Good afternoon. My name is Jimmy, and I will be your conference operator today. I would like to welcome everyone to the Aptose Biosciences conference call for the third quarter ended September 30, 2019. [Operator Instructions]. As a reminder, this conference call may be recorded. I would now like to introduce Ms. Susan Pietropaolo. Please go ahead..

Thank you, Jimmy. Good afternoon, and welcome to the Aptose Biosciences conference call to discuss financial and operational results for the third quarter ended September 30, 2019. I am Susan Pietropaolo, communications representative for Aptose Biosciences. Joining me on the call today are Dr. William Rice, Chairman, President and CEO; 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 and SEC and SEDAR filings.

All these forward-looking statements made during this call speak only as of the date they are made. Aptose undertakes no obligation to revise or update these statements to reflect events or circumstances after the date of this call, except as required by law. I will now turn the call over to Dr. Rice, Chairman, President and CEO of Aptose Biosciences.

Dr.

Rice?.

Thank you, Susan. I'd like to welcome everyone to our call for the third quarter ended September 30, 2019. During the quarter, we made significant progress in the development of our 2 hematology group drugs, CG-806 and APTO-253, both of which are in Phase I clinical development.

Mechanistically, these 2 small molecules are quite distinct from one another as well as from other hematology drugs on the market and in development.

On today's call, we'll bring you up to date on the status of both clinical programs as well as other corporate developments, review our quarterly financials, and then we will open the call to your questions. Let's start our update with CG-806, our oral, highly potent noncovalent inhibitor of the BTK and FLT3 driver kinases.

CG-806, or just 806, is like no other drug commercialized or under development. This first-in-class agent not only inhibits all wild-type and mutant forms of BTK and FLT3, it potently and simultaneously suppresses multiple oncogenic signaling pathways upon which cancer cells rely for survival.

For those of you who may be new to Aptose, we refer to 806 as a mutation-agnostic FLT3/BTK inhibitor because it's much more than your typical FLT3 or BTK inhibitor. 806 is not just directed at the ITD mutation of FLT3 or just at the C41S mutation of BTK.

Rather than engaging only one particular target, 806 is designed to treat the overall diseases that rely on multiple drivers, multiple mutant forms of driver kinases as well as compensatory pathways. Importantly, it continues to suppress the mutations that occur in AML and CLL cells that render such cells resistant to other agents.

They can be viewed as a mutation-agnostic agent the targets clusters of related kinases, yet with the precision that avoids known targets typically associated with toxicity. 806 truly represents an entirely new class of drugs.

Certainly, the key highlights of the third quarter was the initiation of our Phase I multicenter, open-label, dose-escalation clinical trial of 806 in B-cell cancers and the dosing of our first patient.

This trial is designed to assess the safety, tolerability, pharmacokinetics and pharmacodynamic responses and preliminary efficacy of 806 and establish the recommended Phase II dose.

As we announced in July, we initiated dosing of 806 in heavily pretreated patient with chronic lymphocytic leukemia or CLL, starting at the oral dose of 150 milligrams BID or twice daily.

You may recall that our clinical trial protocol calls for an accelerated titration in which we were required to administer 806 only to one patient at each of the first 2 dose levels, 150 milligrams and 300 milligrams BID, unless unexpected side effects necessitate additional testing at those levels.

We're pleased to report significant progress in this program.

Our first CLL patient who was placed on the lowest dose of 806, the 150 milligrams BID dose, completed the first 28-day cycle without complication, is continuing treatment at that dosage, is currently in the fifth 28-day dose cycle, is considered to have stable disease and has shown improvement in ECOG status.

Because only one patient was required on dose level 1, we then moved to dose level 2 which also requires only one patient. Our second heavily pretreated patient also has CLL. This patient also has completed the initial 28-day cycle of 300 milligrams BID, is continuing treatment and is currently in their third dose cycle.

Most interesting, lymphocytosis, defined as an increase in peripheral blood lymphocytes, was observed during the first 28-day cycle and has continued to increase throughout cycle 2.

While lymphocytosis is generally considered a sign of disease progression, in CLL patients, lymphocytosis is the hallmark of clinical response when being treated with an active BTK inhibitor. This is because active BTK inhibitors promote exfiltration of CLL cells from the lymphoid tissue into the peripheral bloodstream.

So the observation of lymphocytosis is very good news for this patient. In addition, at the end of cycle 2 with this patient, we performed an FDG-PET/CT scan. Across the key index nodes, particularly in the abdomen and pelvis regions, we observed decreases in hypermetabolic activity, or said another way, decreases in tumor burden.

This too is very good news for this patient. Although it typically takes months to reach a formal response in CLL patients, we are thrilled for this patient to see the lymphocytosis and a reduction in tumor burden.

