Good afternoon. My name is Mary, and I will be your conference operator today. I would like to welcome everyone to Aptose Biosciences Conference Call for the Second Quarter ended June 30, 2021. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session.

[Operator Instructions] Thank you. As a reminder, this conference call may be recorded. I would like to introduce Ms. Susan Pietropaolo. Please go ahead..

Thank you, Mary. Good afternoon, and welcome to the Aptose Biosciences conference call to discuss financial and operational results for the [second] quarter ended June 30, 2021. Joining me on today's call are Dr. William G. Rice, Chairman, President and CEO; Dr.

Jotin Marango, Senior Vice President, Chief Financial Officer, and Chief Business Officer; and Dr. Rafael Bejar, Senior Vice President and Chief Medical 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 that 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 forward-looking statements made during this call speak only as of the date they are made. Aptose undertakes no obligation to revise or update the statements to reflect events or circumstances after the date of this call, except as required by law. I will now turn the call over to Dr. Rice, Chairman, President and CEO of Aptose Biosciences. Dr.

Rice?.

Thank you, Susan. I'd like to welcome everyone to our call for the second quarter ended June 30, 2021. The quarter is highlighted by the continued progress of our clinical trials, especially with luxeptinib or lux in patients with acute myeloid leukemia or AML, and in patients with B-cell cancers.

We continue to move through dose escalations and our Chief Medical Officer, Dr. Rafael Bejar, will bring you through that in a moment. Because we have observed clinical activity in our early cohorts, our clinical sites are highly engaged and we are pleased with the brisk patient flow to both our B-cell cancer and AML cancer trials.

Before I turn it over to Dr. Bejar, I'd just like to emphasize the continued need for therapies in these hematologic cancers. While there are a number of active drugs on the market and in development, responses are often insufficiently durable, and most patients will relapse or develop resistance.

Luxeptinib is our oral, highly potent, non-covalent inhibitor of the BTK and FLT3 driver kinases and it is like no other commercialized oral drug under development. I will remind you that lux is more than just a typical FLT3 or BTK inhibitor.

As it not only inhibits wild type and mutant forms of BTK and FLT3, it selectively targets clusters of related kinases and suppresses the mutations that occur in AML and CLL cells that render set cells resistant to other agents, and it has been found remarkably safe and well-tolerated to date.

Thus far, lux has been shown clinically to target the primary drivers of B-cell malignancies and AML, including BTK and FLT3 yet with a precision that avoids known targets, such as TEC, EGFR and ErbB2 that are often associated with toxicities.

This selectivity is what sets lux apart from other hematology drugs on the market or in development, and what makes it compelling. I'll also remind you, in this point that sometimes gets lost, that the patients in both of our trials are relapsed and refractory patients who already have been treated with and failed by the best available therapies.

So the progress we are observing in our ongoing clinical trials in these very difficult to treat patient populations is encouraging, and we are hopeful that lux will prove to be valuable in the armamentum of therapies for diversity of hematologic cancers. With that, I'll ask Dr.

Rafael Bejar, our Chief Medical Officer to provide an overview of our clinical activities.

Raf?.

Thank you, Bill. Aptose has three ongoing clinical trials. Two studies of our kinase inhibitor, luxeptinib or lux, one in patients with acute myeloid leukemia or AML, and the other in patients with B-cell cancers, and the third trial, with our MYC repressor, APTO-253, in patients with AML and MDS. I'll start with our B-cell cancer study.

This includes chronic lymphocytic leukemia, or CLL and non-Hodgkins lymphomas, or NHL who have failed or intolerant to two or more lines of established therapies, including drugs such as ibrutinib, rituximab and venetoclax or for whom no other treatment options are available.

Indeed patients in our trial had previously received from two to 12 regimens that have failed them, which also may include failure of other investigational agents.

As we mentioned in our last call, we've completed four dose levels in our Phase I trial luxeptinib and lux has been well tolerated in patients treated at 150 milligrams, 300 milligrams, 450 milligrams and 650 milligrams twice daily over multiple cycles.

