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Edited Transcript of APS.TO earnings conference call or presentation 6-Aug-19 9:00pm GMT

Q2 2019 Aptose Biosciences Inc Earnings Call

TORONTO Aug 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Aptose Biosciences Inc earnings conference call or presentation Tuesday, August 6, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Gregory K. Chow

Aptose Biosciences Inc. - Executive VP, Corporate Secretary & CFO

* Jotin Marango

Aptose Biosciences Inc. - Senior VP & Chief Business Officer

* William G. Rice

Aptose Biosciences Inc. - Chairman, President & CEO

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Conference Call Participants

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* Christopher Liu

Canaccord Genuity Corp., Research Division - Research Analyst

* Gregory James Renza

RBC Capital Markets, LLC, Research Division - Analyst

* Kalpit Patel

Oppenheimer & Co. Inc., Research Division - Associate

* Matthew David Cross

JonesTrading Institutional Services, LLC, Research Division - Research Analyst

* Susan M. Pietropaolo

SMP Communications, Inc. - Principal

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Presentation

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Operator [1]

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Good afternoon. My name is Chris and I will be your conference operator today. I would like to welcome everyone to the Aptose Biosciences Conference Call for the Second Quarter ended June 30, 2019. 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) As a reminder, this conference call may be recorded. I would like to introduce Ms. Susan Pietropaolo. Please go ahead.

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Susan M. Pietropaolo, SMP Communications, Inc. - Principal [2]

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Thank you, Chris. Good afternoon and welcome to the Aptose Biosciences conference call to discuss financial and operational results for the second quarter ended June 30, 2019. I am Susan Pietropaolo, Communications Representative for Aptose Biosciences. Joining me on the call today are Dr. William G. Rice, Chairman, President and CEO, Mr. Gregory Chow, Executive Vice President and Chief Financial Officer, and Dr. Jotin Marango, Senior Vice President 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 meaning of US and Canadian securities laws. Forward-looking statements reflect Aptose's current expectations regarding future events, but 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?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [3]

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Thank you, Susan. I too wish to welcome everyone to our call for the second quarter ended June 30, 2019 and a special welcome to our new shareholders, some of whom I'm certain we have on the call today.

Before we begin our review of the second quarter, both Greg Chow and I would like to recognize the newest member of our Senior Management team, Dr. Jotin Marango. He joined us in June as the Senior Vice President and Chief Business Officer. Jotin is participating with us on his first earnings call today and will be available to answer questions at the end of the call. As most of you know, prior to joining Aptose, Jotin was a senior biotechnology research analyst, where he covered hematology and oncology, with a particular focus on epigenetic and molecularly targeted therapies. He's is particularly familiar with Aptose as we were one of the handful of companies upon which he'd launched and during his research universe.

Part of his tenure on Wall Street, he also served as Chief Operating Officer at the Samuel Waxman Cancer Foundation and received his M.D. and Ph.D. degrees from the Mount Sinai School of Medicine in New York. His depth of experience and this character greatly complement our existing team and corporate culture. And we're delighted to have him join our team. So welcome to your first conference call on this side of the fence, Jotin.

Now let's begin our review of the quarter. Aptose has entered an exciting time in our evolution, with 2 well-differentiated small molecules now in clinical development. CG-806, our first-in-class pan-FLT3/pan-BTK inhibitor has commenced dosing in a Phase 1a/b dose escalation study in patients with B cell malignancies, including chronic lymphocytic leukemia or CLL and non-Hodgkin lymphomas that have failed or intolerant of standard therapies.

APTO-253, our MYC inhibitor currently in a Phase 1a/b trial for patients who have acute myeloid leukemia or AML and myelodysplastic syndrome or MDS is the only known clinical stage molecule that can directly inhibit expression of the MYC oncogene, a major driver of cancer cell proliferation. On today's call, we will bring you up-to-date on the status of both these clinical programs, brief you on other corporate highlights as well as our quarterly financials, and then I'll open the call to your questions.

So let's start today with CG-806 or just 806 is, I will call it. Our highly potent non-covalent inhibitor of all forms of the BTK and FLT3 driver kinases. Although we refer to 806 as a FLT3 and BTK inhibitor, it should be viewed as a mutation agnostic agent because it potently inhibits all known wild-type and mutated forms of FLT3 and all wild-type and mutated forms of BTK, plus it suppresses multiple oncogenic signaling pathways, operative in hematologic malignancies, yet with the precision that avoids targets typically associated with toxicity.

806 is not just directed at the ITD mutation of FLT3 or the C41S mutation of BTK. It is designed to treat the diseases that rely on multiple drivers and compensatory pathways, rather than treating only one particular target. With compelling pre-clinical results, 806 has captured the attention of many in this space and we're very excited to finally be in the clinic and to initiate the long-awaited dosing of patients with 806.

The Phase 1a/b multi-center open label dose escalation clinical trial of 806 is designed to assess the safety, tolerability, pharmacokinetics and pharmacodynamic dynamic responses and preliminary efficacy of 806 and to establish the recommended Phase 2 dose.

