Good afternoon. My name is Vena, 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, 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, Vena. Good afternoon. And welcome to the Aptose Biosciences conference call to discuss financial and operational results for the third quarter ended September 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 third quarter ended September 30, 2021. Today, I want to spotlight the actions we’ve taken during the past quarter and over the entire year to build value in Aptose.

Our company focused on the effective treatment of hematologic malignancies and a company with expertise in kinase inhibitors, and with an expanded team to develop them.

This includes a look at our newest program, HM43239 or just 239, an oral once-daily myeloid kinome inhibitor that already has delivered multiple complete responses and a broad spectrum of AML patients. And for which just last week, we announced an exclusive global license agreement with the Hanmi Pharmaceutical Company.

We also will provide an update on luxeptinib or just Lux, our oral highly potent, non-covalent kinase inhibitor, with dual activity as a myeloid kinome inhibitor and a lymphoid kinome inhibitor. And we will address what this latest transaction with 239 means for Lux.

From an investment in catalyst thesis, 239 added a more advanced derisk asset with proven clinical activity to our portfolio, a molecule that dramatically increases the probability of success for our therapeutic pipeline. And we believe this deal increases significantly the overall value of Aptose by any rational measure.

239 is not a sudden revelation to us. As a matter of course, in our proactive business development efforts and our team focus, we continue to evaluate many compounds, even molecules at very early stages, as evidenced by our agreement with CrystalGenomics for Lux.

We developed a relationship with the Hanmi team some time ago and all the while we’ve been watching 239 and moving toward a partnership as a clinical validation data began to emerge over the past 12 months. Indeed, 239 entered the clinic for the treatment of AML patients a year earlier than did our other kinase inhibitor Lux.

And in that time, 239 has achieved multiple complete responses or CRs with a favorable safety profile. This is an effective and well tolerated drug that already has changed the lives of critically ill AML patients, harboring adverse mutation profiles that render them non-responsive to other drugs.

So, 239 fits exactly into the type of agent that defines our goals at Aptose. The timing of this deal was driven by the emerging clinical data with 239, as was illustrated in the ASH abstract released last week and the emerging competitiveness for this program. And I want to recognize Dr. Marango for orchestrating and negotiating the deal.

We’re thrilled to take the reigns for the development of this clinically proven agent as an addition to our evolving pipeline and to move rapidly through the next steps of development. As a complementary addition to Lux, 239 strengthens Aptoses ability to treat a wider spectrum of AML patients.

So how does this deal for 239 impact Lux? To be clear, 239 is an addition to our pipeline. It is not a replacement for Lux. Lux stands on its own merits and we intend to develop Lux to its full capacity.

Lux is being tested in relapsed/refractory AML patients, where it already has achieved a complete response and in highly relapsed or refractory B-cell malignancy patients, where we have begun to see consistent signs of anti-tumor activity.

Some of you bluntly have asked, if we believe that Lux will be active in AML patients, then why did we in licensed 239? The short answer is, we want to own this therapeutic space and adding 239 to our pipeline, along with Lux is an important step toward that vision.

The longer answer is, it’s because AML represents a collection of many forms of acute leukemia and not one single disease, because AML is so mutationally diverse. No one agent can fully cover the range of all oncogenic drivers in all AML patients and we’re focused on treating the patients rather than merely treating a target.

As we’ve said in the past, there’s room for many agents in the treatment of AML. While some consider AML, a disease driven by the FLT3 kinase, FLT3 is only one of the targets that you might want to cover in the disease.

AML patients may have internal tandem duplication, tyrosine kinase domain or gatekeeper mutations in FLT3 or no mutations at all in FLT3, or mutations in a multitude of other genes, including NPM1, TP53, IDH2, RAS and many others. And each mutation or epigenetic alteration can program the cell to behave in a different manner.

And therefore it is essential to cover as many targets albeit as safe as possible and disrupt as many oncogenic pathways and escape routes as possible. Simply not all genotypes of AML will be effectively targeted by any single drug.