Of the evaluable patients at these dose levels, two-thirds of them experienced dose-related reductions of lesion size or IgM measurements compared to baseline, demonstrating anti-tumor activity. Since our last update, we are well into the expanded 750 milligram dose cohort that is fully enrolled at this time. And as Dr.

Rice mentioned, our recruitment has picked up nicely and we expect to complete the 750 milligram dose level with the currently enrolled patients. Generally, and we've described before, we've observed encouraging on-target activity, including tumor reductions in both aggressive and indolent cancers.

In a corporate event held in conjunction with the European Hematology Association, or EHA, in early June, we reported some Phase I data highlighting our luxeptinib activity in B-cell malignancies.

Intermediate dose levels as of June 7 had delivered all leading indicators of clinical activity, including target engagements with dose-dependent inhibition of phospho-BTK, treatment-related lymphocytosis in patients presenting with classic CLL, and tumor reductions across different B-cell malignancies, including follicular lymphoma, chronic lymphocytic leukemia, small lymphocytic lymphoma and Waldenstrom's macroglobulinemia, a type of non-Hodgkin’s lymphomas.

We've observed cases of clear reversal of aggressively growing disease upon intra-patient dose-escalation and longer times on drug, suggesting that even aggressive disease maybe successfully challenged with higher exposure levels and extended dosing duration of luxeptinib.

FDG PET-CT scans and one relapsed follicular lymphoma patient, revealed lesion growth during the treatment with luxeptinib at 450 milligrams BID for seven cycles, yet after dose-escalation to 600 milligrams BID and Cycle 8, lesion measurements demonstrated continuous reduction.

And by C15D1, the target lesions shrank by 43% when compared with peak tumor size. We continue to spotlight the case of this patient from the first half of this year, as a reminder, and then moving to higher and longer exposure to luxeptinib as we expect in the second half of this year may successfully challenge relapsed and refractory disease.

It's also important to point out that the data reported during EHA, luxeptinib has been generally well-tolerated in 22 relapsed refractory B-cell cancer patients, and dose escalations continued with no concerning drug-related safety trends to date.

And so it is our intention, especially as we have begun to observe dose dependent anti-tumor activity, to continue further dose escalation to the 900 milligram dose level for extended duration to tackle an increasingly treatment refractory presenting population and to get as many patients as possible on these higher dose levels.

For more specific information on the trial and the clinical sites that are enrolling patients, please visit clinicaltrials.gov. Now let's turn to lux in AML.

Acute myeloid leukemia or AML is particularly difficult to treat hematologic cancer because lux potently suppresses FLT3 and additional oncogenic signaling pathways upon which AML cancers rely for survival and drug resistance. Treating AML patients has always been a priority for Aptose.

As Bill mentioned, all the patients in our AML trial have already been treated with and have been failed by the best currently available therapeutics, which can include FLT3 inhibitors, such as gilteritinib, midostaurin, crenolanib, quizartinib and sorafenib, as well as venetoclax, other treatments and investigational drugs.

So this is an extremely tough to treat patient population.

At our EHA Corporate Event in June, we reported promising anti-leukemic activity for luxeptinib, the first dose cohort receiving 450 milligrams BID, deliver encouraging anti-leukemic activity in multiple patients, including a durable MRD-negative complete response in a FLT3-ITD AML patient who had relapsed after two allogeneic stem cell transplants, multiple lines of chemotherapy, and prior FLT3 inhibitor therapy.

To date, we only have presented data on patients at the 450 milligram dose level. We also have completed the 600 milligram dose level, with some patients remaining on treatment at the 450 milligram and 600 milligram dose level, and we expect to complete the 750 milligram dose level with currently enrolled patients.

We are pleased that our sites are very engaged and then we have a vigorous flow of diverse patients. Also, it's important to note that at these doses, we continue to find that lux is generally well-tolerated with no toxicity signals or trends to date that we believe would prevent further dose escalation.

This tolerability profile is critical because it is allowing us to reach the higher dose levels and we will permit the future use of luxeptinib in combination with other agents.