Our clinical protocol calls for an accelerated titration in which we are required to administer 806 only to one patient at each of the first 2 dose levels, 150 milligrams and 300 milligrams twice daily, unless unexpected side effects necessitate additional testing at those levels. We were especially diligent in choosing the first patient for the study in an effort to increase the chances of successful completion of the 28-day dosing cycle with only one patient and we are pleased with the way the trial now is progressing.

As we announced in July, we initiated dosing of our Phase 1a/b dose escalation clinical trial of 806 in a CLL patient, starting at the oral dose of 150 milligrams b.i.d. or twice daily. This patient had failed ibrutinib, venetoclax, rituximab and idelalisib, so the patient is very heavily pre-treated. As of today, we can report that the patient has received more than 50 doses of 806 and we have received no reports of drug-related AEs or SAEs. Upon completion of the first dose cycle of this first patient, the cohort safety review committee will review the results from the patient and determine the next steps with the trial.

The planned second patient will receive oral doses of 300 milligrams b.i.d. and then will be followed by ascending cohorts with 3 patients each in a 3 plus 3 design dosing scheme, including 450 milligrams, 600 milligrams, 750 milligrams, and 900 milligrams b.i.d. With the intent to determine the recommended Phase 2 dose for patients with relapsed-refractory CLL and non-Hodgkin's lymphomas.

Once an MTD or a safe and biologically active dose has been identified as a recommended Phase 2 dose, up to 100 patients may be enrolled for treatment and the expansion phase at that dose. As of today, we have 8 U.S. sites open for screening and enrolling patients for the study with 10 additional sites scheduled to come on board soon.

For more specific information on the trial and the clinical sites enrolling patients, you may visit clinicaltrials.gov. So how would we report data from this trial? First, we have submitted abstracts and hope to present our findings, including early clinical data at the American Society of Hematology or ASH meeting in early December. But we may also be able to report high-level observations and progress prior to ASH perhaps on our next quarterly conference call.

Finally, pending collection and careful review of the initial safety data and predicted pharmacokinetic data in humans from the Phase 1 dose escalation trial in patients with B-cell cancers, Aptose plans to seek allowance from the FDA to move into patient populations that include relapsed or refractory AML and MDS in a separate Phase 1 trial.

And now, I'll remind you that we presented data at the 2019 European Hematology Association or EHA meeting in Amsterdam.

I mentioned the wealth of preclinical data supporting 806 and during the quarter, we presented a poster EHA that highlighted the in vivo anti-leukemic efficacy of 806 and its GLP safety and toxicokinetic profile. In a preclinical murine xenograft model of human AML, 806 suppressed leukemia growth at all doses tested throughout the 28-day period of dosing. After dosing was halted, tumors treated with the lower doses of 10 mgs per kg and 30 mgs per kg resume leukemic growth, but responded again when 806 dosing was restarted.

In the mice treated with 100 mgs per kg, 5 of 11 or 45% of the mice were cured through day 20 of the study. And in the 300 mg per kg dose, 10 out of the 11 or 91% of the mice were cured. Even better, retreating the uncured mice in these 2 dose groups for an additional 28 days beginning on day 88 led to rapid and robust anti-tumor responses resulting in cures in all 100% of re-treated mice through day 120.

Also in the re-treated mice neither drug resistance nor toxicities were observed, and we demonstrated that even very large tumors can respond rapidly to 806. Also, as we reported, GLP 28-day safety and PK studies in mice and dogs showed no adverse drug-related effects on body weight, ophthalmic, respiratory or neurologic examinations, clinical pathology, organ weight or microscopic evaluations, and no drug related cardiovascular effects were noted in the 28-day GLP tox study or in a separate preclinical cardiovascular safety study.

Our [post ready are] generated interest from our industry peers, as most of you are aware, there is a significant activity in the hematology space, particularly around certain BTK and kinase inhibitors out there. So Jotin, would you like to comment here on the differentiation of 806 from other hematologic drugs commercialized and in development?

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Jotin Marango, Aptose Biosciences Inc. - Senior VP & Chief Business Officer [4]

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Certainly, Bill and thank you. It's great to now be part of the team. My beliefs in 806 as a differentiated and mutation diagnostic agents in hematology, oncology is really one of the many reasons why I joined Aptose. The ability of 806 to potently inhibit both the mutant and the wild type forms of FLT3 and of BTK as well as other kinases with a precision that circumvents many of the toxicities differentiate this molecule from other approved hematology drugs as well as molecules in development.

On one hand, in lymphoma diseases, our preclinical studies have shown 806 to be on average 1,000 times more potent at directly killing B-cell cancers than ibrutinib, which is the current standard of care for certain B cell malignancies. And by the way, all these studies are available on our website.

At the same time, in myeloid diseases. 806 is approximately 100 times more potent in killing AML cells with specific FLT3 mutations compared to quizartinib, a FLT3 inhibitor, which is in late stage development or gilteritinib, a FLT3 inhibitor that was approved in 2018.