So to summarize observations of safety and tolerability thus far, a data review conducted at the end of October 2019 for these two patients showed, one, that both patients are continuing on study with the first patient currently dosing on their fifth cycle and the second patient currently dosing on their third cycle.

Two, no serious adverse events, SAEs, or drug-related toxicities were observed. And three, no model suppression has been observed, and 806 has been well tolerated thus far.

Regarding evidence of clinical response in the CLL patient on the second dose level, we observed, one, a robust increase in peripheral blood lymphocytes, or lymphocytosis, classically described as a response to inhibition of BTK; and two, a reduction in tumor burden across multiple index nodes and no new hypermetabolic foci as assessed by FDG-PET/CT at the first scheduled scan.

Regarding the pharmacokinetic profile of 806 with the first 2 patients, we observed dose-related and well-behaved PK properties such that steady state was achieved by the end of the first week of dosing.

We are gratified by the serum exposure levels achieved in these patients, and we hope to see continued dose-related exposures as we dose-escalate to higher-dose cohorts. Now let's move to discussion of the next dose level.

After review of the data from the 28-day cycle of patient 2 on 300 milligrams BID, our Clinical Safety Review Committee, or CSRC, unanimously recommended that we proceed to the next higher dose of 450 milligrams BID. This represents dose cohort 3, and we currently are enrolling and screening patients for this third dose cohort.

At this dose, per clinical protocol, the trial continues now at the 3 by 3 enrollment design, and we will need to successfully complete a 28-day dosing of 3 patients before we can continue to the next dose.

Also, if we successfully clear the 450-milligram BID dose level, the patients that are currently on the lower doses of 150 and 300 milligrams may be able to increase their dosage to 450 milligrams.

Indeed, the first two patients and their attending physicians have already made such a request and are eager to dose-escalate on their drug that had been so well tolerated to date.

All going well, three patients at 450 milligrams will be followed by ascending cohorts with three patients each at 600, 750 and 900 milligrams BID with the intent to select their recommended Phase II dose per patients with B-cell cancers, including relapsed or refractory CLL and non-Hodgkin's lymphoma.

Once an MTD or safe and biologically active dose has been selected as our recommended Phase II dose, up to 100 patients may be enrolled for treatment in the expansion phase of that -- at that dose. As of today, we have 11 U.S. sites open for screening and enrolling patients for the study with additional sites scheduled to come on board.

For more specific information on the B-cell malignancy trial and the clinical sites enrolling patients, please visit clintrials.gov. Now let's discuss the proposed AML study with CG-806.

As previously mentioned, Aptose also plans to seek allowance from the FDA to move 806 into patient populations that include relapsed or refractory AML in a separate Phase I trial.

As a reminder, relapsed and refractory AML patients are acutely ill and we do not wish to dose this patient population with a subtherapeutic dose that likely would not provide clinical benefit. Therefore, we chose to initiate the first clinical trial in B-cell malignancy patients and collect the result of safety and PK data.

From such data, we should be able to identify a dose that we believe have the likelihood to deliver therapeutic benefit immediately to AML patients. For the intended trial in AML patients, we plan to focus initially on the relapsed and refractory AML population with high unmet medical needs.

We view 806 as a molecule distinct from other agents that target FLT3. Indeed, we have planned to include patients having the FLT3 ITD mutation typically referred to as FLT3-positive patients, patients having mutations within the tyrosine kinase or gatekeeper domains of FLT3 as well as AML patients that have wild-type FLT3 status.

Moreover, we wish to include AML patients who are resistant to other FLT3 inhibitors or venetoclax or those having mutations in IDH1 or IDH2 and other relevant genotypes. We are well under way with our clinical protocol preparation for this new trial.

Our clin-ops team has been busy identifying sites for the AML trial, and we expect to be in the position to submit the protocol to the FDA during the first half of next year. Joti, perhaps you can comment here on our rationale for the AML trial..

Thanks, Bill. Overall, we remain on track to initiate the study of CG-806 in all-comers with AML, that is FLT3 mutants as well as FLT3 wild types. And we continue to highlight the novel nature of 806 in AML. This is a new class of drug.

Although it covers FLT3 very efficiently, it is also able to tackle the polyclonal nature of the malignancy in AML, which has been and continues to be the curse for many targeted agents out there. Now that is a very important message, so let me expand on it here.

We just returned from a meeting of the European School of Haematology in Estoril, Portugal, focused on acute myeloid leukemia. And there, we continued to share with the AML community our strong preclinical foundation for 806.

At the ESH meeting, we heard loud and clear from KOLs that frontline AML patients who have been on midostaurin therapy and second- and third-line patients who have been on gilteritinib therapy or in quizartinib trials are now relapsing with specific FLT3 mutations or specific FLT3-independent genotypes.

