Aptose Biosciences Inc. (APS) Earnings Call Transcript & Summary

Good morning, all. I'd like to call to order this Annual and Special Meeting of the Shareholders of Aptose Biosciences Inc. I'm Dr. William Rice, Chairman of the Board of Directors, President and Chief Executive Officer of Aptose, and I'll be serving as the Chair of today's meeting. Joining me today are other directors who have joined us either online or in person, including Dr. Denis Burger, our Lead Independent Director; Dr. Erich Platzer; Mr. Warren Whitehead; Ms. Carol Ashe, Dr. Bernd Seizinger and Dr. Mark Vincent. Other members of senior management joining us today are Mr. Fletcher Payne, Senior Vice President, Chief Financial Officer and Corporate Secretary; Dr. Rafael Bejar, Senior Vice President, Chief Medical Officer; and Dr. Philippe Ledru, Senior Vice President and Chief Commercial Officer. It's my pleasure to welcome the shareholders and employees of Aptose and other invited guests to this meeting. This year, Aptose has opted for a hybrid format for the Annual Shareholders Meeting. By conducting our meeting in person in San Diego as well as online, the Board aims to provide shareholders, employees and invited guests with the options to choose to attend the meeting in person if their circumstances allow, but also with an effective way to participate in the meeting if they cannot attend in-person. We have ensured that this meeting offers registered shareholders and duly appointed and registered proxy holders that choose to join online, the same opportunity to participate as the shareholders who attend in-person. Instructions on how to ask questions and the voting procedure for the shareholders attending the meeting online will appear on your screens. As with any technology, unexpected glitches may occur, but our service providers for this platform at Lumi are prepared to assist with any unanticipated technical difficulty. We will conduct the votes on the matters before us by a poll. On a poll, every registered shareholder or duly appointed and registered proxy holder entitled to vote as one vote in respect of each share entitled to be voted on the matter and held or represented by that registered shareholder or duly appointed and registered proxy holder. You already may have voted your shares. If you already have voted in advance of the meeting, we thank you. And if you do not wish to change your vote, then you need to take no further action. For those who have not yet voted, you only may vote during this meeting. Voting during the meeting can be done in-person or through our virtual voting platform on the webcast. The polls are now open online, and ballots will be distributed to those attending in person. Registered shareholders and proxy holders who have obtained a control number and are now able to cast their votes online. Voting online can be completed at any time from now until the end of the formal business of the meeting. At which time the polls will close. We encourage those of you in -- who have joined us online to vote now. Voting in-person at the meeting will be officially opened when the Chair calls a vote on the motions before the meeting and will close once the Chair declares the polls to be closed on such motions. We thank all of you for voting. Also, registered shareholders and duly appointed and registered proxy holders attending online can submit questions at any time during the meeting through the virtual platform of our webcast. We will address questions received through the virtual platform of our webcast at a general Q&A session at the end of the formal part of the meeting. During the general Q&A session, at the end of the formal part of the meeting, registered shareholders and duly appointed and registered proxy holders attending in-person will also be allowed to ask questions they may have, provided that only questions regarding procedural matters or questions directly related to the motions before the meeting may be addressed during the meeting. To emphasize, we only will answer questions, which are related to the formal business matters presented at today's meeting. The secretary will receive the questions submitted online, judge them for relevance and at the appropriate time will read them aloud so that everyone may be aware of the question being considered. If we have questions that are similar in topic, we may paraphrase, group the questions and mention that we have received similar questions. However, please note that we may be unable to address all questions. Finally, I also wish to welcome all guests who are not registered shareholders or holding proxies of registered shareholders. But as a reminder, only registered shareholders and duly appointed proxy holders are permitted to vote or ask questions in-person or online. I now would like to outline the format of today's meeting, which will deal only with the formal businesses of the meeting as outlined in the proxy statement that all of you received, including voting on resolutions. After we conclude the formal portion of the meeting, we will be pleased to answer questions you may have or respond to your comments regarding the business matters addressed during the formal part of the meeting. Then following the formal part of the meeting, Dr. Bejar, and I, will deliver a brief slide presentation to provide additional color on our activities and accomplishments over the past year and our anticipated milestones and announcements going forward, particularly regarding our lead clinical agent, tuspetinib. I now will ask Mr. Paul Allen of Computershare to act as scrutineer and Mr. Charles-Antoine Soulière of McCarthy Tétrault, Aptose's Corporate Counsel to act as Secretary. Mr. Soulière has also been appointed as deputy for the scrutineer for the in-person portion of the meeting. The secretary has confirmed that the notice calling the meeting, including the proxy statement, financial statements and other documents were mailed on or before April 26, 2023, to shareholders of record as at April 3, 2023. The secretary has placed with me before this meeting, copies of such notice, the proxy statement, and the forms of proxy, together with the confirmations of mailing of these documents. Additional copies of the notice and proxy statement are available to you at this meeting. I direct that the confirmations of proof of mailing of the notice be kept by the Secretary with the records of the meeting. Our corporate bylaws provide that the meeting may be held in person and/or by electronic means. Our corporate bylaws also require a quorum comprised of 2 persons present at the opening of the meeting who are entitled to vote either as shareholders or as proxy holders and holding or representing 25% of the votes. I would ask the secretary of the meeting to summarize the scrutineer's report on attendance.

The scrutineer's preliminary report now has been received and it shows that there are shareholders and proxy holders present or represented at this meeting, representing 41,097,278 shares or 44.19% of the issued and outstanding shares as of the record date.

