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

Good morning, all. I'd like to call to order this Annual Special Meeting of Shareholders of Aptose Biosciences. 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 online are other directors, including Dr. Denis Burger, our Lead Independent Director; Dr. Erich Platzer; Mr. Warren Whitehead; Ms. Carol Ashe, Dr. Bernd Seizinger; and Dr. Mark Vincent; as well as other officers, including Mr. Fletcher Payne, Senior Vice President, Chief Business Officer and Chief Financial Officer; and Dr. Rafael Bejar, our Senior Vice President and Chief Medical Officer. It's my pleasure to welcome shareholders and employees of Aptose as well as other invited guests to this meeting. This year, Aptose has opted for a virtual-only shareholders meeting. By conducting our meeting online, Aptose aims to provide shareholders with a convenient opportunity to participate without incurring significant travel costs or being restricted by time constraints. We have ensured this virtual meeting offers registered shareholders and duly appointed and registered proxy holders the same opportunities to participate as in prior in-person meetings. Instructions on how to ask questions and the voting procedure 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 difficulties. We will conduct the votes on these matters before us via poll. On a poll, every registered shareholder or duly appointed and registered proxy holder entitled to vote has 1 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 of you who have yet to vote, you may only vote during this meeting. Voting during the meeting can only be done through our virtual voting platform on the webcast and the polls are now open. Registered shareholders and proxy holders who have obtained a control number can now cast their votes. Voting can be completed from now until the end of the formal business of the meeting, at which time the polls will close. We encourage you to vote now, and we thank all of you for voting. Also registered shareholders and duly appointed and registered proxy holders can submit questions at any time during the meeting through our webcast virtual platform. We will address questions at the general Q&A session at the end of the formal part of the meeting, 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 that are related to the formal business matter presented at today's meeting. The secretary will receive the questions, judge them for relevance, and at the appropriate time, we will read them aloud so that everyone may be aware of the question being considered. If we have similar topics, 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. I also wish to welcome all guests, who are not registered shareholders or holding proxies of registered shareholders. As a reminder, as with any in-person meeting, only registered shareholders and duly appointed proxy holders are permitted to vote or ask questions. Now I'd like to outline the format of today's meeting, which will deal only with the formal business 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 your questions or respond to your comments regarding the business matters addressed during the formal part of the meeting. I now will ask Mr. Charles-Antoine Soulière of McCarthy Tétrault, Aptose's Corporate Counsel, to act as Secretary of the meeting; and Mr. Paul Allen of Computershare to act as the scrutineer. The secretary has confirmed that the notice calling the meeting, including the proxy statement, financial statements and other documents were mailed on May 28, 2024, to shareholders of record as at May 10, 2024. 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 mailings of these documents. 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 electronically. Our corporate bylaws also require [ par ] of a quorum, comprised of 2 persons being 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 primary report now has been received, and it shows that there are shareholders and proxy holders present or represented at this meeting, representing 8,101,527 common shares or 49.67% of the issued and outstanding shares.

Thank you, Charles. I have before me and I adopt the scrutineer's preliminary report on attendance, whether in person or by proxy, through the online webcast platform, 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: 1, presenting the financial statements for the fiscal year 2023; 2, electing directors; 3, appointing the independent registered public accounting firm of the corporation; 4, passing an advisory resolution on the compensation of the corporation's named executive officers; 5, approving the potential issuance of shares to the holders of certain warrants in excess of 19.99% of the outstanding shares of the corporation pursuant to the NASDAQ listing rules; and 6, approving one or more adjournments of the meeting, if necessary or proven, if a quorum is present, to permit further solicitation of proxies if there are not sufficient votes at the time of the meeting to approve the aforementioned proposals. To expedite the formal part of the meeting, Mr. Payne will move and I will second all motions. While this procedure will facilitate the handling of formal matters, registered shareholders or duly appointed registered proxy holders may address the meeting, when there is a call to discuss a motion before the meeting. Should you like to address the Chair on any motion, please type in your question or comment in the message section once it opens during the discussion period. The secretary will read the question allowed if there is any relevant discussion or questions. All motions will be moved and seconded once the formal matters of the meeting have been presented. As I said, the Annual Special Meeting was called to consider 6 matters. The first item of business is to provide you with Aptose's audited financial statements for the year ended December 31, 2023. The tabled copy of the audited consolidated financial statements and the auditor's report thereon are available for inspection 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 reports will be dispensed. Also, I do wish to recognize and advise the meeting that members of the independent registered public accounting firm of Aptose, KPMG LLP, are 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. Mr. Secretary, are there any questions?

There are no questions.