Our preclinical work suggests that these emerging FLT3-specific mutations as well as these FLT3-independent genotypes would be covered therapeutically by the mutation-agnostic profile of 806.

As another example, speaking of current blockbuster drugs in hematology, a portion of AML patients receiving venetoclax are also relapsing with FLT3-specific mutations as well as various genotypes, which, we believe, will be sensitive to 806.

More generally, when looking at each of the recently approved therapies in AML, the majority of them being targeted therapies, when they fail, and unfortunately they all fail sooner or later in an AML patient, they give rise to a polyclonal relapse, which is exceptionally difficult to tackle with single-target intervention.

We believe that as a mutation-agnostic kinase inhibitor, 806 will be able to capture the majority of this spectrum of this polyclonal resistance or polyclonal relapse in AML.

So overall, following our many interactions at ESH, conversations with KOLs and the many presentations, others' and our's, we returned from the meeting very couraged about the clinical prospects as well as the potential derivative commercial value of 806 in acute leukemias.

Beyond our ongoing study in CLL and B-cell malignancies, we view the initiation of our AML study in early 2020 as a pivotal step towards to firming this broad value of 806 across hematology.

It is exactly this broad applicability that differentiates 806 from the competitors, and it excites all of us at Aptose and it excites our physician colleagues in myeloid disease and our physician colleagues in lymphoid disease and potentially beyond. Back to you, Bill..

4 patients with relapsed/refractory AML and 1 with relapsed/refractory MDS. We recently completed dosing of 3 patients on our third dose cohort at 66 milligrams per meter square. All patients on this dose have relapsed or refractory AML.

We mentioned in our last call that analyses of biomarker expression from initial patients demonstrated reductions of MYC gene expression in their peripheral blood cells with a clear downward trend each week. Notably, we continue to observe MYC inhibition across all 3 dose levels and in both AML and MDS patients.

A major concern among researchers have been that MYC inhibition by any drug may have undesirable side effects, yet at the 66 milligram per meter square dose of 253, no drug-related SAEs have been observed and 253 is maintaining a clean safety profile to date. Dosing will now continue to ascend until the maximum tolerated dose is reached.

The next expected dose level is 100 milligrams per meter squared, and we expect to begin screening patients for that fourth dose cohort shortly. We currently have 7 clinical sites engaged in actively screening for AML and MDS patients for the next dosing cohorts, and we expect to add a few more sites by the end of the year.

We will also plan to update you on 253 during our event at ASH. For those of you interested in learning more about this specific -- the trial specifics and enrollment criteria, please visit clintrials.gov.

To quickly recap, APTO-253 is the only known clinical-stage molecule that can directly inhibit expression of the MYC oncogene, now demonstrated in humans, and it continues to be well tolerated including no evidence of drug-related adverse events, including no observed myelosuppression.

We also wish that -- wish to note that no one truly knows what to expect clinically from a MYC inhibitor.

It may be that we observe robust single-agent activity at an appropriate dose, or it may be more like venetoclax such that its effect is modest as the single agent of highly effective and combinations for AML because it hits a pathway distinct from other agents.

We're eager to learn how best to use 253, and we thank all of the patients that have received 253 and all the physicians participating in our clinical trials. So finally, let me mention quickly other corporate highlights. From an operations perspective, Aptose is now in a growth mode. Last quarter, we introduced you to Dr. Joti Marango.

He joined us as the Chief Business Officer. As we expand our clinical activities, we're continuing to build our clinical team. With growing interest in our key assets, CG-806 and APTO-253, we've attracted high-quality talent and believe we are assembling the right team for moving forward.

We have more -- we'll have more to say about those activities in the coming weeks. I now will turn the call over to our Executive Vice President and Chief Financial Officer, Mr. Greg Chow, who will review results in the quarter..

Thank you, Bill, and good afternoon, everyone. We ended the quarter with approximately $30.2 million in cash and cash equivalents and investments compared to $35.4 million at June 30. Our current cash balance along with our ATM and Aspire facility, which we have not used thus far, provides us with cash runway well into 2021.

During the quarter, we utilized approximately $5.2 million of cash in operating activities which were attributable to increased activities surrounding 253 and 806 as well as G&A purposes. Moving on to the income statement. We had no revenues for the quarter.

Research and development expenses were $4.8 million for the quarter and attributable to 806 and 253 development activities, continuing development on improving GMP formulations for 806 and 253 and increased salaries related to increased headcount in clinical operations to prepare for the 806 clinical trials.