This is why we want Lux that covers FLT3 and a particular constellation of kinases operative in AML and we want 239, that also covers FLT3, but then covers a different constellation of other kinases. We plan to develop each molecule, which can lead to a broader coverage of kinases and AML patient populations than any one drug.

For any AML patient to achieve a complete response with a drug, that patient’s disease must have a target profile that can be subjugated by the drug and the drug must be administered at a level that suppresses those targets. With 239, those levels already have been achieved in multiple patients reported to-date with complete responses.

While we already have achieved therapeutically active levels with 239, Lux is earlier in development for AML. Yet we already have reported one durable complete response with Lux in an AML patient.

We continue to dose escalate Lux, now at 900 milligrams with our current formulation to drive higher exposures to suppress additional oncogenic driver kinases and effectively treat additional patients.

In parallel to those dose escalations with the current formulation, we also are developing a new formulation for Lux, referred to as generation three or G3, that an animal studies can deliver 30-fold greater exposures per milligram of drug administered.

The G3 capsules have been GMP manufacturer, have passed stability test and we plan to introduce G3 into our ongoing clinical studies in 2022. We hope G3 will reduce significantly the bill burden and the amount of drugs substance administered to patients and this could be a meaningful step for Lux as we advance it through the clinic.

While I have spoken about Lux being administered to AML patients, I’ll remind you that Lux also is a lymphoid carcinoma inhibitor and we’re developing it for patients with B-cell lymphoid malignancies, where we continue to see anti-tumor activity and we will update you at ASH.

So the progress we’re observing with Lux and our ongoing clinical trials, over and above are the therapies that already have failed these very difficult to treat patient populations is encouraging, and we are hopeful that Lux will prove to be valuable for a diversity of hematologic cancers. Before I hand the microphone to Dr.

Bejar, I want to bring the focus back to my original statements. We now have expanded our pipeline, we have dramatically increased our potential for pipeline success by adding 239, while also maintaining a value stream and can diction to the development of Lux. Now, I will ask Dr.

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

Rafael?.

Thank you, Bill. We’ll start with what’s happening with our oral highly potent mutation agnostic kinase inhibitor that selectively targets clusters of related kinases and suppresses the mutations that occur in AML and CLL cells that could render such cells resistant to other agents.

Thus far, Lux has been shown to target the primary drivers of B-cell malignancies and AML including BTK and FLT3, with a precision that avoids known targets which is TEC, EGFR and ErbB2, which are often associated with toxicity.

This selectivity is what sets Lux apart from other hematology drugs in the market or in development and what makes it compelling as a clinical agent.

Let’s review Lux and B-cell malignancies, including chronic lymphocytic leukemia, CLL and non-Hodgkin’s lymphomas or NHL who have been failed by or intolerant to two or more lines of established therapy. This includes drugs such as ibrutinib, rituximab and venetoclax or those from whom no other treatment options are available.

Patients in our trial received from two to 12 regimens prior to enrolling in our study. I’m pleased to report that since our last update, we have completed the 750 milligram dose cohort and are now enrolling patients in the 900 milligram dose cohort.

Lux continues to be well tolerated in patients treated with up to 750 milligrams twice-daily over multiple cycles. Of the valuable patients of these dose levels, we’ve observed repeated tumor reductions across different disease types, including tumor reductions in both aggressive and indolent cancers.

We will give specific data on this activity during our corporate update event during ASH in December. Lux is clearly demonstrating that it is an active drug, but like ibrutinib it is not well absorbed. So we continue to push the dose in order to increase the exposure levels, which is key.

We’re looking to get dose exposure levels that can achieve complete eradication of tumors as we did in preclinical studies. At the same time, as Bill just mentioned, we spent a lot of time and effort on a new formulation of Lux that will be better absorbed. We’re pleased with where we are with that new formulation, and we’ll keep you posted.

Now let’s try the Lux in AML, acute myeloid leukemia or AML is a particularly difficult to treat hematologic cancer, of all the patients in our AML trial have 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 other therapies like venetoclax, chemotherapy and investigational drugs.