Additionally, and importantly 806 was able to also tackle FLT3 wild-type leukemic cells. In line with this, we look forward to evaluating 806 in all patients with relapsed or refractory AML and MDS in upcoming clinical trials. So overall the selective coverage of key molecular targets in different tumor types suggest that 806 has broad applicability across hematology and oncology in both the myeloid as well as the lymphoid malignancies.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [5]

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Thank, Jotin. As you can hear in Jotin's voice and the sirens in the background, we continue to believe that 806 exhibits the potential to be best in class and hope that our ongoing clinical trials bear that out. Finally, it's important to note that we continue to be vigilant to observe safety and tolerability in these patient populations. We continue to collect PK and PD biomarker data.

We continue to upgrade our API and drug product manufacturing activities and we seek potential new indications for CG-806. Going forward, we will continue to update you on all these activities as it's important for us to be transparent on both the challenges and the opportunities ahead.

So now let's turn to APTO-253 or 253. As a MYC inhibitor, 253 may have brought into our cancer application, among certain hematologic malignancies and solid tumor indications. But as you know, our initial development is focused on patients with AML and MDS. For our Phase 1 clinical protocol, 253 is being administered once weekly over a 28-day cycle of ascending doses in patients with relapsed or refractory AML or high-risk MDS until the maximum tolerated dose is reached.

The study is designed to then transition as appropriate to single agent expansion cohorts in AML and MDS, followed by combination studies. We recently announced that we completed dosing of the first 3 cohorts in the Phase 1 trial with only one patient required in each of those first 2 cohorts.

Our first patient, an AML patient, received the lowest dose of 20 mgs per meter squared once weekly over 28 days and the drug was tolerated favorably. Our second patient, an MDS patient, received a 40 mgs per meter-squared dose once weekly over 28 days and also tolerate the drug well. Both patients completed the 28-day cycle and as we have recorded, analysis of biomarker expression from those patients demonstrated reductions of the MYC gene expression in their peripheral blood cells with a downward trend each week during the first cycle.

Our second patient is continuing treatment and is now close to completing the third 28 day cycle at 40 mgs per meter squared. Per the protocol because there were no serious adverse events with our first 2 cohorts, we proceeded to our third cohort at 66 mgs per meter squared, which requires 3 patients.

Currently 2 patients have completed successfully their first 28-day cycle treatment with the 66 mgs per meter-squared dose and the third patient is expected to begin dosing this week. Assuming the third patient completes the 28-day treatment period with no DLTs at 66 mgs per meter squared, dosing will continue to ascend until the maximum tolerated dose is reached. The next expected dosing level is 100 mgs per meter squared.

We have a number of clinical sites actively screening for AML and MDS patients for the next dosing cohorts. For those of you interested in learning more about the trial specifics and enrollment criteria, please visit clinicaltrials.gov. We are pleased by the progress of the 253 trial and we want to answer questions about time lines and when we will report any data because this is an open label Phase 1 trial, in addition to pharmacokinetic and safety information, we will continually assess for any evidence of anti-tumor activity of 253 by hematologic and bone marrow valuations in acute leukemias and MDS.

And of course, we have already gleaned and reported important PD data about the reduction of MYC expression. Similar to our plan with CG-806, we expect to be able to share high-level observations from our ongoing APTO-253 clinical trial at our next quarterly conference call and hopefully to present select data at ASH.

To wrap up on our product candidates, we are pleased to be treating patients with both 253 and 806 and are hopeful that clinical testing will prove them to be effective therapies for hematologic malignancy patients greatly in need of new treatment options. We look forward to updating you in the year, indeed we do expect to have early clinical data around the time of ASH. As we mentioned, in addition to several preclinical abstracts, we and our collaborative investigators have submitted clinical related abstracts for both compounds.

I now will turn the call over to our Executive Vice President and Chief Financial Officer, Mr. Greg Chow, who will review the results of the quarter.

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Gregory K. Chow, Aptose Biosciences Inc. - Executive VP, Corporate Secretary & CFO [6]

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Thank you, Bill, and good afternoon, everyone. Before I get into the quarterly financials, I'd like to quickly go over some of the financial news, highlights of the second quarter. In June, we announced closing of the public offering of 10 million common shares at a price of $1.85 per share. The financing also included the exercising followed by the underwriters of their option to purchase 1.5 million additional common shares.

The gross proceeds from the offering before deducting the underwriting discounts and commissions were approximately $21.3 million. We're pleased to have completed this offering with additional quality institutional investors and we thank them for their support. As we mentioned in our last call, early in the quarter, we entered into a new agreement with Aspire Capital where Aspire is committed to purchase up to $20 million of common shares of Aptose for up to 30 months at our discretion.

Additionally, we entered into a new at-the-market or ATM agreement for $40 million with Piper Jaffray and Canaccord Genuity as co-agents to issue and sell common shares of Aptose through ATM distributions on NASDAQ. This ATM replaces the previous ATM that the Company had. Both of these financing vehicles can be accessed under the sole discretion of Aptose and we determine the time, price, the number of shares to be sold, if any.