Thank you. As there are no questions at this time on the audited financial statements for the year that ended December 31, 2023, I will proceed to the second item of business. The second item of business is the election of directors for the current year. The proxy statement contains the names of management's proposed nominees to the Board of Directors, which are: Ms. Carol Ashe, Mr. -- excuse me, Dr. Denis Burger, Dr. Erich Platzer, Dr. William G. Rice, Dr. Bernd R. Seizinger; Dr. Mark Vincent and Mr. Warren Whitehead. I understand that these nominees have consented to act as directors. Mr. Secretary, are there any additional nominations?

There are no additional nominations.

There being no further nominations, I declare the nominations closed. The third item of business is the appointment of KPMG LLP as Aptose's independent registered public accounting firm for the fiscal year ending December 31, 2024. The fourth 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 for 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 programs. And the results will be taken into consideration, when future decisions regarding executive compensation are made. The fifth item of business is approving of potential issuance of common shares in connection with the Hanmi Investment that would exceed 19.99% of the corporation's outstanding shares as of the closing date of the Hanmi Investment. As described in the proxy statement, NASDAQ Listing Rule 5635 B requires us to obtain shareholder approval prior to the issuance of securities in connection with the transaction other than a public offering involving the sale, issuance or potential issuance by us more than 19.99% of our outstanding shares at a price less than a minimum price filed by NASDAQ rules. Further to the public offering and concurrent private placement with Hanmi completed earlier this year, NASDAQ has concluded that the issuance of securities pursuant to the Hanmi Investment did not comply with the NASDAQ 20% rule, resulting in a certain number of the warrants issued to Hanmi being unexercisable unless and until shareholders approved the issuance of shares to Hanmi in excess of 19.99% of our issued and outstanding shares. If our shareholders do not approve this proposal, we will not be able to issue to Hanmi the number of shares to which Hanmi would otherwise be entitled upon full exercise of their warrants, which could require us in lieu of delivering those shares to pay substantial cash amounts to Hanmi. For a more detailed description of the NASDAQ 20% issuance proposal, background and NASDAQ rules, please refer to the proxy statement. The sixth item of business is considering, and if deemed appropriate, approving the proposal to adjourn the meeting to another time or place if necessary or advisable to solicit additional proxies in the event there are not sufficient votes to approve the 20% issuance proposal. For a more detailed description of the proposal adjournment, please refer to the proxy statement. Now that all formal matters of the business have been presented, would Mr. Payne please make the motions for the formal matters of the meeting.

Here, first, I move that persons that have been nominated be individually elected as directors of Aptose for the ensuing year or until the successors are elected or appointed. Second, I move that KPMG LLP be appointed as the independent registered public accounting firm for Aptose for fiscal year ending December 31, 2024. Third, I move that the compensation paid to Aptose named executives, officers be approved. Fourth, approve the NASDAQ 20% issuance proposal be approved. And fifth, I move that the adjournment proposal be approved.

Thank you, Mr. Payne. I'll second all of Mr. Payne's motions. Mr. Secretary, are there any questions or discussions on these motions?

There are no discussion nor questions at this time.

Thank you. As there is no discussion, I'll now call for a vote on the motions before the meeting. As previously mentioned, voting today will be conducted by electronic ballot. The polls have been opened since the beginning of the meeting. And at this point, all registered holders and duly appointed registered proxy holders, who have properly logged in with their control numbers and username and wish to vote should select the vote tab on the webcast platform. There, they will be able to see the screen -- on the screen the motions brought before this meeting. The voting will remain open for an additional 1 minute. Once the electronic balloting closes, the voting page will disappear and your voting automatically will be submitted. We will now pause for 1 minute. [Voting]

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 now ask the Secretary to provide the preliminary results of the scrutineers' tabulation of today's votes.

Thank you, Mr. Chair. This 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 the independent registered public accounting firm of Aptose for the fiscal year ending December 31, 2024. A majority of votes are favorable to the nonbinding advisory resolution on the compensation of Aptose's named executive officers. The percentage of required votes are favorable to the approval of the NASDAQ 20% proposal. And the percentage of acquired votes are favorable to the approval of the adjournment proposal.

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

There are no questions at this time.

Thank you. As there are no questions, I'd like to take this opportunity to thank our current shareholders for their continued support over the past year, all shareholders and proxy holders for your attendance today, and for all our employees, for whom their commitment and their diligence. And we look forward to reporting our ongoing progress during the upcoming year. Finally, we wish to express our sincere gratitude to the patients, their families, their caregivers and our dedicated employees and our supportive shareholders. We wish you a good day and a wonderful year ahead. Thank you.