so all these types of activity we are measuring..

I see And also, maybe you already covered this questions. But basically, when you look at these expressions, is there a way you can memorize these on the blood, and on the tumor cells rather than all normal cells..

Yes. So we do that for every study, so for instance there are PRC based assays in which we are quantitating the [indiscernible] expression levels.

First of all we took 12 different normal volunteers, collected the bloods, extracted the RNA and then we measured the level of MYC and B21 expression in all of those individually, then we pulled them together to use as a standard in every one of our cases.

So it tells us, so that is what we will consider a normal value of MYC expression and then we look at each patient, so most of the patients have elevated MYC expression, but not all of them do, but then once we get the baseline MYC level we look for inhibition thereafter.

But yes, and then within each experiment, we also have a kind of a marker DNA, GAPDH or some other gene that we measure, so that we have a - it’s normalized, we always have to do that and then we also have the standard for the healthy volunteer RNA also..

Okay, so it is normalized. Alright, thank you so much for taking my questions and good luck for the studies..

Thank you..

Thank you, and I'm currently showing no further questions, I would like to turn the call back to Dr. Rice for closing remarks..

Alright well I would like to thank everyone for joining us today, with two, three assets in the clinic CG-806 and FL-253 and actively dosing patients we remain committed to delivering for our patients and our shareholders.

I also want to give a big shout out to the team at Aptose, the employees, consultants, contractors, for all of their very long hours of very hard work to make this all possible, and I also want to thank our clinical team, our investigators, our patients for helping us in this mission.

We appreciate all of your support and we look forward to keeping you updated on our progress and thank you and have a wonderful evening. Good bye everybody..

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