Aptose Biosciences, Inc.

Good afternoon. My name is Jonathan, and I will be your conference operator today. I would like to welcome everyone to Aptos Biosciences conference call for the fourth quarter and year ended December 31st, 2023. At this time, all participants are in listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to withdraw your question, please press star 11 again. Thank you. As a reminder, this conference call may be recorded. And now I'd like to introduce your host for today's program, Susan Pietropalo. Please go ahead.

Thank you, Jonathan. Good afternoon and welcome to the Aptos Biosciences Conference call to discuss financial and operational results for the fourth quarter and year ended December 31st, 2023. Earlier today, Aptos issued a press release relating to these financial results. The news release as well as related SEC filings are accessible on APT House's website. Joining me on today's call are Dr. William Rice, Chairman, President, and CEO, Dr. Rafael Behar, Senior Vice President, Chief Medical Officer, and Mr. Fletcher Payne, Senior Vice President, Chief Financial Officer, and Chief Business Officer. Before we proceed, I would like to remind everyone that certain statements made during this call will include forward-looking statements within the meeting of U.S. and Canadian securities laws. Forward-looking statements reflect Aptos' current expectations regarding future events. They 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 Aptos' most recent annual report on Form 10-K and SEC and CEDAR filings. All forward-looking statements made during this call speak only as of the date they are made. APTOS 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. We encourage you to refer to today's press release and the 10-K for additional information and disclosures regarding today's announcements. I will now turn the call over to Dr. Rice.

Thank you, Susan. I want to welcome everyone to our call for the fourth quarter and year ended December 31st, 2023. Today, we will provide updates on our financial status, on the near-term and long-term clinical development plan for our lead agent, Tospetinib, and a quick update on our Luxeptinib program. From a financial perspective, during 2023, we financed corporate activities with cash gleaned from our ATM facility, from a committed equity facility, and through a strategic investment by our partner, Hanmi Pharmaceutical. Then in January of this year, we closed financing with gross proceeds of $13.7 million, inclusive of a $9.7 million public offering, along with a separate $4 million private placement with Hanmi Pharmaceutical. This provided us with more breathing room, and Mr. Fletcher Payne, our CFO and CBO, provide additional financial details in a few minutes. I now want to pivot to our lead program, Tuspitinib. So why should you care about Tuspitinib? It's because tusfetinib, or TUS as we often call it, is a convenient, poorly administered, once-daily kinase inhibitor with an excellent safety profile and potent anti-leukemic activity that is being developed for the treatment of acute myeloid leukemia, or AML. And we believe a tusfetinib-containing triplet regimen can become a new standard of care for the frontline treatment of newly diagnosed AML patients across the broadest set of genetic subtypes. And today, we'll explain why we believe this and how we arrived at this point. First, you're aware that we've been performing studies in relapsed or refractory AML patients with tuspetinib as a single agent and with tuspetinib in combination with venetoclax, which we refer to as the tusbendublet. The valuable findings gleaned from these studies have now led us to pursue the development of tuspetinib as a triplet combination therapy for the frontline treatment of newly diagnosed AML patients as the highest priority. The triplet includes TUS-Betinib, the BCL-2 inhibitor Venetoclax, and a hypomethylating agent, such as Asosatidate, collectively referred to as the TUS-Ven-HMA triplet. In fact, we just heard from a group of KOLs in AML that they have great enthusiasm for the safety and activity of TUS-Betinib, and they believe this is a real drug with the potential to go all the way. These KOLs and our internal team all agree that the immediate focus of TUSBEN should be primarily on the TUSBEN HMA triplet. And that is precisely where we're focusing our resources. Because this TUSBEN HMA triplet has the potential to deliver the greatest patient impact, the greatest commercial impact, and the greatest return to our investors. At the patient level, we believe TUSBEN can have its greatest impact and frontline AML by improving the response rates, the depths of