Finally, I will mention that based on our clinical observations to-date, data from our dose escalations studies are guiding the planning of our dose expansion studies to explore select disease genotypes under monotherapy and combination therapy programs. We expect to select an expansion dose and cohort strategy for AML around year-end.

For more information on the AML trial and clinical sites that are recruiting patients, please visit clinicaltrials.gov. Now, let me quickly bring you up to date on the status of APTO-253, our second clinical candidate currently in Phase 1a/b trials for AML and MDS. Some of these data were reported in the poster presented at EHA.

To remind you, APTO-253 is a MYC repressor and MYC oncogene is a major driver of cancer cell proliferation, including hematologic cancers. MYC is one of the most coveted drug targets in cancer. However, there are substantial challenges that have impeded direct MYC targeted drug development and has been considered undruggable in the past.

As a direct inhibitor of MYC transcription, APTO-253 represents a novel approach for targeting this oncogenic pathway. Our MYC inhibitor APTO-253 currently is being tested in a Phase 1a/b trial in relapsed/refractory AML and MDS patients. Currently, we are dosing patients at our sixth dose level of 210 milligrams per meter square.

In the ongoing Phase 1a/b study in patients with relapsed or refractory AML and high-risk MDS, APTO-253 has been well-tolerated in the patients treated at 20, 40, 66, 100 and 150 milligrams per meter square over multiple cycles. Thus far, there is no evidence of drug-related adverse events, and importantly, no evidence of myelosuppression.

In the peripheral blood of patients, APTO-253 monomer rapidly transforms to and co-exists with the mechanistically active iron 253 conjugate and significantly higher concentrations with the iron conjugate are sustained for days, suggesting that further dose escalations may provide more sustained pressure on the MYC target gene and alter the biology of the tumor cells.

Collectively, the findings from the ongoing Phase 1a/b study support continued dose escalation of APTO-253. The study is current enrolling patients with AML and MDS at the sixth dose level of 210 milligrams per meter square and several subsequent dose escalations are anticipated.

Of note, we are expanding the trial to include other MYC-driven hematologic cancers. Based on APTO-253 mechanism of action, we also plan to treat patients with Burkitt’s lymphoma and other B-cell malignancies that are driven by MYC rearrangements.

We are pleased by the progress across our clinical programs and at the safety and tolerability of both drug candidates luxeptinib and APTO-253 are allowing dose escalation in all three of our ongoing trials.

As we treat more patients at higher doses, we are generally adding pharmacologic and pharmacokinetic data that we hope to provide further updates at the ASH meetings later this year. I'll now turn the call over to Dr. Jotin Marango, our Chief Financial Officer and Chief Business Officer who will review financial results for the second quarter.

Jotin?.

Thank you, Rafael, and good afternoon everyone. Let's now turn to the quarterly results. We ended the second quarter with approximately $103 million in cash, cash equivalents and investments.

During the quarter, we utilized approximately $8.8 million of cash in operating activities, which were attributable to activity surrounding our pipeline candidates as well as general and administrative purposes.

Based on current operations, cash on hand at June 30, provides the company with sufficient resources to fund all planned operations, including research and development into the first half of 2023. Moving on to the income statement. We had no revenues for the quarter.

Research and development expenses were $9.8 million for the quarter and attributable to clinical trial costs for our pipeline candidates, manufacturing of drug products for our clinical trials, including continuing development on improving formulations of our pipeline candidates and personnel costs for headcounts supporting clinical trials, manufacturing activities and research studies.

G&A expenses for the quarter were $3.7 million and our net loss for the quarter was $13.5 million or $0.15 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?.

Dr. Marango, Dr. Bejar or myself. Operator, if you could please introduce the first question..

[Operator Instructions] Your first question comes from the line of Ted Tenthoff from Piper Sandler. Your line is open..

Thank you very much. I'm excited to hear about the progress with lux and AML and CLL.

And I'm wondering, just looking back at the preclinical data, was there anything that you saw that might start to point towards upper level or dose-limiting toxicities to look for? And quick follow-up question, if I may to for 253, excited to see that data really like that mechanism.

Did you have plans to ultimately pursue that beyond hematologic malignancies? Thanks so much, guys..