G&A expenses for the quarter were $2.3 million, and our net loss for the quarter was $6.8 million or $0.12 per share. More detailed information can be found in our filings on EDGAR and SEDAR. I will now turn the call back over to Dr. Rice.

Bill?.

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

[Operator Instructions]. Our first question comes from Gregory Renza with RBC Capital Markets..

Congrats on the progress. Bill and team, I just wanted to -- might just touch a little bit on your mention of the clinical response and certainly the -- maybe whetting our appetites around what we could hear potentially at ASH or at least around ASH.

It sounds like we won't be seeing any of that in the -- in any of the ASH publications but perhaps, you can set the stage a little bit. I recognize that small patient samples or anything additional you could add at the said applications would be helpful..

All right. Thanks, Greg. So I want to be clear. We are not representing that we have a partial response or a complete response with those patients. We have evidence of response, and we're providing qualitative information today regarding the patient.

We have not provided any quantitative data regarding the changes in tumor sizes -- or excuse me, in tumor burden. We have not provided any qualitative data in terms of the increase in the lymphocytosis. We do plan on providing some of those quantitative numbers during the ASH event.

Again, all of the posters that are being presented at ASH are preclinical studies, and we will hold an event to update you on the corporate as well as the clinical activities related to 806 and 253.

Hopefully, by then, we'll also be able to capture enough of the samples from both the first 2 patients as well as hopefully some from the next cohort so that we'll be able to perform some of these PD marker analyses. We hope to be able to do that. Can't guarantee it because we have to be able to collect those and analyze them going forward.

But yes, we hope to provide additional qualitative data on that as well as the pharmacokinetics from at least 2 and hopefully 3 dose levels when we meet with everyone at ASH..

That's great. Bill, very helpful and just one last one as you start to think about the AML side of things and -- but very helpful to hear you and Joti elaborate on that.

But perhaps, just curious to what extent has this escalation inform that? Clearly, some factors involved that you touched on, but I'm curious to see how that either reiterating your thinking or helping you to become more aggressive on establishing that trial, and then secondarily and just the last point, and how the evolving landscape developmentally is also kind of informing your view on tackling both market..

All right. Thanks, Greg. Well, I'll start out a bit of information and perhaps Joti will jump in. So in terms of the data we've been collecting from the current B-cell malignancy trial, we're getting exactly what we had hoped for, particularly PK data and safety data.

So now that we've gone through these first 2 dose levels, we're seeing dose-related pharmacokinetics. I think we used the word gratified in terms of the exposures that we're seeing. Again, we're not providing the quantitative numbers there. But yes, we -- we're very happy with the steady-state levels that we're achieving in these patients.

And when I say steady state, that effectively is the lowest exposure level that you see at any time during the extended dosing period over, say, 2, 3, 5 cycles. But seeing those dose levels gives us confidence we're going to be able to achieve levels that are going to be effective in the AML patients.

That the most important factor that yes, we believe we're going to be able to achieve those with either the doses that we've already used or possibly the next dose level.

We just want to make sure we get 2, 3 dose levels under our belt so we can present to the FDA that we believe that there is truly dose-related pharmacokinetics we can predict the exposure that's going to occur when we dose patients with a certain level, and we do have confidence we're going to have exposures that are going to be able to target the AML population.

So with that, why don't I turn it over to Joti, and he can address the second part?.

Thank you for the question. So regarding the therapeutic landscape, let's start with CLL. This landscape is in flux. And it is changing before our very eyes. So what are we seeing? Number one, we're seeing ibrutinib move to the front line.

Number two, we're seeing a lot of excitement at the prospect of future combinations of targeted therapies in the front line, achieving their perfect response rates, so specifically, the excitement about ibrutinib being combined with venetoclax, right? Number three, we're seeing that the available therapies left over in the relapsed/refractory stage are not sufficient to meet the needs of patients.

And so KOLs expressed that they would like, for example, alternatives to PI3K inhibitors within the segment. So that's 3 points. We could continue here in the list of 15 to 20, but let's stop right there.

So overall, there's an emerging need in relapsed/refractory disease, and it is a widening opportunity as some of these blockbuster drugs move to the front line.

Also importantly, we think that the nature of the patients in the relapsed or refractory segment in CLL will slowly change as they all experienced ibrutinib and venetoclax together earlier on in the front line. So the clinical presentation and the incidence of genotypes, including 481S mutants, it may actually be a different a few years from now.

So thinking cumulatively then about this relapsed/refractory population as it may look a few years from now, it will likely be wider, more heterogeneous, which emphasizes the need for agent which is holistic in a way by means of targeting, right? So 806 -- coming 806, right, Q4 at the entrance, it is a mutation-agnostic agent with respect to BTK.