responses, the durability of responses, the quality of life, and the long-term survival across the diversity of AML patients relative to the current Venn HMA standard of care and frontline AML patients who are ineligible for intensive chemotherapy. Plus, the commercial aspect or impact of the TUS-Venn HMA triplet and frontline therapy is estimated to exceed $1 billion annually. And we've heard from many potential partners that the application of the TUSBEN HMA to the frontline market is of primary interest to them. Indeed, the safety, breadth, and efficacy profiles of TUSBEN today make us believe that TUSBEN can be the best agent to combine with the BEN HMA, which is the current standard of care. While the goal for the TUSBETNIV program is to move into frontline EML therapy at the triplet, the path to the frontline triplet began with the TUSBETNIV single agent trial and then transitioned through the TUSBEN doublet trial to understand activities, safety, and contribution of components. With the TUSBETNIV single agent trial, we completed enrollment of 93 patients across six dose levels. TUSBETNIV single agent achieved an excellent safety profile without many of the key liabilities seen in competitor agents. It demonstrated broad activity across AML populations with adverse genetic alterations. We observed a three-fold longer median overall survival in responding patients relative to non-responders. And 80 milligrams once daily was selected as the recommended phase two dose for single agent therapy. With the 80 milligram dose level, Tuspatinib single agent was highly active achieving high quality responses with high response rates. We were delighted to see a strong 36% CRCRH rate among all-comer genotypes in patients who had not previously been treated with venetoclax, referred to as then-naive patients. Notably, at the 80 milligram dose level, few of the patients had failed prior therapy with venetoclax. However, as we dose escalated above the 80 milligram dose level, we saw that prior VIN failure patients were emerging as a new category of relapsed refractory AML at that point in time. And the proportion of prior VIN patients increased dramatically to greater than 80% in the next dose level of 120 milligrams. Once patients fell of venetoclax-containing therapy, they're more refractory to all subsequent salvage therapies, including Tuspetinib as a single agent. And this led to lower response rates in the 120 milligram dose level and then in the 160-milligram dose level. Fortunately, there is a silver lining to this change in the relapsed refractory AML patient population. In our past scientific conference presentation, we've described how tuspetinib targets the venetoclax resistance mechanism and how tuspetinib can combine synergistically with venetoclax in animal models. Plus, we've shown that tuspetinib-resistant AML cells are hypersensitive. 2,000-fold more sensitive to venetoclax. This mechanistic complementarity provided a rationale for us to combine tuspetinib with venetoclax to evaluate the TUSPEN doublet and the relapsed refractory AML population. In our TUSPEN doublet trial, we now have completed enrollment with 40 mg tuspetinib and with 80 mg tuspetinib combined with 400 mg venetoclax in a total of 79 patients. First, we observed that the excellent safety profile of Tuspetinib as a single agent was maintained with the Tusben doublet. We observed bone marrow leukemic blast reductions in the majority of patients, including those who failed prior therapies with FLT3 inhibitors or prior venetoclax therapy. And we continued to see evidence of broad activity across AML patients with a diversity of adverse mutations, including patients who had failed prior therapy with venetoclax. We see great promise for the TUS-VEN doublet to effectively treat the prior VEN failure patients and even become a standard of care for those patients. And there remains a potential accelerated approval path for the TUS-VEN doublet in a molecularly defined subpopulation of relapsed refractory AML, especially if we increase the dosage of TUS-VEN and the TUS-VEN doublet and demonstrate even greater activity. This has been a source of high interest for KOLs, collaborators, and certain potential partners. And as resources become available, we would like to pursue the TUSBEN doublet with higher doses of TUSBEN for the relapsed refractory population. However, in the near term, we have chosen to focus our resources on the TUSBEN HMA triplet and frontline AML therapy. So our next step to build value as quickly as possible will be to initiate a TUSBEN plus venetoclax plus azacitidine triplet pilot study in frontline newly diagnosed AML patients, and to select