Hi. Ted thanks so much for coming on. Let's start with the first question on luxeptinib and the preclinical data associated with any – pointing to any potential DLTs. What I can say is that lux was extraordinarily well-tolerated in all the preclinical studies, whether it be in mouse, rodent or dogs.

In the GLP talks, what we did observe, and this is – all of our studies up until that point were once-a-day dosing in all the animal models, and we had great anti-tumor activity, but we had not seen any toxicity associated with the model with lux in those models.

We therefore went into the GLP talks and decided to dose twice-a-day because we’re trying to drive toxicity in the GLP talk studies and both the rodents and the dogs.

Even with that, going out to the maximum feasible dose in both species, we saw no effects on the rodents, but if the dogs after 20 days of twice-a-day dosing, we did see a very slight reduction in neutrophil count. It was not considered sufficient to be adverse, so it was not listed as an adverse event.

But it gave us the signal that at the very highest doses, there maybe a trend towards some of the neutrophil reductions, and that's what we are – we'll continue to look for in the clinical trial. So in a moment, I'll ask Dr. Bejar, if he wants to add to that. But also you mentioned 253, the APTO-253 or MYC repressor. We agree with you.

It is exciting to say to find a molecule that actually can inhibit MYC. We have seen MYC inhibition in patients, but at this point, we have not seen any over toxicity. Beyond this, as we continue to dose escalate through the heme malignancies, we did start with AML and MDS.

We are now also including the B-cell malignancies that are associated with MYC rearrangements. And Dr. Bejar may want to add to that in just a moment. But we also would like to look beyond the heme malignancies and awfully go towards some of the solid tumors.

A good example is that in non-human studies of pancreatic cancer, it's been shown that even transient reductions in MYC will always tends to target those tumors to your classic chemotherapy. And that's a real need in the pancreatic cancers in humans.

And so once we get to a dose in humans of which we believe we can show consistent transit or even prolonged inhibition of MYC expression, we'd like to be able to move that into the drug combination studies and some of those solid tumors and look for the combined effect of drugs with chemotherapies pancreatic cancers and possibly other solid tumors.

So did that answer your questions? And perhaps I can ask Dr. Bejar to add.

Ted?.

And then just one quick topic.

So if we're not looking for, or we may not see dose limiting talks, are there markers, including even maybe just a plateauing of a fact that we would look for dose selection, or how do you think about that in the good position that you're in?.

So I'll start on that, and then I'll ask Dr. Bejar to expand on it. So one of the things that we look for is, are we achieving exposure levels in humans as we dose escalate to inhibit the targeted kinases.

The most common way to do that, the accepted way is to take the plasma from the patients, bring it back to laboratory, place it on reporter cells, and then ask after treating the cells with the drug, did you have enough drug exposure there in the plasma to inhibit the pathways? And we have some very nice inhibition of the phospho-FLT3, the SYK, PDGFR-alpha, CSF1R, ERK, AKT pathways as we continue to dose escalate further and so as we get to the 750 milligram dose level, and we hope to get even greater exposure and greater hammering of some of those key oncogenic pathways as we dose escalate.

So that's what we look for in terms of biomarkers. And so I'm going to ask Dr. Bejar also to expand on this a bit and to tell you how we're thinking about selecting that dose going forward for expansions..

Sure. Thanks, Bill. I think your point about the PIA assay is the best as you just described and it’s really important. But I think that that's a necessary, but not sufficient test to see if you're at the right dose. And I think if we don't see inhibition in that assay, then we certainly need to go higher.

But we design AML study in particular to start with the dose level that already shows inhibition of phospho-FLT3 at the lowest dose level in that study. So we're seeing that already. I think, like I said, I think it's not sufficient, it's necessary. We need to see other activity as well before we decide that we're at the right dose level.

And fortunately, toxicity permitting, we're able to continue to dose escalate and push into these higher dose levels to observe that.

Now ultimately given the variability of AML patients, some that may have sensitizing mutations, some that may have more resistant mutations, it may not be one dose level that applies to all-comers and we'll have to continue to dose escalate to explore that, but we're in a good position, as you mentioned, where the toxicity profile is allowing us to do that..