And in addition, it covers several other key kinases and oncogenic pathways which may meet the demands of this relapsed/refractory population, which will be heterogeneous. Now switching over to the AML side, a few words because things there get much more interesting and in a shorter time frame, given that it is acute leukemia.

What we have seen in the last few years -- and this is something that is getting both academics and physicians very excited. What we have seen in the last few years is when a patient would relapse, we would be able to characterize quite well the genotype of the relapsed disease.

So let's say -- let's take as a hypothetical example a patient which had been on venetoclax and HMAs, right? We're able to look at the relapsing disease and say, "Okay.

It has a FLT3 ITD mutation, and it has an IDH1 mutation and potentially a RAS mutation." Now very recently, we are able to -- we've gone up in our ability to measure, to actually look microscopically at the disease. So we are able to look at the separate clone, single-cell analysis.

What that is showing now is that these mutations are actually in different clones. So after the venetoclax treatment, we have an emerging clone, which only has the FLT3 ITD mutation and then another clone which has the IDH1 mutation and so on.

And that's what I was referring to earlier on in the prepared remarks when I refer to polyclonal relapse, right? So this is a really challenging way now, a challenging reality in AML.

And again, that shows the need for either and less combinations of very specific targeted agents in order to target all of these different clones, right? You cannot just kill the relapsed disease by only targeting one of the mutations. One of the other clones will step up and repopulate the marrow.

And there comes the need for a mutation-agnostic agent which can cover multiple oncogenic pathways, and we believe that 806 is it..

And safe..

Exactly. And something that we cannot neglect, especially in the myeloid arena, is the absence of myelotoxicity is key because these patients are myelosuppressed extremely by their primary disease. And so it is very important some of the observations that we reported today, we have observed no myelotoxicity..

And our next question comes from John Newman with Canaccord..

Congrats on the progress on both programs here. My question is on the data for CG-806.

Just curious -- the patient that you mentioned in the prepared remarks with some evidence of response, that was CLL patient, just curious if you know what the mutational status is for BTK and whether or not that patient had any prior exposure to either ibrutinib or acalabrutinib?.

Yes. So this patient came to us from one of the regional sites. It's not from one of the major institutions where they -- the major institution, they typically give the -- get the full genotyping of the patient. That's typically not done at the regional site.

So this patient had already failed a number of the standard drugs out there, chemotherapeutic agents as well as the targeted agents and also have refused the other drugs. So we'll provide more color around that in terms of everything that patient failed and the status.

Hopefully, we'll be able to go back and get some of this mutational status on these patients. But this also plays into what Joti was talking about. So the changing landscape, the patients get treated with all these different molecules, is not just driving people toward the C481S mutation anymore.

You're getting a variety of mutations, and that's why we want to have this -- a drug that can target these polyclonal relapse in CLL patients as well as AML patients. But again, thanks for calling in, John, and asking the question.

Was there anything -- any other questions you had?.

The only question I was curious about was when you started to see the increase in peripheral blood lymphocytes, I don't know how often that check -- is it checked at the same interval as the scans or maybe checked a little bit more often?.

So we take blood samples, especially throughout the first cycle -- first 28-day cycle. So we get weekly blood samples, and literally, by the end of the first week, we are beginning to see an increase in the lymphocytes in the patients. It continued throughout the entire 28-day cycle. And it's also continued to increase during the second cycle.

We don't necessarily take a weekly meeting -- excuse me, a weekly blood draw after the first cycle. But in this patient, we've been able to get multiple blood draws in the first and second cycle. And we can see it continuing to increase.

Typically, it takes -- there's actually a publication that talks about ibrutinib, so that's kind of the standard drug that everybody uses for comparison. So ibrutinib treatment of patients, I think it takes on average about 2.5 months in patients to demonstrate a response of any level.

And then for a complete response on average, it's about 14.5 months of treatment. Because again, these are chronic patients and the response in these patients is also somewhat rather slow to emerge. So the fact that we're seeing lymphocytosis within the first week of dosing the patients was really good news.

And so -- and then to follow that up with the scan to show that these index foci, we're seeing reductions in tumor burden. So we were thrilled with this and the drug very well tolerated. So I hope that answers it.

Did it answer it sufficiently?.

Yes, that does..

Our next question comes from Matt Biegler with Oppenheimer..

This is Kalpit on for Mark, and congrats on the progress.

First, assuming we'll get additional details for 806 shortly, what types of biomarker data should we be focusing on to understand that drug's clinical impact? And in your view, how important are phospho-BTK assays considering the broader spectrum of activity of this molecule?.

Good question. I think everyone has heard me say this for months or years now that everyone measures phospho-BTK. And I think it's important to show that we can inhibit BTK. In fact, the best proof that we are targeting BTK right now is the lymphocytosis and the reductions in the tumor foci.