I have before me, and I adopt the scrutineer's preliminary report on attendance, whether in-person or by proxy, which confirms that a quorum is present. I direct that a copy of the final report on attendance be filed with the records of the meeting. As notice of the meeting has been properly given, and a quorum is present, accordingly, I now declare today's meeting to be properly constituted for the transaction of the business for which it has been called. The formal business of this meeting consists of: one, presenting the financial statements for fiscal year 2022; two, electing directors; three, appointing the independent registered public accounting firm of the corporation; four, amending the corporation's stock incentive plan; five, approving the reverse stock split of the corporation's issued and outstanding shares; six, approving one or more adjournments of the meeting to permit further solicitation of proxies if there are not sufficient votes at the time of the meeting to approve the fourth and fifth items of business; and seven, advising on the compensation of the corporation's named executive officers. To expedite the formal part of this meeting, Mr. Payne will now move, and Dr. Bejar will second all motions. While this procedure will facilitate the handling of the formal matters, registered shareholders or duly appointed and registered proxy holders may address the meeting or there is a call -- when there is a call to discuss the motion before the meeting. Should you like to address the Chair on any motion, please either raise your hand during the discussion period, if attending in-person or typing your question or comment in the message section once it opens during the discussion period, if attending online. The secretary will read any relevant questions asked in the message section aloud. All motions will be moved and seconded once the formal matters of the meeting have been presented. As I said, the annual meeting was called to consider 7 matters. The first item of business is to provide you with Aptose's audited financial statements for the year ended December 31, 2022. The table copy of the audited consolidated financial statements and the auditor's report thereon are available for inspection in-person and at the hyperlink provided on the meeting platform. I direct the secretary to make a copy available for review by any shareholder who so requests. With the consent of the meeting, the reading of such statements and report will be dispensed. I do not wish to recognize and advise the meeting -- I do wish to recognize and advise the meeting that the independent registered public accounting firm of Aptose, KPMG LLP is in attendance online. I do not propose to ask shareholders to approve the financial statements tabled. However, I will be pleased to receive any questions concerning the financial statements.

There is no discussion at this time.

Thank you. As there are no questions at this time on the audited financial statements for the year ended December 31, 2022, I will proceed to the second item of business. The second item of business is the election of directors, directors for the current year. The proxy statement contains the name of management's proposed nominees to the Board of Directors, which are Ms. Carol Ashe, Dr. Denis Burger, Dr. Erich Platzer, Dr. William Rice, Dr. Bernd Seizinger, Dr. Mark Vincent and Mr. Warren Whitehead. I understand that these nominees have consented to act as directors. Mr. Secretary, are there additional nominations?

There are no additional nominations.

There being no further nominations, I declare the nominations closed. The third item of business is deployment of KPMG LLP as the independent registered public accounting firm of Aptose for the fiscal year ending December 31, 2023. The fourth item of business is considering, and if deemed appropriate, adopting a resolution, the text of which is set out in the proxy statement, approving an amendment to the corporation's 2021 stock incentive plan, which I will refer to as the incentive plan to increase the number of shares reserved for issuance thereunder by 1,027,758 shares. All of the provisions of the incentive plan would remain in full force in effect as adopted during last year's meeting. As described in the proxy statement, if you approve this amendment to the incentive plan to date, the maximum number of common shares in the capital of Aptose authorizing reserve for issuance under the incentive plan, subject to equitable adjustment in the event of any change in capitalization would be fixed to a limit of up to 10,371,000 common shares. For a more detailed description of the incentive plan and the proposed amendment, please refer to the proxy statement. The fifth item of business is considering, and if deemed appropriate, adopting a resolution, the text of which is set out in the proxy statement, approving the adoption of an amendment to the corporation's articles to effect a reverse stock split or a consolidation of the corporation's issued and outstanding common shares on the basis of not less than 1 post-consolidation share for every 10 pre-consolidation shares and not more than 1 post-consolidation share for every 20 pre-consolidation shares. Such amendment will become effective at a ratio and a date to be determined by the Board when the Board considers it to be in the best interest of the corporation to implement such share consolidation as more particularly described in the proxy statement. As described in the proxy statement, on July 18, 2022, the corporation was notified by NASDAQ that the closing price of the shares of APTO did not meet the minimum bid price required to comply with NASDAQ listing standards. On July 18, 2023, the corporation received a second compliance notice from NASDAQ regarding the corporation's failure to maintain the minimum bid price requirement. Pursuant to NASDAQ rules the corporation has until July 18, 2023, to regain compliance with the minimum bid price requirement. Such compliance may be achieved through the reverse stock split or if at any time prior to July 18, 2023, the closing bid price of the common shares of the corporation is at least USD 1 for a minimum of 10 consecutive business days. If the corporation does not regain compliance prior to July 18, 2023, the common shares of the corporation will be delisted from NASDAQ, but the corporation will have the option to request a hearing to appeal the delisting determination. There can be no assurance that such an appeal, if made, will be granted by NASDAQ. The Board is of the opinion that it may be in the best interest of the corporation and the shareholders to proceed with the reverse stock split in order to both: one, maintain the NASDAQ listing; and two, enhance the marketability of the shares, given that an increase in the share -- price per share could increase the interest of institutional and other investors with policies that prohibit them from purchasing stock below a minimum price. To be effective, corporate law requires a diverse stock split resolution be approved by a special resolution of the shareholders, being a majority of not less than 2/3 of the votes cast by shareholders present in-person or by proxy at the meeting. For a more detailed description of the reverse stock split resolution, please refer to the proxy statement. The sixth item of business is considering, and if deemed appropriate, approve the proposal to adjourn the meeting to another time and place if necessary or advisable, to solicit additional proxies in the event there are not sufficient votes to approve the incentive plan amending resolution and the reverse of split resolution, prospectively, the fourth and fifth items of business of this meeting. For a more detailed description of the proposed multiple adjournments, please refer to the proxy statement. The seventh item of business is considering, and if deemed appropriate, adopting an advisory nonbinding resolution the text of which is set out in the proxy statement, approving the compensation paid to Aptose's named executive officers. Because this vote is advisory, the results will not be binding on Aptose or the Board. However, this proposal, commonly known as a say-on-pay proposal, gives shareholders the opportunity to endorse or not endorse Aptose's executive compensation program, and the results will be taken into consideration on future decisions regarding executive compensation are made. Now that all former matters of business have been presented, would Mr. Payne, please make the motions for the formal matters of the meeting.