Perfect. Thank you, Raf..

Excellent. Thank you very much..

Okay. Thank you, Ted..

Next question comes from Gregory Renza from RBC. Your line is open..

Hi. This is [indiscernible] on for Greg, and thank you for taking my questions. I was wondering if you could provide more color around that dose-dependent anti-tumor activity that was mentioned in the press release just now. And what is your latest thinking around dose escalation beyond the 900 mg dose level? Thank you..

All right. So again, I'll start on it. Then I'll ask, Dr. Bejar to provide a bit more color around it as you asked for.

So as we have – especially in the B-cell malignancy patients, as we have continued to dose escalate at some of the lower dose levels, we are seeing some of the – what we call the markers or the indicators of activity, inhibition of BTK, induction of on-target lymphocytosis and some levels of tumor inhibition.

But as we went to higher and higher doses, we started seeing greater levels of tumor inhibition, and in particular, in patients, often when we would see who start out at one dose and then we would expand or increase them to a higher dose level. So I'll ask Dr. Bejar to step in at that point and talk about what we've seen there..

Yes. I think your example Bill is exactly the one that we're referring to, where you have a patient starts at a lower dose level, does not see the kind of activity you would hope to see, and then upon those, increasing the dose then begins to see improvements. And as we've gone to higher dose levels, we've also seen higher exposures.

So we're hopeful that will translate into greater activity. We have seen the phenomenon that we described at the EHA meeting, where some patients will initially come out of study and we'll see initial tumor growth.

And then in a couple of these examples, patients were allowed to dose escalate and actually have seen some reduction in that tumor growth in that peak, whether it be below baseline or not, it suggests that there is some activity as we get to those higher dose levels.

I think it's a good motivator for continuing to dose escalate and see if we can get greater exposure in individuals and therefore greater likelihood of response..

Yes. So let me play off that because she had also asked about possibly increasing beyond the 900 milligram dose level. So we're at the 750 now. We have plans to go to the 900 milligram dose level thereafter. We hope that we get increased exposure as we go to the higher dose levels. And we also hope it continues to be tolerated well.

If we see that the pharmacokinetics exposures continue to increase, it’s tolerated well, we would seek to increase beyond the 900 milligram dose level. If the PK is plateauing all four, if we see some safety signals that may take us in a different direction.

Did that answer your question?.

Yes, it did. Thank you. And I just have a quick follow-up, if I may, on the PIA assay. I was wondering, based on the data so far, what's your expectation around the serum level that will be needed to inhibit FLT3 with resistant mutations, and where does that translate in terms of dose levels? Thank you..

What's interesting is Dr. Bejar just mentioned just a moment ago, how diverse these patients are with AML. And we've actually presented some of the data with the PIA assay looking at FLT3. And it is clear when you get to 0.5 micromolar, you're inhibiting essentially all of the activity, the FLT3, in particular, when you have the FLT3-ITD.

But in these patients, FLT3 is only part of the – what's driving these tumors. So you'll have the FLT3 as well as the number of other tumors. So it is essential for us to show that we're inhibiting the FLT3 activity. But we also want to get as high as we possibly can to hit as many pathways as possible.

So you want to achieve the highest exposure levels that are tolerated in humans to try to hit the pathways as much as you can. And trying to think what else, [indiscernible] as we look to wild type, typically it takes a little bit more drug to inhibit the wild type FLT3. But we are seeing inhibition of that too. We have a PIA assay.

I think we're the only company that does this. We look at – we have two different reporter cells, one is FLT3 wild type, one is FLT3-ITD. And we've already shown that we also inhibit the wild type FLT3 at sub micromolar levels, and we do so very effectively.

But again, you need to inhibit the other receptors at the cell surface PDGFR-alpha, CSF1R, TRK as well as some of the internal the kinases, the SYK as well as maybe the ERKs and some of the ORs and some of the others. So we need more drug. We always want to try to get more drug in as much as it will be tolerated. Dr.

Bejar, do you want to add to that?.