We are measuring or we're collecting samples to measure phospho-BTK. We will do that. It's not necessarily the most wonderful assay anyone uses out there. We're all using an ELISA assay, and we're measuring the relative phospho-BTK over total BTK quantitation. We hope to be able to show that.

But the other parameters we're measuring is we're collecting serum samples to measure CCL3 and CCL4. Those are chemokines that are released from the cells, the B lymphocytes when the B-cell pathway is activated. So we'll be collecting the samples and measuring that. We're also collecting total mRNAs so we can look at gene expression.

And we're collecting plasma from these patients, total plasma, so we can bring that back into the lab and measure and put it on cells that we grow in the laboratory and see if there's enough drug in there to have an anti-cancer effect to inhibit these various pathways in the cells.

So we're doing all of those, but what we're doing is we only had 2 patients. We're going to be collecting samples from the next round of patients. We want to be able to collect those, batch them and hopefully, test some -- all those together. And we hope to be able to present some of those quantitative data at the ASH event..

Okay. Got it. And then switching gears to 806 for AML. As I started to think about possible combinations of a potent molecule like 806 with other agents like venetoclax, which we know does not have a very clean safety profile, I was wondering about your team's thoughts on potential toxicity issues of 806 when combining with venetoclax.

And if you can comment -- do you also plan on running a combination arm with venetoclax in the Phase I for AML?.

Yes. So a couple of points there. So as Joti mentioned, we just came back from this meeting at Estoril. And they started referring to venetoclax as vitamin D. They think it is such an impressive molecule it should be included in effectively every AML patient.

But as you mentioned, it's also difficult to dose-escalate and some patients can -- you can escalate to the highest dose. Some of them, you can't. It's just difficult to tolerate sometimes. You get that tumor lysis syndrome. But it is still a very effective agent. It is an agent for which every drug out there in AML will be placed in combination.

So we've already done that. We've placed our drug in combination. This is in vitro. So it was Dr. Brian Druker's group who did all those studies and primary patient samples from AML, CLL, MDS and a variety of other patients. And in every case, we got quite remarkable enhancement of cell killing when we combined with venetoclax.

Venetoclax does have its toxic side effects. The good news is it does look like 806 has overlapping toxicity with those. So it positions us very well to combine with venetoclax. And you asked about the -- a combination trial.

When we submit our protocol to the FDA, we plan to submit a request to test a single agent in AML with our drug as well as in combination with venetoclax. So all of those are under way. And as we get further along, I'm sure we'll also look to test with hypomethylating agents and a variety of other drugs as we move forward.

Hopefully, that answers your second question.

Do you want to add anything?.

No..

[Operator Instructions]. Our next question comes from Jason McCarthy from Maxim Group..

This is actually Naureen on for Jason.

So can you hear me?.

Yes, absolutely..

First, wondering in terms of the study with 253, you're obviously looking at reductions in MYC. And I apologize I joined the call late, so perhaps you've already answered this.

But what levels of reduction do you consider meaningful, or put it in another way, if -- can you tell what levels of reduction would correspond to clinical benefit that you hope to see -- or that you are seeing?.

No, it's a good question because no one really knows the answer to that because no one's ever had a well-tolerated, non-toxic MYC inhibitor. So no one knows what is needed or what is expected even in an animal model.

So now we have a molecule that even in humans, even at the lowest dose, we saw that -- a 70% reduction in overall MYC levels -- MYC expression. That's measured in the peripheral blood of the patients. The peripheral blood includes not only the blast cells from AML, it also includes all the normal cells.

So is 70% reduction in MYC sufficient? Is 90% sufficient? Or in some patients, is 50%? The point is no one really knows what to expect and what is required. And if we say we're seeing a, say a 70% or 80% reduction, is that an underestimate because we have so many of the normal cells in the peripheral blood samples that we're also measuring.

So this is where we said that we're looking forward to collecting the data, trying to understand how this drug can best be used.

What do we expect? How much MYC inhibition is required? Is it different in the AML during -- versus MDS? Is it different when patients have higher levels versus low levels of MYC? Those are the studies that we're going to have to perform in humans.

We just hope that we can continue to show MYC inhibition, that it's safe and well tolerated and we get to a dose where we start -- truly begin to see benefit. And that's the only way that we can get these correlations because there is no other drug in the past that provides us with precedent.

So it's a good question, but we just have to say we don't fully know yet..

Right. Sure. That's helpful. And I was just wondering at ASH, obviously you'll be sharing the typical biomarkers, MYC and phospho-21.

But will you be sharing the other biomarkers that you're using to evaluate the drug?.