We ended the quarter with $35.4 million in cash and cash equivalents and investments, compared to $17 million at March 31. In addition to the proceeds received from the public offering, during the quarter, we also raised $4 million to common stock purchase agreement with Aspire Capital, which exhausted that agreement.

During the quarter, we utilized approximately $5.3 million of cash in operating activities, which were attributable to activities surrounding 253 and 806 as well as general and administrative purposes. Based on current operations, cash on hand and committed capital provide the Company with sufficient resources to fund all planned Company operations, including research and development into the second half of 2020.

Moving on to the income statement, we had no revenues for the quarter. Research and development expenses were $3.5 million for the quarter and attributable to 806 and 253 clinical trial costs. Manufacturing a drug product for our clinical trials, including continuing development on improving GMP formulations for both 253 and 806 and personnel cost per headcount supporting clinical trials and manufacturing activities and research studies.

G&A expenses for the quarter were $2.9 million and our net loss for the quarter was $6.2 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.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [7]

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Thank you, Greg. I now like to open the call for questions. And hopefully, you'll have questions for all 3 of us. Operator, if you could, please introduce the first question.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from the line of Gregory Renza with RBC Capital Markets.

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Gregory James Renza, RBC Capital Markets, LLC, Research Division - Analyst [2]

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Hey, Bill, I just wanted to start just your and Dr. Marango's mention of 806 of differentiation and I know as new data in the market emerge and CLL (inaudible) sale and the BTK space evolve and now that 806 is gaining experience in the clinic. I just wanted to ask you to perhaps revisit that the 806 profile and your perspective on this differentiation and hone in a little further on, you mentioned of going after patients mutation diagnostically or otherwise. And certainly, how that is affecting the pace of patient selection in the trial underway?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [3]

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Right. Thank you, Greg for calling in. It's great to hear from you. So I will start out answering the question, then I'll ask Jotin to also jump in. So first of all, 806 has a very atypical kinase inhibitory profile. Of course it inhibits all forms of FLT3 as we've talked about, all forms of BTK but in the clusters for FLT3, it also inhibits the PDGFR alpha and CSF1R, those are receptors. It also inhibits the track receptors and related are the red there.

So it's able to inhibit the initiation of those oncogenic signals at the cell surface. It also inhibits the clusters of the intracellular kinase, it's the BTK clusters, BTK, BLK as well as some of the kinases in the SRC cluster, SRC, SIC, (inaudible) all of those that are driven through the B-cell receptor pathway, but it does not inhibit us, for instance, TEC, the TEC kinase specifically that can often lead to toxicities.

And then separately, it does affect and higher concentrations and be Aurora kinases, that's important because so many companies now are going after the particular the Aurora A to try to inhibit MYC. So we do inhibit these pathways, these kinase I've talked about, and some of those are driver kinases. The FLT3 and the BTK. But we also inhibit suppressed in those other oncogenic signaling pathways, the MYC, the AKT are some of the MAP kinase pathways SIC, the B-cell receptor pathway.

So we view this drug is very different from other molecules out there. For instance Jotin earlier mentioned gilteritinib, quizartinib, well those are targeting FLT3. We are not just targeting FLT3 and AML. We want to inhibit FLT3 and whatever form comes along, we want to actually kill the cells and treat the disease by inhibiting and suppressing the additional compensatory pathway.

The same is true in the CLL, the B-cell malignancy arena. Yes, we inhibit BTK, but if you look at some of the other drugs out there, they do too. They inhibit the wall type and some of them inhibit wall type and C481S molecule kinase. Well, we inhibit those, but we also again inhibit the other pathways in the cell.

So again, we're trying to treat a disease, not just trying to treat a particular target. So that's why we believe that we have to view this as a target or mutation agnostic in many cases and it truly differentiates our molecule from others. That allows us to go after all-comer patients relapsed-refractory that with AML or MDS, we don't have to restrict it down to just FLT3, ITD driven patients. And the same is true for the B-cell malignancy patients. We can go after those that have CLL, SLL, MCL or various non-Hodgkin's lymphomas whether they have a mutation or not and even if they failed a variety of drugs. I mentioned to you the first patient on our CLL trial had failed ibrutinib, venetoclax, rituximab as well as the PI3K inhibitor. So we believe we can go after those types of patients.

So having said all of that, I'm going to turn it over to Jotin because I'm sure he has additional thoughts beyond that.

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Jotin Marango, Aptose Biosciences Inc. - Senior VP & Chief Business Officer [4]

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Yes. Thank you, Greg for the question and Bill summed it up very nicely. On the acute leukemia side, Greg, as you know, there are 2 agents that are approved gilteritinib and midostaurin that target specifically FLT3 positive disease and quizartinib is in late-stage development. However, these are all indicated for disease with FLT3 apparent. However, what we've seen in the pre-clinical studies is that our agent 806 is able to target effectively and (inaudible) well as wild-type FLT3.