the optimal triplet dosage of Tuspatinib, which will be driven by CR, CRH rate, MRD negativity, and safety data. After selecting appropriate phase two doses of the triplet, we plan to transition into registrational studies that compare the safety and efficacy of the triplet to the then HMA control for frontline newly diagnosed AML patients. I also want to mention that our ongoing BD conversations with a number of large pharma companies emphasize a need for the AML therapeutic paradigm to focus on creating more effective, more durable, broader acting, and less toxic frontline cocktails of targeted agents for AML patients. And they point to the frontline triplet therapy as the cornerstone of a commercial success. It's clear that we can create the greatest value for Tuspatinib and the shortest period of time earned for the least amount of capital by performing a TUS-BEN HMA triplet pilot study in frontline AML patients, and such data can then support partnerships for later stage development of TUS-BEN. So this provides you with a framework of our strategic thought process, and Dr. Behar, our chief medical officer, will provide you with additional clinical insights in perspectives in a few minutes. But first, I also want to mention our other drug, Luxeptinib. You will recall that LUX, as we often call it, is an oral highly potent kinase inhibitor that selectively targets defined kinases operative in myeloid and lymphoid hematologic malignancies. This molecule has been evaluated in a Phase I AB study for the treatment of patients having relapsed to refractory B-cell leukemias and lymphomas, and in a Phase I AB study for the treatment of patients with relapsed to refractory AML. Enrollment and in dosing of patients in the B-cell malignancy trial has now been completed, including 36 patients who were dosed with the original G1 formulation across five dose levels ranging from 150 milligrams to 900 milligrams BID. In this trial, LUX achieved tumor shrinkage among 63% of the available B-cell cancer patients and across dose levels from 450 to 900 milligrams. This also includes a complete response, or CR, in a DL-BCL patient and impressive tumor reductions in follicular lymphoma patients and an SLL patient. Likewise, enrollment and dosing of patients in the AML trial now has been completed. In this trial, AML patients received the original G1 formulation across dose levels ranging from 450 to 900 milligrams BID. Bone marrow blast reductions were observed 38% of the evaluable FLT3 mutated patients, and 50% of the evaluable FLT3 wild-type AML patients. In addition, an MRD-CR, or complete response, in one reslapsed refractory AML patient occurred with a 450 mg BID dosing of the original G1 formulation. Our clinical data demonstrate that LUX is active in AML patients and in B-cell cancer patients but we were not consistently achieving the desired exposure levels to drive consistent responses. Because absorption of the original G1 formulation hampered the effectiveness of LUXF-mitted, a new Generation 3, or G3, formulation was developed. And now we can report that the clinical evaluation of the G3 formulation also has been completed. First, the G3 formulation was tested in a single-dose bioavailability study in 20 patients. including both B cell cancer and AML patients, and across five different dose levels, from 10 milligrams to 200 milligrams. The G3 formulation was then evaluated in relapsed refractory AML patients with continuous dosing using two different dose levels, 50 milligrams BID and 200 milligrams BID, in a total of 11 patients. Recent data show the G3 formulation dosed at 200 milligrams twice daily can achieve two to three macromolar steady-state plasma levels with approximately tenfold better absorption and, interestingly, even better tolerability than the original G1 formulation. This means the G3 formulation achieved our desired plasma exposure benchmark and that the G3 formulation will be the formulation of choice for future studies with LUX. Collectively, these findings demonstrate LUX is a viable drug with a viable formulation, and that LUX as the G3 formulation should be advanced into a focused clinical development program, and we are delighted to see a future for LUX. Regarding any next steps with LUX, we are exploring the potential to advance LUX to treat molecularly defined relapsed refractory hematologic malignancy patient populations of high MAP need. And we now are seeking alternative development paths and collaborations to execute that strategy. I now want to turn the call over to Dr. Behar, our chief medical officer and resident KOL, for his insights and comments on our data and clinical plans for TUSBETNM. Raf?