Yes. We're actually looking at many different genes here that might be affected both MYC itself, p21 as well as a variety of downstream genes. So we're measuring all of those. We should be able to roll some of those data out also.

But yes, again, what I'd like to say is that today, this presentation is kind of our early ASH release, telling people that, "Yes, we're -- the 253 study is moving along well. We completed three dose cohorts, we're going to the fourth.

And in the 806, we've actually seen levels of benefit in the patient and evidence of response." So this is kind of our early ASH unveiling here, and we'll try to provide additional quantitative data during the ASH event..

that's great. And just one more. I was just curious in terms of the -- your other drug, 806. I know you can't offer any color on mutational status at this point.

But let's say you have -- you do have patients ultimately with the C481 mutation and if you start to see responses in that population, would you move forward to quickly engage the regulatory authorities to perhaps engage in a registration-directed study? I'm just thinking about potential avenues for accelerated approval for the drug..

Well, what we're seeing is -- so Joti alluded to does that, that field is evolving very quickly. So the C481S population, there is a certain number of patients now that have the C481S.

But then as venetoclax and ibrutinib get moved up in the first line, especially with venetoclax being incorporated in there, we're not sure how many patients are going to continue to fail with the C481S. It may be that, that population actually begins to decrease.

It's going to be much more complex as we start combining all of these other drugs into the patients, first line and second line. We may still see some C481S patients. We may see that, that population actually decreases over the next couple of years.

So what we're focused on are those patients now who are relapsed/refractory that have failed the other drugs. So we're looking for patients who have failed the cytotoxic agents, ibrutinib, venetoclax, CD20 antibodies, the rituximabs, the PI3K inhibitors.

So the patients who have failed essentially everything, those other drugs are driving those cells -- those patient cells to having mutations that we feel can still be addressed with 806. So we're trying to focus on that relapsed/refractory population.

We think that is the best lane to go after for this drug rather than just -- remember we said it was mutation agnostic. So we think our drug is going to be effective whether they have C481S or not.

And so we don't think the best strategy right now is to go after just that subpopulation with the C481S mutation because we're not even sure what that population is going to be in the next couple of years. That population may begin to decrease..

Sure. That's helpful. And just one final question from me.

Once you move into your third trial in AML and MDS with 806, are you going to be engaging both the community sites as well as large institutions for that trial like you do for your CLL? Or is it going to be similar to your 253 study?.

No, we will engage both. There are a couple of reasons for that. These -- the major institutional sites, I mean they're wonderful. They have all the capabilities. The patients are exceptionally well characterized coming on to the trial, but it also can take a long time to get these clinical sites up and running.

It can take 6 to 9 months easily to get one clinical site up and running. The regional sites, they tend to have more patients available to them. You can get those patients on more quickly, especially at these lower doses. So it's great to have these regional sites. You can get the patients on quickly.

They are patients who have failed all the other drugs, but they may not be as well characterized genotypically as the large institution but allows us to get patients on, to dose-escalate and to demonstrate that -- again, we're going after those patients who have failed all the other drugs, not just a particular genotype..

Great. That's it for me, and congrats on the progress..

And our next question comes from Matthew Cross with JonesTrading..

Great news on the progress for both programs here and looking forward to the event next month. A couple of questions from me.

First off, and I apologize if I'm harping a bit on the CG-806 exposure, which I know you've touched on a bit here already, but to get specific and speculate a little bit, I guess what concentration or exposure level do you expect will be therapeutic to achieve total BTK inhibition, assuming that's even the goal, given you have a broader inhibitory profile here? If we extrapolate from preclinical work, I guess I'm hoping to be able to make a fair comparison to the other clinical competitors and frame results next month.

So I assume you have some range in mind based on where you've seen responses in preclinical in vivo work. So I was just trying to get a little bit of context there..

So you are correct. We have quantitated the pharmacokinetics in the preclinical models. We've been able to relate that back to the efficacy, particularly in the AML models. Because there are many more models available in AML than B-cell malignancies.

We know the Cmax anas [ph] the AUCs as well as nadir, the steady state that are involved with promoting activity at different levels. We have not really fed information out. We're not setting those quantitative parameters out with the public because ultimately, that will have to go to the FDA.

The FDA will have to make the judgment as to whether or not they agree with us on the quantities and the parameters that are required to go into the AML patients. That's why we have been very careful. I know you would like to hear those quantitative numbers of what is our Cmax, the AUC, the half-life, all of that.

So we haven't disclosed that yet because we are going to have to utilize those data, present it to the FDA to make the case that we have data that we believe can go into the AML patients. So that's why we haven't done that. We'll try to get that out to you as soon as we can.