Mr. Chair, first, I move that persons that have been nominated by the individually elected as directors of Aptose for the ensuing year or until their successors are elected or appointed. Second, I move that KPMG LLP be appointed as independent registered public accounting firm for Aptose for the fiscal year ending December 31, 2023. Third, I move that amendment for the incentive plan be approved. In review of the accelerated -- accelerate the process, I'd like to dispense with the reading of the incentive plan amending the resolution and that for purposes of the meeting, the incentive plan amending the resolution be approved as it had been read in its entirety. Fourth, I move that the reverse stock split resolution be approved. In view to accelerate the process, I would like to dispense with the reading of the reverse stock split resolution and that for the purposes of the meeting, the reverse stock split resolution be approved as if it had been read in its entirety. Fifth, I move that multiple adjournment proposals be approved. And sixth, I move that the compensation paid to Aptose's named executive officers be approved.

Thank you, Mr. Payne. Now that Mr. Payne has made a motion for all formal matters of the business of the meeting. With Dr. Bejar, please second all of Mr. Payne's motions.

Thanks. I second all of Mr. Payne's motions.

Thank you, Dr. Bejar. Mr. Secretary, are there any questions or discussions on these motions?

There is no discussion at this time.

As there is no discussion, I now call for a vote on the motions before the meeting. As previously mentioned, voting today will be conducted by ballot. On the ballot vote, all securities for which proxies have been received will be voted in accordance with the instructions of the proxy holders as stated in the proxy. Therefore, only proxy holders and registered shareholders who have not already returned a proxy or wish to change their previous instructions given in the proxy need to complete a ballot should they wish to vote. For online voting, the polls have been opened since the beginning of the meeting. And at this point, all registered shareholders and duly appointed and registered proxy holders who have properly logged into the meeting with their control numbers and user names and wish to vote should select the Vote tab on the webcast platform. There, they will be able to see the screen, the motions brought forth at the meeting -- on the screen, the motions brought forth to the meeting. The polls are now open. You'll be granted 1 minute to complete your ballot. [Voting]

Does anyone need more time to complete their ballot? It appears that all ballots have been completed. We now will close the electronic and in-person voting. Once the electronic balloting closes, the voting page will disappear, and your votes automatically will be submitted. The polls now are closed with respect to voting on the motions. I propose that we take a short recess to allow the scrutineer time to tabulate the votes. I will call the meeting back to order when they are finished. Now before announcing the voting results, Mr. Secretary, is there any other business that any shareholder or proxy holder present wishes to bring to the attention of the meeting?

There is no proposal for other business.

If there is no further business, I now declare the polls closed, and we will proceed to present the voting results. I'll now ask the secretary to provide the preliminary results of the scrutineers' tabulation of today's votes, both online and in-person.

Thank you, Mr. Chair. The scrutineer confirms the following preliminary vote results. Each of the 7 director nominees received the required percentage of votes for. The percentage of required votes are favorable to the appointment of KPMG as independent registered public accounting firm of Aptose for the fiscal year ending December 31, 2023. The percentage of required votes are favorable to the adoption of the amendment to the incentive plan. The percentage of required votes are favorable to the adoption of an amendment to the articles of the corporation to effect a reverse stock split of the corporation's issued and outstanding common shares. The percentage of required votes are favorable to the multiple adjournments of the meeting permits further solicitation of proxies if there are not sufficient votes at the time of the meeting to approve the fourth and fifth items of business at the meeting, and a majority of both are favorable to the nonbinding advisory resolution on the compensation of Aptose's named executive officers.

Thank you, Mr. Soulière. I declare each of the resolutions considered at today's meeting in respect to those matters is carried. The exact number of votes cast in respect to each matter will be filed on SEDAR and EDGAR. We now will take a few moments to answer any questions received during today's meeting.

Mr. Chair, there are no questions at this time.