So this is an extremely tough to treat patient population. Earlier in the year, we presented data that demonstrated blast reductions, as well as the patient who experienced a durable MRD negative complete response.

In this trial, like our B-cell trial, we are now enrolling patients at the 900 milligram dose cohort, some patients remaining on treatment at lower dose levels.

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 or increases in exposure.

This tolerability profile is critical, because it is allowing us to reach the higher dose levels and should permit future use of Lux in combination with other agents. Now let’s talk about our newest program, HM43239 and our clinical plans for this exciting agent.

239 is currently in a Phase 1/2 clinical trial in six centers, three in Korea and three in the U.S. In our last call, we described an impressive preclinical profile of 239, superior to go through them as a single agent and when combined with the BCL-2 inhibitor venetoclax or the hyper method agent we cited [ph].

This already has translated into strong anti-leukemic activity and a diverse array of AML patients delivering multiple CRs early in a Phase 1 trial thus far and has been well tolerated to-date. In three of the four CRs reported in the ASH abstract patients underwent at hematopoietic stem cell transplantation remained a lot.

The CRs occurred in AML patients with the FLT3 ITD mutation, the FLT3 TKD mutation and the wild type form of FLT3 as well. The AML in these patients harbored additional mutations in NPM1, TP53 and NRAS, IDH2 and other important key drivers of AML.

One FLT3 went that patients with a complex karyotype and TP53 mutation has experienced a durable CR lasting many months. Another patient with a FLT3 TKD mutation who was refractory to prior treatment with might have stolen at later gilteritinib achieved the CR was able to undergo allogeneic transplantation.

To summarize, at an early dose level, 239 has shown broad activity across several major AML genotypes, representing a potentially genotype agnostic agent. A potential minimum therapeutically effective dose has already been identified. However, because of the favorable safety profile to-date we are exploring higher doses.

The trial has cleared the 120 milligram dose level and recently cleared the 160 milligram dose cohort, with no dose limiting toxicities and patients now are being enrolled in the 200 milligram dose cohort.

Based on the strong signals already seen today, as well as new lessons from these later cohorts, we plan to move aggressively towards registration director development.

This includes ongoing studies of 239 as a single agent and particularly difficult to treat patient populations, for those who genetic markers or response, as well as combination studies that would allow 239 to complement existing therapies and moving to earlier line of treatment.

Last week, we distributed the press release on the ASH abstracts that were accepted for presentation in December, which include an oral presentation on clinical results for agent 4239 and poster presentations on Lux and B-cell malignancies and an AML, as well as a poster on APTO-253 our MYC expression.

Because of submission cutoff dates, the Lux abstracts in particular were largely based on previously announced data. The actual posters will contain some incremental data and our plan corporate event will bring you up-to-date on our more recent data and all of our ongoing studies.

We are pleased by the progress across our clinical programs and that the safety and tolerability of all our drug candidates, Lux, 239 and APTO-253 our long dose escalation in all of our ongoing trials.

As we treat more patients at higher doses, we are generating additional pharmacokinetic and pharmacogenetics data and we look forward to providing in further updates at the ASH meeting later this year. For more information on all of our ongoing clinical trials and clinical sites that are recruiting patients, please visit clinicaltrials.gov.

I will now turn the call over to Dr. Jotin Marango, our Chief Financial Officer and Chief Business Officer who will review financial results for the first quarter.

Jotin?.

Thanks, Rafael, and good afternoon, everyone. First, a quick summary of the key terms of the licensing agreement for 239, for exclusive global rights to 239 for all indications, Hanmi will receive an upfront payment totaling $12.5 million, which will include $5 million in cash and the rest in Aptose shares.

Hanmi will also receive up to $407.5 million in future milestone payments, contingent upon the achievement of certain clinical, regulatory and sales milestones across several potential indications, as well as tiered royalties on net sales. Now look over our quarterly financials.