We will provide PK data at the event at ASH, at least for the 2 patients, dose levels. And hopefully, we'll have PK data on the third dose level. You'll be able to see, again, the Cmax, the steady state. But we're not going to tell you what we think is required for the exposure levels that would be active in AML because that's between us and the FDA.

And then we'll roll that out to you. Does anybody else want to add to that? Okay. So everybody is saying they're good with that. So that's as much as we'll be able to present at that ASHD in terms of the PK..

Fair enough. And obviously, looking forward to -- in the context of your event actually, discussing that point in greater detail as about what's kind of a fair bar looking across the aisle with it.

So these other BTK inhibitors and where there -- this is all with the noncovalent ones and where they're falling in line from a PK perspective, given that it's a different inhibitory profile..

Yes. But Matt, what I will say is we will show you the PK levels. And I think you heard earlier, I say that we are not unhappy with the exposure that we're seeing. So that gives you kind of a broad -- once you see the numbers, that gives you a broad understanding of how we do this. We just can't give the specifics. Okay. You had another question..

I totally understand. And it makes sense. They are nice to see with just the first 2 dose levels. Yes, the second question was I know you really emphasized that this is a mutationally agnostic agent, speaking about CG-806, although theoretically both.

But I think a lot of folks out there may be basing their market assumptions for 806 and any of the reversible BTKs on the existing ibrutinib market may be factoring and even vetted to lose exclusivity in 2027 -- or starting 2027. And rates of relapse or intolerance, they're in for ibrutinib, given this is where other the reversible BTKs are focused.

And again, I'm only focusing on the BTK element of 806. But to a lesser extent, acalabrutinib is out there. Zanubritinib is in late-stage development. I guess I'm hoping to get your take on 2 things here.

First, when you get into expansion cohorts for 806, are you expecting to enroll patients with exposure to any covalent BTK inhibitor similar to what you stated your planning in AML within -- for an all-comer's design? Or we should view the potential market as bigger than just a slice of ibrutinib in this indication.

And then secondly, should we expect the rates of C481S mutation and other resistance mechanisms, because I know you're alluding that this is not just about that mutation, should be fairly uniform across these different covalent binders in your view?.

I'll ask Joti in just a moment to address some of that. But the first part of that, we don't care what covalent BTK inhibitor they failed. I think many of those will have the C481S, but a portion of those patients will -- but a lot of them will fail just because they have refractory disease.

Even if the BTK is still wild type, they still fail because other pathways are operative. And that's where you get a lot of the refractory disease without just having the resistance. So yes, we want to go after those patients whether they have the C481S or not, whether they've come from ibrutinib or any of the other covalent BTK inhibitors.

I think ultimately, we want to go after patients who have failed even in noncovalent BTK inhibitors, the venetoclax stuff. So perhaps Joti wants to add to that now..

Yes. Thanks for the question. The -- so as I said before, the treatment landscape here is in flux not only because of the move of ibrutinib and venetoclax to the front line and the types of potential responses and outcomes that the combination of these 2 agents offers in the front line but also because of the arrival of other covalent agents.

And there is some suggested data out there showing that, for example, relapse from acalabrutinib compared to relapse from ibrutinib is quite different, right, in the time frame but also in the clinical picture of the patient afterwards. So we are watching this quite attentively.

We think that there will be increased heterogeneity in the pool of relapse patients, which will be a challenge to meet by existing agents. And then otherwise, when it comes to our trial, I know that you mentioned you had -- you put a few question marks about our potential extension cohort.

At this point, we're observing the trends and what the physicians are reporting. And then when it comes to 806 on the path ahead with the expansion cohorts, we'll just be pragmatic and we'll follow where the data leads us..

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

All right. Well, I'd like to thank everyone for joining us this afternoon. We're pleased by the progress of both of our clinical programs, 806 and 253. Both have demonstrated favorable safety profiles to date, and we've been able to escalate the dose -- the dosing in both programs. And we really want to thank our entire staff.

They've worked so hard, so diligently. We thank our investigators as well as our patients for participating in this important work. We appreciate the support of our shareholders, our research analysts. And we do look forward to keeping you up to date on our progress going forward. Thank you, everyone, and have a wonderful evening. Bye, bye.

We're pleased by the progress of both of our clinical programs, 806 and 253, both the demonstrated favorable safety profile to date, and we've been able to escalate the dose -- the dosing of both programs. And we really want to thank our entire staff. They've worked so hard, so diligently.

We thank our investigators as well as our patients participating in this important work. We appreciate the support of our shareholders, our research analysts, and we do look forward to keeping you up-to-date on our progress going forward. Thank you, everyone, and have a wonderful evening. Bye-bye. Thank you.

Ladies and gentlemen, that concludes today's conference. You may all disconnect, and have a wonderful day..

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