So interpreting this and looking forward to the clinic and to the market, all AML should really be susceptible to this agent. Now the same is true on the lymphoid side targeting BTK. But we have heard certainty enough about this emerging subset of the disease post ibrutinib treatment. The 481S mutation which presents -- resistant disease, presents commercial -- testing clinical and commercial opportunity.

However, what our preclinical data show that the agent is as effective in targeting these cells as well as cells with wild-type BTK. So this presents an opportunity that is wide on the clinical side within each tumor itself across the entire tumor, so mutation agnostic for each target and then across hematology, which is on the myeloid side, AML, MDS, but also on the lymphoid side, CLL and potentially beyond into non-Hodgkin's lymphomas.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [5]

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Much as (inaudible) developed turned in both indications -- both categories. All right. So Greg, did that answer your questions sufficient?

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Gregory James Renza, RBC Capital Markets, LLC, Research Division - Analyst [6]

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It surely does. I greatly appreciate the color and just one more for me and I'll hop back into the queue. Just looking at the back half of this year and your mention of ASH, I think I also heard some commentary on the potential for disclosures over earnings calls or prior to ASH, just curious how your team is thinking about those disclosures, what inputs we should be considering as far as what may or may not be revealed ahead of ASH? Thank you very much.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [7]

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So we want to be careful to set expectations. These are Phase 1 trials. So clearly, we are looking for safety, tolerability, PK, pharmacodynamic responses. We will always watch for any other types of activities at our current patients, but we really want to set the stage for the free to expect the type of data that would come out of the Phase 1, and then we'll see what additional data come from there. Jotin, would you like to add to that?

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Jotin Marango, Aptose Biosciences Inc. - Senior VP & Chief Business Officer [8]

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No.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [9]

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All right. And that's true with both 806 and 253.

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Operator [10]

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And our next question comes from the line of John Newman with Canaccord Genuity.

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Christopher Liu, Canaccord Genuity Corp., Research Division - Research Analyst [11]

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This is Chris on for John. Just wondering if there was a feel for what dose levels could show activity for either 806 or 253?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [12]

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So let's start on 253. In the past, we have said that we hope we're getting into an exposure level at the third dose level that we might start seeing something in patients. Having said that even at the lowest dose level, we saw target engagement and biomarker movement with 253. So we saw the MYC inhibition as well as p21 induction.

So we sold that at the lower dose levels, dose levels 1 and dose level 2. We now have also performed studies in patients from dose level 3. We're also seeing inhibition of nuclear. We're actually starting to get some very interesting findings and some of these patients are not willing to discuss those yet because over time, we want to make sure that anything we might observe is durable, it's not just something you see at the end of one cycle and don't see at the next cycle, but we do hope that we begin to start seeing something at the third dose level of 253 and then at the 100 mgs per meter squared dose level to 4. Again, we expect it's even more activity there.

With 806, I'm going to be very careful because we do not yet know the oral availability, the exposure levels in humans. We can try to predict based on exposure levels that we saw in mice and exposure levels we would get in dogs, but we just don't know what is the percent or availability in humans yet. We'll be getting some of those data soon that will allow us to better predict when, at what dose level. But I wouldn't want to try to predict after just one dose level. You want to see a couple of different dose levels.

So again, I'd like to see the 150 and 300 look at the exposures there, begin to be able to then make predictions as to the full exposure levels and the pace of pharmacokinetics. It's not just to see Cmax or an AUC, it's also reaching steady state. When do you achieve that? How long does it stay there? Does it maintain levels? So I want to see the pharmacokinetic profiles, understand those before I make any full predictions on the -- when I think we're going to see efficacy there.

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Operator [13]

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And our next question comes from the line of Matt Biegler with Oppenheimer.

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Kalpit Patel, Oppenheimer & Co. Inc., Research Division - Associate [14]

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This is Kalpit on for Matt. Congrats on the progress and thanks for taking our questions. We were wondering if you could provide us with any more details on the first patient dosed in this trial with this patient, C481S mutant patient?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [15]

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So we have actually asked the question. We do not have data as to whether or not the patient has the C41S mutation. So we do know that the patient failed ibrutinib, venetoclax, rituximab as well as the -- I always mispronounce it, idelalisib, it's a PI3K inhibitor. So we know the patients failed all those either for in tolerances or just they were refractory to the drugs, but we don't know if true resistance occurs there and if mutations exist.

We have asked the question, but we do not have such data, but you can see it's a heavily pre-treated patient. We were happy to get that patient out and especially our CLL patient. So we're thrilled to finally have this drug in the clinic. So far, I think, yes, I think tomorrow is likely in the last dosing day, the 28-day dosing of this patient. So by that time, they would have received 56 doses of the drug. Will be measuring the pharmacokinetics and all. But then we hope to be able to then transition soon to the next dose level.

I think that's about the most that I can say about the patient. We are going to be measuring a variety of biomarkers, the phosphorylated target proteins, plasma inhibitory assays CCL3, CCL4s, many of these as we can depending on how much samples we get from the clinical sites, so we will be measuring these, but we do not have the data yet.