We ended the third quarter with approximately $95 million in cash, cash equivalents and investments. During the quarter, we utilized approximately $8.1 million in operating activities, which were attributable to activities surrounding our pipeline candidates, as well as general and administrative purposes.

Based on current operations, cash at hand on September 30th, provides the company with sufficient resources to fund all planned company operations into early 2023. Moving on to the income statement, we had no revenues for the quarter.

Research and development expenses were $7.7 million for the quarter and were attributable to clinical trial costs for our pipeline candidates, manufacturing of drug product for clinical trials, including continuing development of improved formulations for pipeline candidates and personnel costs for headcount supporting clinical trials and manufacturing activities.

G&A expenses for the quarter were $3.6 million and our net loss for the quarter was $11.3 million or $0.13 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, Jotin. As we open the call for questions, please feel free to pose a question to any of us. Operator, if you could please introduce the first question..

[Operator Instructions] Your first question comes from the line of Alethia Young of Cantor Fitzgerald. Your line is open..

Hey, guys. Thanks for taking my question and congrats on an interesting, nice Bill.

I have a couple questions from me, one, maybe -- can you just talk, I mean, obviously, this asset looks very interesting, is that active? Why would Hanmi like want to give up the asset is one question and I’m just curious about [inaudible]? The second question is, you’re on does escalate, right, I think, to 200 milligrams.

But do you think you kind of do you think you’ll see more at that or do you kind of feel like you’re saturating the target.

I mean obviously it feels like you might be testing the hypothesis, but the data look pretty good as they are? And then the third question is, Lux, I know the abstract, but can you characterize maybe what incremental numbers of patients or any information that we might get at ASH? Thank.

Hi, Alethia. This is Bill. So I’m going to ask Jotin to describe intellectual autonomy and to give the perspective of quote while they might want to give it up. And then I’m going to ask Dr. Bejar to talk about the escalation plants.

Jotin?.

Yeah. Thank you, Bill, and thank you, Alethia, for the kind words and the question. Perhaps, the way that I would -- that I will address the question about Hanmi, since that is probably a more appropriate question to ask them rather than us.

Perhaps the way that I will address it is that, they’re not really giving up this asset, they were seeking for a partner that would be able to create the most value. And when thinking of it that way, they recognize Aptose being such partner.

So they had observed from far away the way that we licensed Lux at the preclinical stage and took it through multiple phase one studies. And that was very reassuring in the field of kinase inhibitors.

They probably observed the way that we interact and take advice from some of the top leaders in the field, some of whom are in our Scientific Advisory Board, doc, physicians and scientists such as Brian Druker, who are some of the fathers of the field of kinase inhibitors.

And so a lot of these we believe have strengthened their comfort and their belief, their conviction in Aptose ability to move this asset forward and to create the most value..

Thank you, Jotin. And Dr. Bejar..

Sure. I can address that second question.

You asked if we are just continuing to dose escalate and have already seen signs of activity? How will we decide when we reach the appropriate dose if I can paraphrase your question? So you’re right that we already have some signs -- impressive signs of activity at early dose levels in the study and we continue to just escalate.

But I will remind you that this is not just targeting FLT3 and this drug has multiple different targets. And even if one target is saturated, that may not be the driver for that particular patient.

So we do want to continue to dose escalate, to cover the broadest number of targets that we can safely, which we hope will translate into greater activity for a broader set of patients in the AML study, including those patients that don’t necessarily have the mutant disease, having shown already two responses in patients without mutation..

And then ASH, have you said good luck, but how many more people will see at the different dosing levels?.

Well, we haven’t given any information publicly yet. So with Lux, we’re continuing to dose escalate in the B-cell malignancy trial, we’ve completed the 750 with the 900 milligram dose level. What we have said is that, as patients are on drug longer and higher doses, we’re beginning to see greater levels of activity, we will present those data.

Also, we continue to dose escalate in the AML trial. Again, we’ve completed the 750 milligram dose level and we’re at the -- we’re exploring the 900 milligram dose level at this time and we’ll continue to accumulate the data and present the data on all the patients at a corporate event that should occur at around the same time as ASH.