Yes. I'll point out that it's tempting to look at a drug like lux and call it a FLT3 inhibitor. I mean, that is an accurate description of what it does, but it does so many other things that I think are relevant to its activity. And we have to take those into account.

And you asked specifically about the inhibition of the resistance mutations, for example, could arise in the setting of prior treatment with another agent. One of those resistance mutations can be the mutations that occur in the tyrosine kinase domain certainly with FLT3 inhibitors that are out there don't target that very effectively.

We know from preclinical data that luxeptinib is very effective at targeting those kinds of mutations that could arise in setting of resistance. The other mutation that can arise as a gatekeeper mutation F691L and our preclinical data again suggests that we have low nanomolar activity against that mutation also.

We haven't had the opportunity to explore that using the PIA assay specifically that we believe that we are well above the concentrations that should be able to do that in that type of in-vitro assay..

Thank you, Dr. Bejar..

Great. Thank you very much..

Next question comes from the line of John Newman from Canaccord. Your line is open..

Hi, guys. Thanks for taking my question. I just had a question on the type of patients that you're now enrolling for luxeptinib in the AML study, specifically at the 750 milligram cohort. I'm just curious if you're looking to enrich for FLT3 here, for example, or if you're taking all patients.

And also I'm wondering if you're getting any patients with prior successful transplants. And if you can talk a little bit about how much follow-up you might have on this cohort as we reached the end of 2021? Thanks..

All right. So the types of patients, well, we have not disclosed the types of patients definitively that are on the 750 milligram dose level. But I'll remind you, it is an all-comer in which we have both FLT3 wild type and FLT3 mutated patients. It is clear that we have shown activity already against the FLT3-ITD mutant patients.

We clearly want to get additional patients like that on the study to be able to prove that we can have activity against multiple FLT3-ITD patients, because again, everyone of those represents a different patient, almost a different disease because they have such a wide diversity of other mutations, and they've been treated with different drugs coming into that.

At the same time, we absolutely want to have the FLT3 wild type patients. And when I say that, okay, it maybe wild type FLT3, it maybe overexpressed wild type FLT3. But again, you have all these other mutations in there that gives rise to the disease. So we want to provide balance and we've talked about that all the way through.

We clearly want to have the FLT3 mutated as well as wild type patients.

In terms of patients that have received successful transplants, we highlight one patient in particular, it's the patient in which we reported the complete response, the MRD-negative complete response, that patient have had two successful transplant and then relapsed after several years after the successful transplant. So perhaps, Dr.

Bejar would like to add a bit more to that and talk about the data coming..

Yes. We do allow patients that have had prior transplants on study and then subsequently relapsed in several other patients who have met those criteria. We do also try to balance our cohorts to include wild type and FLT3 mutant patients with sites selecting the patients that they believe are more likely to respond to help us with that.

So we are not trying to limit the enrollment in any way. We want to get a clean picture for both wild type and FLT3 mutant patients as we make decisions about how they go into expansion. And then you asked about how much follow-up we will by year-end.

You can gauge from when we have announced progress in the study, how much time it will be from that point. And as we mentioned, we believe that we'll be able to complete the 750 milligram dose escalation cohort for AML with the patients that we currently have enrolled..

Great. Thank you..

Yes. Okay. Thank you. Next question, please..

Next question comes from the line of Alethia Young from Cantor Fitzgerald. Your line is open..

Hi. This is Emily on for Alethia. Thanks for taking our questions. I'm curious if you have any updates on potential combination approaches for AML.

Do you plan to maybe add combination cohorts in the dose expansion portion of the Phase I study? And if so, what agents would you potentially consider? And then I'm also curious, as you said that you would have the dose expansion strategy by year-end.

How does the 900 mg dose cohort fit into that? Do you think you could potentially enroll that by the end of the year? Or if not, what are your thoughts about that? Thank you..

All right. Hi, Emily. So again, we'll tag team. This one I'll start out. In terms of the combination approaches, we absolutely want to pursue combination approaches. We've shown this drug has activity as a single agent.

We want to prove that in expansions with specific either genotypic or phenotypically defined patients that is as a single agent monotherapy, we're pursuing that. But in parallel, we do plan to perform a drug combination studies. We haven't disclosed exactly which ones that we're going to pursue yet.