We're just happy to be in the patient-center start collecting data now. And by the way, we thank you for being on the trial. It would be great to see you soon. And we thank everybody for being on -- not on the trial, sorry, on the call today.

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Kalpit Patel, Oppenheimer & Co. Inc., Research Division - Associate [16]

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Can you also comment on how frequently the tumor scans are being conducted per protocol?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [17]

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I think per protocol, I believe, it's every third -- I believe that's right. I'll have to look that up, but I believe it's every third cycle, but if we actually see something interesting or something is going on with the patient, we have performed some of these earlier with other patients in the past. So yes, I'll have to look it up. So I think Jotin is trying to look it up now. But I think it's every third cycle, but I'll have to get that to you.

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Kalpit Patel, Oppenheimer & Co. Inc., Research Division - Associate [18]

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Okay. And then final question. We were wondering if there had been any changes in the game plan for enrolling AML patients into this trial? Are you still on track to expand the trial by the end of the year?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [19]

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We hope so. We're going to collect the data from PK data from the first patient then -- and then take a look at it and there's always variability around one patient. So you'd like to have at least 2 patients. So try to get that one on and get the PK data as soon as we can. And then depending on what it says been, we plan to take those data to the FDA.

If the data show that we're getting exposure that gives us the confidence that there's going to be activity in AML, again, because we do not want to treat AML patients that are very sick some therapeutically. So right now, we're still on track for that. And if that changes, we will let you know. But it just depends on the PK data that come out of these first couple of patients. That's why we are very data driven to put it bluntly, and we will follow the data. We hope it's earlier, but we'll make the right decision based on the data.

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Operator [20]

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And our next question comes from the line of Matthew Cross with Jones Trading.

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Matthew David Cross, JonesTrading Institutional Services, LLC, Research Division - Research Analyst [21]

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Congrats on the rapid pace of execution thus far with 806 and 253, and a big welcome to Jotin of course. I had a couple here. First, I wanted to touch a little bit more on what you started on here, Bill, about the biomarkers that you're looking at for CG-806, given that you're testing in a number of different sub-indications and with the collection of targets that are being hit by 806.

So could you go into a little bit the rationale for the specific ones you're looking for? And I think you mentioned CCL3 as apoptotic factors. I suppose, given that your first patient is a CLL. Just what do you view as most appropriate to assess kind of indications of 806's activity initially when we might be looking at some data that could be sub-therapeutic.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [22]

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Okay, so what do we look for in these patients. There is a diversity of these patients, it ranges from the chronic leukemias to the various lymphomas, different regions of the body that, but they're -- all of these are affecting either bone marrow blood and or the lymphoid tissues. So one of the things that we like to do is scans.

So you wanted to do various types of scans depending on which type of tumor the patient has in the location, you want to, you want to try to get a scan to see if you can get tumor volume assessment and then also determine whether not to your cooling the tumor. So that's more of the FDG type of assay. So yes, the PET can give you tumor volumes, but if you include the FDG-PET on top of that, then you can get not only tumor volumes whether or not your drug is actually cooling the tumor such that they are less metabolic activity in the tumors.

So those are important indicators. On other types, we want to know are we affecting the B-cell receptor pathway. Couple of ways we look at that we collect samples, we hope to be able to measure fossil BTK, that's an ELISA based assay. Fossil SIC if we get enough samples. We've already shown in CLL cells, even in those that are co-incubated with nerves like cells that our drug can turn off the phosphorylation of SIC, BTK, AKT pathway various pathways in the CLL cells. So we hope to get enough samples from the patients that we can look at the activation state of those various kinase phosphorylated forms of kinases.

If possible, we'd love to be able to look at ERK. It just depends on how much sample that we get. We also mentioned CCL3 and CCL4. Those are factors that are released from the sales when the BC -- B-cell receptor pathway is activated. And so it's been shown that certain other BTK inhibitors or drugs that turn off the B-cell receptor pathway can inhibit the production of CCL3 and CCL4. We've actually confirmed that in vitro our drug does cause that inhibits the CCL3 and CCL4 production from the CLL cells and then other companies have used those as indicators in the claim to just measure those in the serum. So we plan on doing all of those.

And then one other that we're trying to do and we hope we get enough serum or plasma, it's plasma inhibitory assay. So you collect plasma from the patients at different times after they've been dosed. You hope there's enough of your drug in the plasma sample to actually have an anti-tumor effect we hope that's true in the patient, but if you then take that plasma back to the laboratory and you put it on, let's say, some sort of B-cell, a cell line in the laboratory, you want to see if you're turning off the pathways. So the important pathways in those cells in culture.

So it's an indirect in vitro assay, but it does tell you give a sense of whether or not you have enough of the agent in the bloodstream that can have an effect on these pathways. So we'll be doing all of those, but it also depends on how much sample is available for each patient and that can vary.