Thank you. As there are no questions, the formal portion of the meeting is concluded. We thank you for participating in the formal portion of the meeting and for staying with us for the informal session. Now Dr. Bejar and I will present to you a brief slide presentation to provide perspective on our recent activities and accomplishments as well as our anticipated milestones and announcements going forward, particularly regarding our clinical agent and lead value driver, tuspetinib. While the market has been challenging for all of us and for a prolonged period, we implemented efficient cash management strategies to tighten our belts and to dedicate resources only to those assets and activities that could build value. This strategy has extended the runway of our current cash into 2024 and has delivered strong clinical data as we invested in our key personnel and into tuspetinib. Today, you will hear optimism pride and excitement in our tones as we speak about tuspetinib. And we hope that you too will see in tuspetinib what we have seen in it all along and that you too will be proud to be a contributor to its development. As the new medicine to treat critically ill patients with acute myeloid leukemia. With that, let's get into the presentation. If I may have the next slide. And next slide, please. I believe most of you are aware that Aptose is a precision oncology company, developing oral targeted agents to treat hematologic malignancies. Our lead product candidate is tuspetinib. We also often refer to it as tus and we spell that T-U-S. So tus is being developed as an oral kinase inhibitor to treat acute myeloid leukemia or AML. AML is a severely acute and deadly cancer of the cells of the bone marrow in the bloodstream. And when the patients come to us very often, they have failed all standard therapies, the accelerated therapies to date, investigational drugs as well as bone marrow transplant often, so the patients come as relapsed refractory patients, and these are very ill patients. Tuspetinib has shown itself to be a safe and effective once-daily dosing, the drug for the treatment of AML. Because of the indication as well as the activity seen to date, tuspetinib has already received orphan drug designation as well as Fast Track status from the FDA. To date, we have also observed complete remissions or CRs across 4 different dose levels with no DLTs, and that's quite unusual in AML to have 4 dose levels that are active with no dose-limiting toxicity. We've also shown that tuspetinib is broadly active across diverse AML populations. This includes patients with a variety of adverse mutations, including mutations in the genes such as TP53, NRAS, FLT3 mutations, as well as IDH, NPM1, MLL and others. In addition, tuspetinib has shown to have a favorable safety profile and tolerability profile, and this truly sets tuspetinib apart from other comparators -- comparative drugs in our space. In addition, we've identified a number of populations with the relapsed/refractory AML population that have the potential to be passed for accelerated approval. But this truly is the tip of the iceberg because we believe tuspetinib has the ideal profile to be a drug for combination therapy, both in first-line and second-line therapy in AML, dramatically increasing commercial potential of tuspetinib into what we believe could be a $1 billion-plus market potential. In addition to tuspetinib, we also have our secondary program, luxeptinib or lux as we often call it, also an oral kinase inhibitor. Lux has been shown to be clinically active in AML and B-cell malignancies, and we are currently exploring a new formulation. We'll speak briefly about it later today, but the vast majority of information today will focus on tuspetinib, which is our lead drug. In fact, on the bottom of the slide, you can see that we're lifting certain value-driving near-term clinical milestones during 2023. Those are all directed at tuspetinib. There is the European Hematology Meeting or EHA meeting that's planned in June in Frankfurt, Germany. We'll be presenting data there. Also coming up after that is the European School of Hematology Conference. That will be held in Estoril, Portugal, that's in October. And then finally, the American Society of Hematology or ASH Conference will be held in San Diego in December, and we'll be presenting clinical data on all of these. So this provides us with multiple opportunities to report additional responses to you from tuspetinib, and that's in addition to the various earnings calls and timely reporting throughout the year. Next slide. So I want to highlight a couple of the recent headlines. And again, most of these are focused on tuspetinib. So the first is tuspetinib has completed the dose escalation and dose exploration trial in patients with relapsed or refractory AML, and this is a Phase I/II trial. As I mentioned, we've identified or tuspetinib has achieved clinical responses when being treated as a monotherapy, that's tuspetinib alone. And this is in patients who are very difficult to treat populations with relapsed or refractory AML. As I mentioned, they are very mutationally diverse, having a broad array of mutations, and this has occurred across 4 different dose levels with no dose-limited toxicities in those 4 dose levels. We've also seen a favorable safety profile, and we've performed extensive dose optimization in accordance Project Optimus of the FDA. Second, with tuspetinib, we've initiated the APTIVATE expansion trial, and that's with enriched populations for relapsed/refractory AML. Tuspetinib will be used as both monotherapy and it will also be used in combination therapy with venetoclax. We've already had brisk enrollment. We've been dosing patients who are relapsed/refractory AML patients, either with monotherapy or with the tuspetinib-venetoclax doublet. And already, we have early clinical signs of activity. And thus far, it's been reasonably well tolerated, and Dr. Bejar can speak more about that in a few moments. Third, we've also seen this favorable safety profile of tuspetinib has continued to date. We've continued to see a safety profile that's very safe with the monotherapy and again an early snap chart with the patients who have received the tus and then doublet. And then finally, the luxeptinib G3 formulation that we've spoken about, it is currently in continuous dosing in patients, and that is ongoing. Next slide. So today, we're going to focus again on tuspetinib. We'll review the clinical journey of tuspetinib, both where we have come from, where we are now and where we're going. We'll talk about the forecast for clinical catalysts, and we'll examine the registrational opportunity. Next slide, please. Well, the first thing I want to do is to describe to you without getting too called out and too nerdy, to describe to you how this drug works and how it differs from other drugs in the marketplace, other comparative drugs. So as I mentioned, when a patient comes into the clinic, they take a once-daily tablet of tuspetinib. The drug is absorbed into the bloodstream, and it's delivered in into your bone marrow. So what happens then to the AML cells that are in your bloodstream or in your bone marrow. So if you look at the cartoon on the lower left, we're showing AMLs out there. And you can see in the membrane of the cells, there are certain proteins that are receptors, such as FLT3 and the c-KIT, the immune forms of the c-KIT, those are receptors. Those then transmit signals to activate pathways inside the cell. So you can see over towards the left, the SYK jump pathway, the JAK-STAT pathway over to the RAS, MEK kinase and also the AKT pathway. All of those pathways very optimal become activated or stimulated in AML cells, and they drive the growth in proliferations itself. So how does tuspetinib act? Well, as the title says, it simultaneously suppresses a handful of clinically validated kinases that are driving these signaling pathways in AML. So you'll notice the red spheres that are included in the cartoon below on the left. So for instance, the FLT3 to receptor. Our drug does directly inhibit the FLT3 receptor, but that's insufficient. You would expect that to then turn off the downstream pathways, but those downstream pathways can also be activated by other receptors. Therefore, we not only inhibit the FLT3 directly. But over towards the left, tuspetinib also suppresses the SYK kinase directly and the JAK kinase directly. Over toward the right, you also see additional pathways. So tuspetinib suppresses