Thank you, Alethia..

Okay and congrats on a very smart deal..

Thank you. Appreciate that..

Your next question is from the line of Gregory Renza of Capital -- RBC Capital Markets. Your line is open..

Yes. Good afternoon, Bill and team. Congrats on the progress again and thanks for taking my questions.

Bill, maybe with respect to 239, just curious if you could comment a little bit about as Hanmi historically has kind of characterized 239 with respect to FLT3 inhibition, what specifically or maybe even broadly, would you speak to and your team speak to you around the broader characterization, if you could just point us to or highlight again, some of the preclinical work that you’ve seen or done or even ongoing, that gives you confidence that it is not just that that plain inhibitor that leave you in a team fully excited? And then maybe secondly, it’s helpful just….

Okay..

Yeah. Go ahead..

Why don’t we tackle that one then go second? Okay. So it’s a really good question. So when people think about AML, very often, this is what I was saying, they think about FLT3 is a target. So if you have a drug and it’s a kinase inhibitor, they -- people will often promoted as a FLT3 inhibitor.

Now, if you’re going to do that, you need to inhibit all the different forms of FLT3, you need to inhibit the wild type, the ITD, tyrosine kinase domain, gatekeeper, all the different forms. But there is no absolutely selected kinase inhibitor out there.

So as we look across these, we want to make sure we have a compound that, as we said, can cover FLT3, but we also look at that broader kinome that they’re inhibiting. And if they’re going to if this drug is being directed toward AML, we want to make sure that they’re hitting, we call it a myeloid kinome constellation of kinases.

Again, we’ve talked about this one has inhibited SICK, very potent inhibitor of SICK, we made sure all of that was confirmed, it does inhibit FLT3. We also mentioned that it also inhibits the mutant but not the wild type forms of C kit. So that’s potentially could take into other areas.

But what I would say is, they -- all of these kinase inhibitors will inhibit a different constellation.

The most important aspect here is, in preclinical studies, when they put it in various animal models, it out competed gilteritinib in a variety of different animal models in which the AML cells had mutations, in FLT3 or wild type FLT3, it also worked in collaboration -- in combination -- very well in combination with other drugs without inducing additional toxicity, the hypomethylating agents, venetoclax, as well as other agents.

So it was those early preclinical data and even in AML cells that had even other mutations where drugs can’t work that well. And those strong preclinical data then have been translated into the clinic with humans.

So what’s absolutely most important is that we see those strong preclinical data and then see data beginning to emerge as you get into the therapeutic levels in humans and they’ve seen the broad activity in humans. So whatever that constellation of kinases is, we like it. It’s the appropriate set of kinases for a broad set of AML patients.

None of them will cover all AML patients, but we really liked this constellation and we’re seeing the broad activity in patients. Okay, so question number two..

Actually, Bill, I think you even answer my follow up. That’s super helpful..

Wow!.

And we’re looking forward to ASH. Thanks again..

Thanks so much, Greg, for being on here..

Your next question is from Joe Pantginis of H.C. Wainwright. Your line is open..

Hey, guys. Good afternoon and thanks for taking the question. I have a logistical question and a corporate question.

So first, Bill, when you were discussing the G3 formulation for Lux, I guess, can you describe the process that will be required to get it included into studies? Do you have to do a separate bridging study first or do you think you’ll just be able to start dosing within the current?.

Hi, Joe. Thanks for being on here? Really good question. So this is quite a different formulation. So when we had G2 that was just machine filled versus hand filled or the original G1 formulation. It was easy to just blend that into the or merge it into the ongoing clinical trial.

But this is a very different formulation and it gives us much higher levels of exposure per milligram. So the process is you must understand what it’s doing in various animal models. We’ve done that. Single dose, acute dose toxicity, seven-day dosing, 28-day dose, we’ve actually completed all the 28-day GLP tox studies in rats and in dogs.