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Matthew David Cross, JonesTrading Institutional Services, LLC, Research Division - Research Analyst [23]

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All right, great. No, that's -- I really appreciate that level of detail and I'll be keeping an eye out for all of those measures, but I think it's not stress -- stress, the amount of sample you get, it is obviously very important. And then another one for -- sorry, go ahead.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [24]

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No, I was going to say (inaudible) Please go ahead. Next question. Thanks.

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Matthew David Cross, JonesTrading Institutional Services, LLC, Research Division - Research Analyst [25]

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Sure. Thanks. So the second was about 253, now that you've got up to I guess 5 patients that are going on with dosing, with preliminary MYC inhibition insights I guess now available at 3 different dose levels, is there anything you can say about maybe a trend that you've observed between dose and degree of inhibition and I guess given how upstream this target is, is there kind of a range you're hoping to see to maintain tolerability or is this really kind of really exploratory given the uniqueness of the molecule where DLTs are reasonably expected to kind of guide the determination of a Phase 2 dose?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [26]

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Number of questions there. So in terms of the patients, we've seen inhibition of MYC at all 3 dose levels. And I think an average of 70% to 80% inhibition of MYC in the patients, I think we had already talked about and reported that we saw MYC inhibition from the first 2 -- patients on the first 2 dose levels are actually seeing that on the third dose level now.

We are also collecting samples further out in time, so hopefully we'll be able to see launch truly over time whether or not the MYC has inhibited the p21 induced. So those are some of the major markers. As to further or not, you need a certain amount of MYC inhibition to have an anti-tumor effect that is really unclear because nobody in the past has really been able to effectively inhibit MYC without having toxicity associated with it.

So we think inhibiting mix is important. We've spoken with some of the experts in the field and they say that even a 50% reduction in MYC can have a major effect on patients. We don't know if that's true when we dose with the drug. We will just have to watch. But we haven't seen a reduction in MYC that is associated with toxicity. This has been a very well tolerated drug thus far. It's been in a number of patients. We've never seen myelosuppression. So it's -- we haven't seen toxicity to normal bone marrow cells. So as to when we might expect a DLT that's difficult to know and we also have a -- new formulation is also different from the prior one.

So we just don't know at this point when to expect that, but at least for now I can tell you no drug related events that have caused us any type of concern to this point, it's been very well tolerated thus far [2/3] and we're looking forward to dosing up.

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Matthew David Cross, JonesTrading Institutional Services, LLC, Research Division - Research Analyst [27]

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Fair enough. Okay, great to hear that the safety has been so good thus far. Just trying to make sure that we're not coming up on any potentially kind of well-documented level of MYC inhibition, where you start to see that tolerability become an issue. But as you said, I think you're kind of really paving the way for a more direct inhibitory approach. So we are looking forward to seeing the results.

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Operator [28]

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(Operator Instructions) And our next question comes from the line of (inaudible) with H.C. Wainwright.

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Unidentified Analyst, [29]

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So a couple of questions, one on CG-806. So basically, I understand you'll have like 17 active sites. Can you please give us more color on the speed of the enrollment, specifically how long will the enrollment take?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [30]

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You know that, when we first started into this, everyone said there was going to be a tremendous concern being able to get enough patients. Our first patient took longer than we had hoped for. Part of that is we are really trying to also be careful that we got the right patient. We wanted to make because we'll have to have one patient on the 2 lowest doses. You want to be very careful and get a patient that you feel call up and can make it through the 28-day dosing, and then you can also move to the parameters.

Going forward, we have a number of sites that are actively looking, searching for screening patients, getting ready for the next dose cohort. As I mentioned, the last day of dosing, I believe, if all goes well is tomorrow for our first patient. But then you don't put the next patient on immediately. This is going to be the first patient who has received this drug. We're collecting all the data, all the PK, safety data, we're taking it to the Drug Safety Monitoring Board, the Committee and then we're going to make certain that we really scrubbed the data. So that if anything comes up, we can tell the FDA what we're looking at safety, we want to make sure the molecule is very well tolerated.

Thus far it has been, we've seen no drug-related AEs or SAEs in this patient very well tolerated. But we want to make sure that, we collect all the data from the clinical sites and then get a core committee and then dose up. I suspect that next patient will be able to go on quickly after we get through the committee. And the sites that we're talking to are very motivated to get patients on here because they're excited to get patients on this drug. There are so many patients out there that still are filling all the other drugs.

I mean we hear great comments about many of the other drugs out there, but patients will fail every therapy out there eventually. And so there is a need for those patients to go on these studies. So I -- it's a long-winded way of saying, I hope we'll be able to accrue reasonably quickly. I don't see any reason why we should not at this point.

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Unidentified Analyst, [31]

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I see. Okay, thank you. And maybe you already covered this. When we'll expect some initial data readout for the trial?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [32]

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What we've said is that, we expect to be able to present some data at ASH, which is in early December of this year. If we have certain meaningful data that we're able to present between now and then, we have to have confidence in the data, we have to -- it has to be an enough patients that we feel confident, we're seeing trends. We don't want to put out a flash in the pan. So we may be able to put out additional information on our Q3 earnings call and then will be at various conferences between now and then. But ASH is most likely the timing or even after the first of the year. So those are the first times of this effect. All right.