We will continue to collect data throughout the remainder of this year with the current study, the patient populations. And then see which types of combinations would be appropriate in the particular patient populations. For that I may see it maybe relapsed refractory and more first-line.

And depending on what we see in the patient types that we look at, we’ll choose the drug combinations appropriately. And then in terms of the 900 milligram, how does that fit into the process? Well, again, we're going into the 900 milligram, if it is tolerated well. We're getting greater exposure, then we will continue to dose escalate.

That will then impact the timing of the expansion cohorts. We may decide to move on with the 750, 900 or possibly a higher dose level. We will follow the data, which is what we always do, and try to make some rational decisions and then provide you with additional information toward the year-end. Dr.

Bejar, any additional?.

Nothing additional to your comment about the 900 milligram cohort. I think that's accurate.

With regard to combinations, we want to be able to combine with other agents because we think that the future of the treatment of AML will be in combination just as it has been for other hematologic malignancies, where they have several therapeutic options available, like multiple myeloma, for example.

And I think one of the keys to that is to have a drug that doesn't bring added toxicity to the table. So that you're able to combine more cleanly with another agent, not necessarily exacerbate the toxicity and be able to push the doses that are likely to be therapeutic for both..

Yes. Great point. I should have brought that up. Thank you, Dr. Bejar. All right. And thank you, Emily..

Next question comes from the line of Matthew Cross from Alliance Global Partners. Your line is open..

Hey, guys. Hope everyone is doing well and then thanks for taking a couple of questions from me. I think you kind of laid out well the rationale for dosing higher in both of these trials, now that we're getting up to 750 and potentially going on to 900, it sounds like.

I was curious how much of a priority you feel it is also to either backfill or dose escalate due to the dose levels where we've seen pretty substantial exposure. So the 600 and 750 milligram dosages and whether that differs based on the indication we're talking about. And kind of the second part, similarly, as we're getting higher up into dosage here.

I guess you were talking about in the preclinical setting moving from QD to BID. I was curious, if we're moving into potentially 900 if not the end of this year, then probably really next. And you're giving I guess 750 about five pills twice a day, 900 will be six twice a day.

I was curious, if you could speak to whether pill burden has been a problem at all for these patients, or if there's a way to circumvent that? I believe there was some maybe transient commentary about formulation work. So I was just curious to get some insight there as you are dosing higher? Thanks..

All right. Thanks, Matt. That was great to have somebody on the phone that looks down on me. So let me start with talking about as we dose escalate the pill burden. So yes, you are correct. In the past, we have mentioned formulation development activity, but we really haven't said that much about it, except that we continue to pursue it.

At 750, we do have five capsules twice a day and 900 it will be six capsules twice a day. So we would look to reduce that pill burden. There are a couple of ways that we can do that.

But one of the things that we are doing is as with most drugs, in Phase I and Phase II efforts continue then to improve the formulation as you move towards the later stage development, as well as commercialization.

And we're often asked about the potential for new formulations for lux, given that our formulation does require administration of such high doses. We have been developing a new oral formulation that we believe it may significantly improve absorption of lux. The new formulation has been successful in non-human models to date. It's very encouraging.

We're actually preparing it for GMP manufacturing, stability test in preparation for advancement to the clinic. What I would say is we're happy with what we're seeing. We're happy with what we've seen in animal models – multiple animal models to date.

As I said, we are moving it forward toward GMP manufacturer, but also remind you that the manufacturing stability, regulatory risks still remain. There are no guarantees that this will actually work in humans that we will show improved properties. But we feel like it's getting to the stage now that we can actually talk about it a bit.

I appreciate you asking the question. So it is promising, it may reduce the pill burden, it may reduce the amount of the milligrams that we have to give each day to humans, and so we're keeping our fingers crossed, everything looks good thus far, but we're not quite there yet, and we hope to get it into humans as soon as we can. So good question. Okay.

So what was the follow-up?.

I can take the backfill question.

Shall I go?.

Okay. Thanks. Please do..