We don’t have the report yet. But that’s been completed. So all of that needs to be done. But what we want to do initially is try to get it into patients, as soon as possible, get a quick peek at the exposure levels and then make a decision as to what is the appropriate dose levels for multiple dosing for continuous dosing.

We will work through that with the FDA. Again, part of the process is making sure that you work appropriately with the regulatory agency, have a plan, how you’re going to get into humans presented to them, execute accordingly and then go back to them and work through this. So it’s been a long process to get here.

It’s taken many, many months and much effort to identify this one. We’re very hopeful for this formulation. First one we’ve been willing to speak about. Okay, so that’s the high level on G3 and then you said you had a corporate question..

Yes. Thanks and that was very helpful. So, I guess, look, obviously, you’ve had a lot of, the -- nice hires over the last several months and even recently.

So, I guess, when you look at the corporate plans for the company, where do you feel you are right now, are you right sized at this point or do you anticipate future growth with regard to certain positions and how we can link that also to potential manufacturing needs?.

Again, very good question. Very insightful. So, yes, we have been expanding the company. We trying to bring on the experience skill sets that would allowed us to develop a multitude of molecules.

We -- again we want to focus in hematology, we want to focus on kinase inhibitors and we want to have multiple drugs to move forward across heme malignancies, both AML, as well as the lymphoid malignancies. So just as we brought in Dr. Bejar to drive us forward. Now we have Vice President of Regulatory, Finance, Operations, Clin offs at our CMC.

So all of these key areas. So right now we have the vast majority of key hires that we need, not going to preempt any additional hires that we may want to look at into the near future. But the great part is we’ve been able to gradually build a team, the right people at the right time. It’s a great mix of the right people.

And now we have the ability to not only execute on the luxeptinib, but also now to bring on this new molecule and make sure that we don’t have any missteps there. So, yes, we’ll continue to grow as appropriate. We don’t want to waste money, but we want to make sure you have those skill sets at the right time.

So, Jotin, did you want to add anything to that?.

No. Nothing to add. Thank you, Joe..

Yes. Thank you, Joe..

Thanks, guys..

Sure. Thanks..

Your next question is from Matt Biegler of Oppenheimer. Your line is open..

Hey, guys. Thanks for the question. Bill, you kind of touched on this a little bit in the prior question. But I just kind of want to ask you point like, what do you think is attributing the 239’s activity in FLT3 wild type patients? That’s pretty impressive.

And do you think, I mean, are you guys considering a mutation agnostic label at this point or is it kind of too soon to tell?.

So I’m not going to go into every potential kinase that hits or doesn’t hit. So we did mention that this drug potently inhibits the wild type FLT3. So in some of these patients that have, we’ll call it, unmutated FLT3.

You may actually have over expression of the wild type FLT3, that’s sensitive to a FLT3 inhibitor, if your drug actually is potent on the wall type. Often, you will also get over expression of the ligand in the bone marrow that binds to FLT3. And so in this case, having the ability to inhibit the wild type FLT3 is very important.

But also, as you look inside the cell, you’re able to see a variety of pathways that are inhibited. We mentioned SICK, we’re able to watch the SICK pathway, we inhibited the phospho SICK downstream will you have the step pathways to earth pathways and a variety of these.

So we’ve actually been, even though this just drug, we just licensed it this past week, we’ve been looking at it inside the cell already to try to understand all these different pathways.

And what I will tell you is, every AML cell that you look at, has a different set of pathways and different redundancies and you just need to hit as many of those as you can, but not hit the safety targets. And this hits enough of those of the key ones to have broad activity and so we’re very happy with that. Now in terms of the label.

Again, we’re very early in Phase 1. We’re thrilled with the activity we’ve seen. We -- as Dr. Bejar mentioned, a couple of the patients, the activity some of these were FLT3 mutated. I mentioned one that had failed the other TKIs.

If you’ve got a drug that can inhibit various -- that can act on patients who have failed other TKIs, patients, even the wild type that have failed some, excuse me, they have some of these other mutations that other drugs have not been able to address. So we believe there are multiple paths for single agent development, as well as combination.

So that was long winded..

Okay..