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Unidentified Analyst, [33]

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All right. And when we talk about safety of CG-806. I was wondering if you can give us more color as to the molecular mechanism beyond CG-806 favorable safety profile, especially as opposed to peers.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [34]

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So I'm not fully certain I understand the question. So based on -- you're talking about the structure and the various target that's going to hit us.

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Unidentified Analyst, [35]

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Yes. And yes, and also, based on your preclinical data. So how do you think your drug could be safer as compared to other non-covalent BTK inhibitors?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [36]

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We can only address that in a couple of different ways, and ultimately the answer is going to be in humans, but one of the ways is, we profiled against all the major kinases. And we see kinases that we hit that are involved in these key oncogenic pathways and that tells us, it should be able to kill cancer cells. But we're not seeing all the other target set, it's not hitting all the other targets that are typically associated with cancer. I mean with the safety problems.

Various receptors, TEC I mentioned earlier is a kinase that if you get any concern call certain toxicities, ERBB2 and EGFR. So these are known targets that some of the other kinase inhibitors will inhibit, but ours doesn't. So at a molecular level, we do all those studies. Then you go into animals and you dose escalate as high as you can. So we have exceptionally good activity in animal models. As I mentioned, we're able to cure up to a 100% of these animals with AML at our high dose with no observed toxicity and this is over 120 days in a mouse model and a model at that point.

So it's very well tolerated there in our GLP tox studies, we are never able to get a dose related adverse event at the very highest dose level in dogs, it looked like we might be seeing a slight reduction in bone marrow. So possible bone marrow separation, but it was such a small amount. It was reversible, but it was such a small amount of reduction. It was not considered adverse.

So if I had to predict. I would expect that the DLT and humans ultimately might be bone marrow suppression. But that is conjecture and it's based on the data that we've seen. Some of these molecules, the kinase inhibitors can also cause cardiac tox. We have gone out of our way to try to demonstrate whether or not this drug is safe and we've never seen any adverse event in any cardiac safety study that we perform. So that's how we make the judgment.

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Unidentified Analyst, [37]

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Fair enough. And my last question on the 253 trial. So I know you are basically testing for drug activity in the peripheral blood of these patients. So platform p21 in MYC expression, what are the molecular markers are you're looking at?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [38]

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We really haven't disclosed all the other various markers that we're looking at, but we're looking at 18, 20 different genes internally. Why would we do that because we know MYC affects many other genes downstream, you want to know if some there are various pathways and processes in the cell that are affected. So are we looking at those genes? Yes, we are. We're not going to be reporting that out anytime soon. But that's -- those are PCR based assays looking to expression levels.

But the MYC in the p21, those are the major markers we're looking at. And then your typical hematologic parameters -- clinical parameters you look for and all these patients bone marrow blasts. So that's something else we look at is if you're going to look at the neutrophil counts in the bloodstream, are the higher or lower, are they derived from the malignant clones, are you decreasing blasts in the bone marrow. So all of these types of activity were measured.

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Unidentified Analyst, [39]

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I see. And also, maybe you already covered this question, but basically, when you look at these expression. Is there a way you can normalize these on the blood and on the tumor cells, rather than all normal cells?

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [40]

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But yes, so we do that for every study. So for instance, these are PCR-based assays and which are quantitatively the mRNA expression levels. First of all, we took 12 different normal volunteers, collected the bloods, extracted RNA, and then we measured the level of MYC and p21 expression to all of those individually, then we pull them together to use as a standard in every one of our cases. So it tells us -- so that's what we'll consider a normal barrier of MYC expression.

And then we look at each patient, so most of the patients have elevated MYC exploration, but not all of them do. But then once we get the baseline mid-level, we look for inhibition thereafter. But, yes we -- and then within each experiment, we also have a kind of a marker DNA, GAPDH or some other gene that we measure. So that we have that -- it's normalized. We always have to do that and then we also have the standard for the healthy volunteer RNA also.

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Unidentified Analyst, [41]

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Okay. So it is normalized. Good luck for the studies.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [42]

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Thank you.

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Operator [43]

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Thank you. And I'm currently showing no further questions. I would like to turn the call back to Dr. Rice for closing remarks.

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William G. Rice, Aptose Biosciences Inc. - Chairman, President & CEO [44]

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All right. Well, I would like to thank everyone for joining us today. With 2 key assets in the clinics CG-806 and APTO-253 and actively dosing patients, we remain committed to delivering for our patients and our shareholders. I also want to give a big shout out to the team at Aptose employees, consultants, contractors for all of their very long hours and very hard work to make this all possible. And also I want to thank our clinical team, our investigators, our patients for helping us in this mission. We appreciate all of your support, and we look forward to keeping you updated on our progress, and thank you and have a wonderful evening. Goodbye everybody.

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Operator [45]

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