You mentioned about backfilling and then further dose escalating patients. I think backfilling provides us with several advantages. One just fairly straight forward advantages that it can be frustrating to enroll patients to a Phase I study in dose escalations, there are a limited number of slots.

Patients can't wait necessarily until the next dose cohort is open. So having a mechanism to put a patient on a study in a backfill when the dose escalation cohort is closed, it's often welcomed by sites and continues to favor ongoing site engagement.

But from our standpoint, what we're trying to learn more about the safety and efficacy of the drug, it gives us the opportunity to explore more patients and to get at some of that diversity at AML by putting patients with different genotypes or phenotypes on study, then we might otherwise be able to do during dose escalation.

So it is an opportunity to learn more about the agent and get more patients on. So we think it's a win-win. It's really positive for us understanding the drug. It’s positive for patients who would like to get on study, and it's positive for the sites who are sometimes frustrated with the pace of the Phase I dose escalation study..

Thank you, Dr. Bejar.

Operator?.

We have time for one more question, Matt Biegler from Oppenheimer. Your line is open..

Oh, hey bingo. Thanks guys for squeezing me in. I definitely don't look down on you. I have to look up to you. I'm only 5'10. I’ll ask maybe a multi-part question on the evolving treatment landscape in CLL and maybe how that's affecting demographics in your Phase I trial.

Specifically, are you noticing any uptick? Are you getting any patients with prior non-covalent BTK exposure? And I kind of wanted to hear your thoughts to the follow-up on emerging resistance mechanisms to the non-covalent class as a whole, and whether you think lux might be able to show some effectiveness here? Thanks..

All right. Again, I'll start and then we'll ask Dr. Bejar to come in. So in terms of the evolving landscape in CLL, you ask in particular, if we're seeing patients that are getting treated with non-covalent BTK inhibitors. And the answer is yes.

We're seeing patients that have been treated with effectively every type of treatment out there and they failed those and then they come to us. So it is – many of these are very heavily pretreated patients, whether it's the covalent BTK, it’s the non-covalent BTK inhibitors, Venetoclax, rituximab, PI3K inhibitors, EIO. And Dr.

Bejar can talk a little bit about more of that. But let me just mention very quickly, in terms of the resistance that we're beginning to see in a lot of these patients. Yes, of course, you will get some patients coming forward that have mutations in BTK, but those are actually quite rare.

Most of them that we're seeing emerge now or in the RAS and the BPT3 pathways. So we think that is an area that's keen for us because once you start getting the RAS and of the [BPT3] mutations, most other drugs, you don't see activity, or you lose sufficient activity that you just cannot achieve those exposure levels in the bloodstream.

We've actually done studies, Dr. Brian Druker did studies with various cells that had RAS and BPT3 mutations, and they maintain sensitivity for lux. So we're hoping that as patients fail the other types of molecules out there and the best array of other molecules, that it's actually driving the cells towards sensitivity to our drug.

But again, these are very experienced patients. Dr. Bejar, would you please add..

Yes. I think that's correct. I think that we are seeing patients that have had that kind of prior exposure in some of our sites. I don't think we entirely understand what the patterns of resistance are going to be for them, but obviously the patterns of resistance we've seen ibrutinib aren't just the mutations versus of the enzyme itself, BTK.

They also include other pathways like PLCgamma2 and so on. So it’s unclear to me if non-covalent inhibitors will having superior activity in those cases where the BTK molecule itself isn't mutated, but they themselves may induce other mutations of BTK that we'll have to explore with regard to the activity of our drug.

I think it's too early to know yet..

Makes sense. Thanks guys..

Thank you, Matt..

And I am currently showing no further question. I will now turn the call back over to Dr. Rice for closing remarks..

All right. Well, I want to thank everyone for joining us this afternoon. We are at a very exciting stage here with Aptose development. None of this would be possible without the dedication of our employees, investigators and more importantly, the patients who are helping advance our important work.

We're also very pursued by our shareholders ending at research analysts. And we thank you for your continued support. We look forward to keeping you all appraised of our progress in the second half of the year. And I want to thank you and have a wonderful evening..

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