mutant forms of the c-KIT receptor but not the wild-type forms of c-KIT. Therefore -- thereby, it can suppress the downstream RAS and AKT pathway. But even that's not enough, because very often, you'll get mutations in the RAS pathway. And so this brings in at the very bottom of the RSK, tuspetinib also can suppress the RSK I and II. So the best way to look at tuspetinib is that it is a current, it is a multidrug therapy, and a single tablet, addressing these various targets simultaneously. So how does this differ from other drugs? Well, if you look at the blue caption of above. Let's compare it to other drugs, such as a pure FLT3 inhibitor, single targeted drugs that are going out primarily after a single target. Those types of drugs, and this is published in the literature, they require exposure levels that deliver near 100% target inhibition. And that's what is required by those drugs to deliver responses in the clinic. So if you look down at FLT3, that sounds like good news, you can completely turn off the FLT3. The negative aspect of that is you also turn off the FLT3 in normal cells, and that can lead to toxicities, and that is what's seen with certain of these drugs. In addition, if you're only inhibiting FLT3, then the cell can jump to other pathways and develop drug resistance. And again, that's what we've seen in the clinic. But the part taken with tuspetinib is quite different. With tuspetinib, we achieved clinical responses with lower exposure levels that deliver 40% to 80% target inhibition. If we increase the exposure levels in the plasma, we can create the 100% target inhibition as seen with other drugs, but we've learned it is not necessary to do so. By inhibiting multiple pathways simultaneously in the level of 40% to 80%, we can. And at lower exposure levels in the plasma, we can achieve responses and avoid some of the typical toxicities of other agents. This is important for us as we distinguish tuspetinib from some of the other drugs. Okay. Next slide. So what is tuspetinib's journey to date and toward through registrational trials and on towards commercialization. On the far left side of this slide, you'll see that we have listed the dose escalation and dose exploration trial. That study is now complete. We started at 20 milligrams and dose escalated all the way up to 200 milligrams. Those are the bookend-dose levels. And then the intermediate doses, 40, and 80, 120 and 160 milligrams, we expanded out many more patients on each of those dose levels up to 20 patients per dose. What we observed were complete remissions with no DLTs at each of those 4 dose levels, 40, 80, 120 and 160, and that study is now complete. We then moved to the study in the center of the slide. We refer to this as the APTIVATE expansion trial. This study is currently ongoing. Next, please. We currently are dosing patients with monotherapy, tuspetinib alone, and we're enriching for patients that have failed prior FLT3 inhibitors, patients that have RAS mutations and in patients who have TP53 mutation. The reason we're doing this is we hope to achieve a certain level of response rate in patients that then we can take to the FDA and petition to allow us to perform an accelerated approval trial in relapsed/refractory patients. In parallel, next, we also are dosing patients with the doublet. This is the combination of tuspetinib and venetoclax. Patients are already being dosed with the doublet there, and this provides us with several potential outcomes. It is possible that we may be able to perform a doublet for an accelerated approval in relapsed/refractory patients. We also may be -- may allow us to move forward toward the development of registrational trials in second-line patients. And then finally, if you see towards the bottom of the center portion of the slide, you'll see that we have triplet combination. We want to get experience with tuspetinib and venetoclax as the doublet, understand the tolerabilities and then be able to move into the triplet combination as a pilot study. That will then position us for registrational trials in frontline AML patients. So you'll notice on the far right, we have multiple pathways toward approval and commercialization of tuspetinib in relapsed/refractory, second line, frontline and also possibly as maintenance therapy. So this gives tremendous commercial potential for tuspetinib. And of course, this is what has kind of engendered the attention of larger biotech and large pharmaceutical company in tuspetinib. Next slide. So I just want to highlight a couple of the activities that occurred over the past year. So I think most everyone knows that this molecule was in-licensed from Hanmi Pharmaceuticals. This is a pharmaceutical company in South Korea. They have been an extraordinary partner to work with us. They did not just hand off the drug to us and then walk away. Again, as I said, an extraordinary partner in the development of this company as we go -- of this drug as we go forward. But we took over the trial, the Phase I/II dose escalation and dose exploration trial of tuspetinib monotherapy in January of last year 2023. At that point, we added clinical sites and we accelerated the patient enrollment. Also at that time, as you can see on the bottom left, just immediately after taking the drug on, we also received Fast Track status from the U.S. FDA. As we continue through the year, we -- although we had only had the drug for a few months, we did present data at the EHA meeting in 2022. We presented incremental clinical dataset at that time. We continued through the year. And then at ASH in December, the ASH meeting, we presented broad activity across mutation subtypes as well as a favorable safety profile. And as at this point, we started getting attention of larger companies because they're able to see the commercial potential of the drug that has very broad activity and a broad and favorable profile, much greater commercial potential than some of the competitor drugs. We also now have continued on -- we've completed the original dose escalation and dose exploration trial during the first part of this year, 2023, and we've now submitted the briefing book to the FDA containing the data from that trial. You'll also notice along the bottom, we did initiate that APTIVATE trial, that's the expansion trial, in which patients are being treated with monotherapy tuspetinib as well as the combination doublet tuspetinib plus venetoclax. And as you'll hear from Dr. Bejar, we also already have had rapid enrollment. Next slide. So where we are in time now is the blue diamonds over on the left. So coming up very shortly, on the bottom, we're looking at we have a meeting with the FDA coming up. We want to ensure agreement of the recommended Phase II dose with tuspetinib. We also want to review the clinical study design and talk about next steps to determine if there are any adjustments that need to be made in the APTIVATE trial going forward this year to position us for our registrational study. Up along the top, you'll see that we also, in just a few weeks, we have the EHA meeting that's being held in June. And that's in Frankfurt, Germany. We will present clinical findings at that time. The vast majority of the data will come from the dose escalation and exploration trial. We have a good bit of data that we'll be presenting from that trial. And then very early, let's call them, trends or peaks of data or information from the APTIVATE trial of both monotherapy and the doublet. Then as we go through the year, we'll collect additional data. As we present at the ESH conference in late October, the APTIVATE data should be maturing during that period of time, and we'll be presenting additional clinical data sets. Then toward the end of the year, the data will continue to mature. We should have a very robust clinical data set that being presented at the ASH conference in December. And all of that positions us then to describe what we're going to be doing going forward for the registrational studies, whether it be in relapsed/refractory patients, second-line patients or triplet patients. So this gives you a sense of the new data release that's expected throughout the year in these major conferences as well as the potential for us to provide or to present to you new responses as the year goes along. Now in addition to this, we also will have earnings calls as well as regular press releases in which we can also report new responses going forward. Next slide. So with that, I'm going to turn the slides over to Dr. Bejar.