But Dr.

Bejar, did you want to add anything to that at this point?.

No. I think you nailed that exactly. There are multiple pathways including wild type pathways that are operable at AML and the drug that has activity against the wild-type to form FLT3 to have activity there, as well as the other targets you did that..

Yeah. That makes sense. Definitely looking forward to seeing that kind of profile, when it’s presented. I just had a quick housekeeping question for Jotin on the finances of the deal. How are you guys planning on recognizing that $5 million upfront as part of it? Should -- would that be bulk next quarter or is it going to be spread out? Thanks..

Yeah. Thank you, Matt, for the questions. So we reported -- and just to give you a larger frame here, we reported our cash balance today was $95 million as of September 30th. That does not include the cash component of the upfront payment to Hanmi, which was $5 million.

That amount will be paid within this calendar year, as you will also find in the full license agreement that is filed on EDGAR. Thank you..

Thanks, guys..

Yeah. Thanks, Matt..

Your next question is from John Newman of Canaccord. Your line is open..

Hi, guys. Thanks for the question and congrats on an interesting deal here, certainly..

Thanks, John..

I’m curious in terms of going forward with, I guess, the current study, as well as dose escalation. It looks like in the ASH abstract, there were a couple patients that received a stem cell transplant after a CR, which is happens in AML. It’s not uncommon.

Just curious in terms of the way that you would like to conduct the study at some of the higher doses, if you would look to sort of establish a framework where doctors will be encouraged to put patients in a stem cell transplant, if they achieve CR or if they wouldn’t or if you would just leave it up to them.

Just kind of curious as to how you’re looking at that?.

All right. Thanks, John. Appreciate you coming on. So I’m going to give just a very broad statement, then I’m going to ask Dr. Bejar to jump in. The good news is, we have seen very broad activity in AML patients with this drug.

And it’s actually great news that they can then be taken with CRs over to transplantation and for what -- from what we understand those patients remain alive. So that’s great news. People will ask about durability of your drug.

We actually have one patient who’s a -- who was on there for a long time, as -- that did not go to a stem cell transplant and I believe that was also an abstract. We’re not going to speak beyond what’s in the abstract now, because the global PI is going to be presenting the all the information at ASH in an oral presentation. But I am going to ask Dr.

Bejar, just to step in on this and talk about the current study in dose escalation..

Yeah. Thanks, Bill. You’re exactly right. I think when we have an AML study in a relapsed/refractory population, you have the ability to put that person into remission and take them to transplant. From a clinical perspective, that’s an absolute win. I understand it doesn’t help you understand the durability of the drugs but the patient comes first.

That said, not all patients will be candidates for allogeneic transplant, some will have been transplanted earlier, some will just completely not the good candidate for other reasons and those patients would stay on drugs until either they progressed or hit some other events.

So the data that we’ve seen so far have been incredibly encouraging that in the abstract, noting that three out of the five CRs had moved on to transplant and the patient who didn’t, as Bill mentioned, had a very durable response lasting many months, much longer than the median might expect, especially given the genotype, which one of you expect to relapsed relatively early.

So we want to be mandating one way or the other whether patient should be considered or shouldn’t be considered for allogeneic transplant that would be at the discretion of the investigators. Of course, we would be happy if the patient were able to move on to potentially curative therapy after our drug..

So I guess, to the point we talked about earlier, we want to treat the full patient, if we can get them to a transplant and that’s the best thing for them, we consider that a win, okay.

Al right and what’s going to encourage physicians to put patients on here CRs, the responses will encourage the physicians to continue to put patients on here, all right..

Yeah..

Thank you, John..

Great. Thank you..

All right..

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

All right. Thank you. And let me just thank everyone for joining us this afternoon. We believe that both 239 and Lux are truly remarkable and distinct assets that will bring us significant value to the company, to our shareholders and we look forward to updating you more on our evolving pipeline next month during ASH and then also going into 2020.

We should have a catalyst -- set of catalyst going through 2020 and be sure to watch that. Thank you so much..

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