Thank you, Dr. Rice. So I'll speak a bit about the clinical aspects of the tuspetinib trial to date. And I want to remind folks that while we have completed enrollment of over 70 patients in the escalation and exploration portion, these are relapsed/refractory patients, relapsed in multiple lines of therapy and are therefore very sick with their -- and side effects of prior exposure. However, tuspetinib provides a once-daily oral dosing option, which is much more convenient and easier to administer to patients. So far, as I'll show you, we've seen a very favorable safety and tolerability profile for the drug that includes multiple clinical responses against AML across a broad diversity of adverse mutations. We are generating a detailed data package for an upcoming FDA meeting that will help us align our development strategy with the FDA's expectations and will help accelerate our registrational program. We plan to deliver additional trends in the data throughout the remainder of 2023 along these lines. Next. So this is a diagram that demonstrates how patients go through AML over time. Patients are diagnosed on the left here when they get their first line therapy when they are naive to any prior treatment. Unfortunately, a substantial fraction of these patients fail this therapy or go into remission and ultimately relapse, requiring second-line therapy. And again, a fraction of these patients aren't necessarily cured with this outcome and need further therapy when they relapse again or are refractory. And this is what takes them in the third line, plus relapsed/refractory AML. However, drug development works almost in the opposite direction. Next. What we see is that the onset of new drugs are treatment in the most relapsed and refractory population with the greatest unmet medical need, and this is where we were with tuspetinib over a year ago, treating patients who had on average between 3 and 4 prior lines of therapy. Again, the most challenging population to treat is due to their increased frailty and the fact that they have now accumulated a disease that is much more likely to be resistant to any agent regardless of its mechanism. Next slide. So here, you can see that tuspetinib in monotherapy has been tested extensively now in our dose-escalation exploration trial and again as monotherapy in APTIVATE as well. However, we believe the future of treatment in AML is going to involve combination therapy. So if you go to the next animation, you'll see that by putting it together with other active agents like venetoclax, it enables us not only to see greater activity of the combination compared to the monotherapy alone that allows us to treat patients in earlier lines of therapy, where venetoclax might be an option to partner with other agents. This is something else that we are now beginning to put together in our APTIVATE study. We're exploring the combination of tuspetinib and venetoclax in patients and ideally in earlier lines of therapy. And as Dr. Rice mentioned, this is something that will enable us to look for a registrational approach in that earlier line. But finally, if we're going to go to first line, move to the next animation, we want to combine with the standard of care. Currently, for first-line older unfit patients, that standard of care is a hypomethylating agents or HMA and venetoclax, which we believe adding tuspetinib to increase the activity profile while being still very well tolerated and able to be administered to these older unfit individuals. This would not only increase the activity of tuspetinib but would also increase the number of patients that can be treated. This would dramatically increase the populations that would benefit from this drug and increase its commercial potential. If we go to the next slide. We estimate that if you combine all the different indications where tuspetinib could be active, including in maintenance therapy after initial therapy in some of these indications with potential annual sales could be greater than $1 billion. Next slide. So where are we in that journey? As Dr. Rice mentioned, we have completed dose escalation, where we treated patients from 20 to 200 milligrams in increasing cohorts, where 18 patients were dosed. But then we had the opportunity to explore activity in additional patients at those intermediate dose levels, 40, 80, 120 and 160, at which we saw signs of activity, including complete remissions at each of those dose levels. Importantly, if you combine all of the patients in the dose escalation and the dose exploration portion treated in that 40- to 160-milligram dose range, there were no dose-limiting toxicity. The drug was well tolerated and had no instances of drug-related severe adverse events, no drug-related deaths, no drug-related differentiation syndrome or QTc prolongation or muscle breakdown called rhabdomyolysis. The plasma half-life of the drug is quite long, suggesting that once duly dosing is more than adequate. And as we mentioned, no dose limiting toxicities that might impair the further development of the drug. Next slide. Here is a sign of the type of activity that we've observed. These waterfall plots show the reduction in bone marrow blasts or leukemic cells in patients who were treated with tuspetinib monotherapy. On the left, you see the data for all of the patients, that is bars to go below the x-axis, demonstrated a reduction in the number of blasts in the bone marrow, and the colors indicate the different doses the patients received. As you can see, more than half of the patients had some degree of blast reduction in response to single-agent tuspetinib. Now for some of these, blast reductions were complete. These are patients that likely achieved a complete remission. But for others, there was a partial reduction in blast, demonstrating the activity of the drug but showing that in this patient population, monotherapy was insufficient to get all of the patients all the way to a remission. This is what makes us believe that addition of another active agent like venetoclax would engender a greater number of responses even in the [indiscernible] and heavily pretreated patient population. On the right, you see the breakdown between those patients that carry the FLT3 mutation and those that do not suggesting perhaps some degree of sensitivity in FLT3 mutant patients to the drug, but definitely demonstrating a great degree of activity even in the FLT3 wild-type patients, suggesting that FLT3 mutations are not required for patients to respond to tuspetinib. If we go to the next slide. Here, we look at the responding patients who had an objective formal response, and I'd like to point out 3 major points on the swimmer's plot that shows the conduct of these patients over time in the study. First is on the left, where it has the FLT3 mutation can, again, reiterating the point that not all the patients who were formal responders had FLT3 mutations. They were wild-type patients, they were ITD patients, and they were even a TKD patient. The other point I'd like to make is that many of these patients were able to go to a stem cell transplant. Those are the blue stars you see in certain lines of this graph. Those patients received a potentially life-saving therapy. And in fact, 3 of these individuals were still alive more than 2 years after their relapsed/refractory disease, began treatment with tuspetinib. And finally, the last point I'd like to make is a really important one, which shows the nature of the responses over time. So you can see that some patients will achieve a CRi, which is complete remission with incomplete hematologic recovery; or a CRp, complete remission with partial hematologic recovery. Those are the pink-colored diamonds. They go on to achieve complete remissions with more significant recovery, including complete remissions with full account recovery. Those are the orange and red diamonds. This occurs while patients are taking tuspetinib on a continuous basis. It suggests that once patients have cleared their leukemia and their bone marrow has reconstituted, that continuous dosing with tuspetinib does not suppress counts to the point that it would affect the quality of the response or threaten transfusion independence or negatively affect their quality of life. This is an important characteristic. It means that tuspetinib as a single agent doesn't cause profound or prolonged myelosuppression. That would allow it to then be combined with other agents that might have myelosuppression as a side effect and not compound that and make it much worse. It also suggests that tuspetinib could be given in a maintenance therapy indication where patients have cleared their disease and are now hoping to remain in remission by taking an active agent like tuspetinib over time. And this ability to be treated continuously without [indiscernible] suppression would enable us to work well in that context. Next slide. Here is a breakdown of some of the mutations that patients with responses had in our study. These are mutations were detected at the time that they were diagnosed with AML, and they include FLT3 mutations in some patients but not in others and the presence of several adverse mutations, like mutations in the RAS genes, KRAS and NRAS; mutations in genes like RUNX1, TP53, PTPN11 and MLL, typically associated very poor prognosis or resistant disease. And finally, you see a gamut of mutations and other genes like slicing factors, U2AF1,SRSF2, SF3B1 and so on as well as ASXL1. These are genes that are frequently mutated in patients with MDS as well, giving us so that the indication for tuspetinib may be broader than just AML. Next slide. Go to the next slide. So let's talk about where we are now with the APTIVATE expansion trial. Next slide. Dr. Rice showed this slide earlier, showing that we've completed the dose escalation and explorations as I just discussed, and we're now treating patients in APTIVATE. APTIVATE includes this monotherapy arm, we're enriching for certain genetic subtypes. These are individuals with great unmet medical needs, either because they've exhausted all available therapies or they have a very poor prognosis and unlikely to respond to any therapy. Those are the TP53 mutant patients. If we see sufficient activity in this patient population in APTIVATE, we could then go to the FDA to propose a monotherapy single-arm accelerated approval trial in patients with late-line relapse/refractory disease. This would be a more rapid test to approval that obviously involves a fewer patients in the subset of patients with AML. The other exploration that we're making now is with the tus-ven doublet. The combination of tuspetinib and venetoclax in patients with relapse refractory AML, and we have begun dosing patients in that regard. That is an exciting combination because it would allow us to then consider registrational trials in earlier lines of therapy where patients are more fit, more likely to tolerate the drug, and more likely to benefit from the combination that has increased activity. So that is another approach that we're taking. That could include an accelerated approval path with an early look at randomized data or a complete approval by powering the study to include overall survival of principal endpoint. And finally, we are planning combination with the standard frontline therapy of venetoclax, plus a hypomethylating agents combined with tuspetinib in the frontline setting of newly-diagnosed, treatment-naive patients. That would be the broadest patient population with AML, and that could us lead to a registrational approach in that regard. And I remind you that in all of these studies, we are not restricting enrollments to patients that have FLT3 mutations who are looking at the broader population of AML as we've observed activity both into FLT3 wild-type and FLT3 patients. Go to the next slide. So these are the summary of the highlights we just talked about. We completed the dose escalation exploration trial, seeing multiple responses across these patients with over 70 patients dosed to date. We've done our duty in terms of doing dose optimization to make sure that when we select our go-forward dose that the FDA has aligned, and that meeting with the FDA will help solidify that and allow us to move our programs forward. The APTIVATE expansion trial has now dosed over 20 patients across the monotherapy in the tus-ven doublet arms who are rapidly accruing data there. In fact, enrollment has been quite risk in this study. Early signs in the tus-ven doublet show that the drug has been well tolerated in combination with venetoclax, and we have started to observe blast reduction. We have also done many of the other things that one needs to do to advance a development of a drug candidate. We've done complementary studies to advance towards commercialization. That includes having completed the in-life portion of a healthy volunteer study to examine whether the drug can be given in a fast-less or fast condition, an important consideration for patients and patient comfort. We completed the in-life portion of a 13-week chronic toxicity study in both rats and dogs. That would again be important to help understand the safety profile of the drug and a requirement for the subsequent advancement of the drug in the later stages. Finally, we began to expand our global sites substantially. With already having sites in U.S. and Korea, we're now looking to add additional countries in multiple regions across the globe. Next slide. I'll bring you back to the summary of the path that a patient takes through their AML diagnosis and subsequent treatment. We are now moving backwards in terms of drug development from late lines into earlier lines of therapy as we start to combine venetoclax, and tuspetinib and venetoclax in hypomethylating agents with tuspetinib, hoping to expand not only the number of patients who treat but the breadth of patients we treat in terms of their genotypes and their disease presentations as well as the size of the population that we're able to benefit with tuspetinib, again, making -- realizing the potential commercial availability of tuspetinib for patients. Next slide. Finally, I want to talk a little bit more about why we think tuspetinib is not only a great drug in monotherapy, but why it's so important to have the safety profile that tuspetinib has in order to allow it to combine with other agents. Several of the other drugs that are being developed for AML at the moment have certain toxicities that might preclude their safe combination with other drugs, particularly the HMA-venetoclax combination, which forms the backbone of standard frontline therapy for over unfit patients. HMA-venetoclax is already very myelosuppressive. So again, being able to minimize the amount of myelosuppression that a drug brings to the table would enable us to more easily combine with these 2 upfront drugs. Drugs with [indiscernible] with tuspetinib have shown pretty significant myelosuppression in combination with venetoclax or in combination with other myelosuppressive drugs, and that could be an advantage of tuspetinib has over these drugs. We've noted that tuspetinib has no hint of QTc prolongation, a form of cardiac toxicity that has plagued other agents in this class, including drugs in the menin inhibitor class. And finally, we have not observed differentiation syndrome, which is something that can occur with other drugs that could cause problems when we try to combine them with agents that have their own toxicity as well. And importantly, we are not restricted to any one particular genotype. While there may be some differential activity in certain genotypes versus others, we have seen responses in a broad array of patients. So we're not restricted to only state patients or even only AML as we believe that the start could have activity in other myeloid indications as well. Next slide. Now I'll change gears and say a few words about luxeptinib. It's a drug that we still remain very excited about. I'll remind you that luxeptinib has one of the most impressive preclinical data packages that I've ever seen. It has activity in a broad array of hematologic malignancies, not just myeloid disorders but lymphoid disorders as well, and that comes from the targets that luxeptinib inhibits. This includes Bruton's tyrosine kinase -- FLT3, as well as several other myeloid and lymphoid kinases that drive these disorders. We tested the G1 formulation extensively in multiple patients in both lymphoid and myeloid disorders. We achieved dose escalation up to 900 milligrams BID and noted that the drug was generally well tolerated. We did see responses in a diverse set of B-cell cancers and in one patient who achieved an MRD-negative complete remission to luxeptinib. However, we noted that the G1 formulation was capped in terms of its absorption. Giving more drug didn't necessarily mean that the patients had greater exposure and required quite a heavy tilburg. We, therefore, spent the effort and time to reformulate luxeptinib into the G3 formulation that is much more bioavailable. And we have completed single-dose G3 testing in patients and now have moved on to continuous dosing of G3 monotherapy at 50 milligrams BID in patients with AML. We plan to continue to dose escalate G3 to higher dose levels to further explore what kind of exposure we can achieve in patients and whether this translates into greater activity. We hope that increased exposure levels with G3 could position lux for development in combination with other drugs to treat a variety of disorders, including lymphoid disorders, where we've seen significant activity with G1 already. We've also done additional research into the mechanism of action of luxeptinib and how it inhibits the B-cell receptor pathway, the Toll-like receptor pathway and the NLRP3 inflammasome. This could lead to future potential applications in inflammatory disorders and in autoimmune conditions. Next slide. So with that, I'll end my portion and pass it back to you, Dr. Rice.

Thank you, Dr. Bejar. I'll close this out here with just 2 quick slides. I just want to remind everyone how challenging capital markets have been for all the companies in the biotech space, in particular, those small and mid-cap companies that have faced erosion of the share price and the market cap, including Aptose. We've launched many of the companies perform financings. Many of these provided minimal proceeds, typically one quarter or less of cash, challenging terms, extensive warrants, 100% to 200% warrant coverage, core post-financing stock performance. I think the average is a 23% reduction soon after the completion of the financing, and they tend to undermine current investors. I want everyone to know that we decided to not take such finances. We've avoided those harsh financings. That's because at Aptose, we believe in our people and our molecules and our strategies. We have taken proactive actions as shown up on the top right. We cut our expenses to extend our cash way into the first quarter in 2024. In spite of that, we recruited and experienced a new director to our Board. We recruited and retained our key personnel, and we funded the value-driving activities with tuspetinib. In terms of going forward and driving value, we will continue to enroll patients on the APTIVATE study, as was described by Dr. Bejar. We'll drive toward data events in the second half of the year, and I'll just reiterate those in just 1 second. We plan to retain our NASDAQ listing. We are evaluating various financing instruments. And we're also evaluating partnerships, which we believe could bring nondilutive cash. Next slide. As I said, I wanted to reiterate some of those time lines in which we believe we could report new responses to you, not only to the key research scientific and medical meetings, but also the earnings calls and any unscheduled press releases throughout the year. We mentioned the EHA, the EHA meeting in June, which -- in which we will present extensive data from our dose escalation and exploration trial as well as some of the early trend data from the APTIVATE trial as described by Dr. Bejar. Then as we get later into the year until late October, the ESH meeting that's being held in Estoril, Spain. There, we expect to present even further maturing clinical data set. And then finally again toward the end of the year, an additional and robust data set coming out of the APTIVATE trial at the ASH meeting. So we plan to present a variety of new anticipated releases throughout the rest of the year. Hopefully, we'll report additional responses, both scheduled and unscheduled. And with that, may I have the next slide? Having concluded the corporate slide presentation, we're going to take this opportunity to thank all the shareholders for their continued support over the last year, thank all of our shareholders and proxy holders for your attendance today, thank all of our employees for their commitment and their diligence. And finally, we wish to express our sincere gratitude to the patients, their families and their caregivers. We look forward to reporting our ongoing progress during the upcoming year, and we wish you a good day and a wonderful year ahead. Thank you.