10-K
1
f10k_032321p.htm
FORM 10-K
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
(Mark one)
☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31,
2020.
Commission file number 001-3200
APTOSE BIOSCIENCES INC.
(Exact name of registrant as specified in
its charter)
647-479-9828 (Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Shares, no par value APTO Nasdaq Capital Market
Securities registered pursuant to Section
12(g) of the Act:
None
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐
NO☒
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐
NO ☒
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES ☒
NO☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§229.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files). YES ☒ NO☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether registrant
is a shell company (as defined in Rule 12b 2 of the Act). YES ☐
NO ☒
The aggregate market value of the voting
stock and nonvoting common equity held by non-affiliates computed by reference to the price at which the common equity was last
sold, or the average bid and asked prices of such common equity, as of June 30, 2020 was $478,045,833.
As of March 23, 2021, the registrant had
88,885,238 common shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of our Proxy Statement for our
2021 Annual Meeting of Stockholders (the “Proxy Statement”), are incorporated by reference in Part III.
TABLE OF CONTENTS
PART I. 2
Item 1. Business 2
ITEM 1A. RISK FACTORS 17
ITEM 1B. UNRESOLVED STAFF COMMENTS 33
ITEM 2. PROPERTIES 34
ITEM 3. LEGAL PROCEEDINGS 34
ITEM 4. MINE SAFETY DISCLOSURES 34
PART II. 34
ITEM 6. SELECTED financial data 34
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK 46
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 46
ITEM 9A. CONTROLS AND PROCEDURES 47
ITEM 9B. OTHER INFORMATION 47
PART III. 47
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 47
Item 11. EXECUTIVE COMPENSATION 48
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 48
PART IV. 48
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 48
This Annual Report on Form 10-K contains
certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is subject to the safe harbor created
by those sections. For more information, see “Part I. Item 1. Business — Cautionary Note Regarding Forward-Looking
Statements.”
As used in this report, the terms “Aptose,”
“Aptose Biosciences,” the “Company,” “we,” “us,” “our” and similar
references refer to Aptose Biosciences Inc. (formerly known as Lorus Therapeutics Inc.) and our consolidated subsidiaries, and
the term “Common Shares” refers to our common shares, no par value.
Aptose has historically qualified as
a “foreign private issuer” for purposes of reporting under the Exchange Act, and filing registration statements under
the Securities Act of 1933, as amended. Effective December 31, 2018, however, Aptose ceased qualifying as a foreign private issuer
and began filing reports with the SEC as a “domestic issuer”. As a result, Aptose changed the accounting standards
by which it prepares its financial statements from International Financial Reporting Standards, or “IFRS”, to generally
accepted accounting principles in the United States, or “US GAAP”. All financial statements contained in this Annual
Report are presented on the basis of U.S. GAAP. This report contains the following trademarks, trade names and service marks
of ours: Aptose. This report also contains trademarks, trade names and service marks that are owned by other persons or entities.
PART I.
Item 1. Business
Overview
Aptose is a science-driven biotechnology
company advancing highly differentiated agents to treat unmet medical needs in life-threatening cancers, such as acute myeloid
leukemia (“AML”), certain B-cell malignancies, high-risk myelodysplastic syndrome (“MDS”) and other hematologic
malignancies. Aptose is a publicly listed company incorporated under the laws of Canada. The Company’s Common Shares are
listed on the Nasdaq Capital Market and the Toronto Stock Exchange. The Company was incorporated on September 5, 1986, under the
name RML Medical Laboratories (“RML”) pursuant to the Business Corporations Act (Ontario) and then continued
pursuant to the Canada Business Corporations Act (“CBCA”). Between 1986 and 2014, the Company operated under
the names of RML, IMUTEC Corporation and Lorus Therapeutics Inc. On August 28, 2014, the Company changed its name from Lorus Therapeutics
Inc. to Aptose Biosciences Inc. and, on October 1, 2014, we consolidated our outstanding Common Shares on the basis of one post-consolidation
Common Share for each twelve pre-consolidation Common Shares.
Based on insights into the genetic and
epigenetic profiles of certain cancers and patient populations, Aptose is building a pipeline of novel and targeted oncology therapies
directed at dysregulated processes and signaling pathways in cancer cells, and this strategy is intended to optimize efficacy through
simultaneous targeting of key drivers of disease in cancer cells, while preserving quality of life in patients by minimizing the
side effects associated with conventional therapies. Our product pipeline includes cancer drug candidates that exert potent activity
as stand-alone agents and that enhance the activities of other anticancer agents without causing overlapping toxicities. Indeed,
we believe our targeted products can emerge as first-in-class or best-in-class agents that deliver single agent benefit and may
serve as part of a combination therapeutic strategy for specific populations of cancer patients.
We believe the future of cancer treatment
and management lies in the prospective selection and treatment of patients having malignancies that are genetically or epigenetically
predisposed to response based on a drug’s unique mechanism of action. We are of the view that many drugs currently approved
for the treatment and management of cancer are not selective for the specific genetic alterations (targets) and pathways that cause
the patient’s tumor and hence allow for disease progression and /or significant toxicities due to off-target effects. Aptose’s
strategy is to develop agents that target underlying disease-promoting mutations or altered pathways within a patient population,
and we intend to apply this strategy across several therapeutic indications in oncology, including hematologic malignancies and
solid tumor indications.
Aptose Programs
Aptose has two clinical-stage assets, and
a third program that is discovery-stage and partnered with another company.
Aptose is committed to the development
of anticancer drugs that target aberrant oncologic signaling that underlies a particular life-threatening malignancy. This targeted
approach is intended to impact the disease-causing events in cancer cells without affecting normal processes within cells. Such
an approach requires that we first identify critical underlying oncogenic mechanisms in cancer cells and then develop a therapeutic
asset that selectively impacts such oncogenic mechanisms.
The following table sets forth various
product conditions in our pipeline and their respective stages of development.
Luxeptinib (CG-806) Program
Overview
On May 7, 2018, we exercised an option
by paying $2.0 million in cash to South Korean company CrystalGenomics, Inc. (“CG”), in order to purchase an exclusive
license to research, develop and commercialize luxeptinib in all countries of the world except the Republic of Korea and China,
for all fields of use (collectively, the “Rights”). Subsequently, on June 14, 2018, we announced that we entered into
a license agreement with CG for Aptose to gain a license for Rights in China (including the People’s Republic of China, Hong
Kong and Macau) (the “China Rights”). Under the license agreement, Aptose made an upfront payment to CG of $3.0 million
for the China Rights. CG is eligible for development, regulatory and commercial-based milestones, as well as single-digit royalties
on product sales in China. The total deal value for the China Rights, including the upfront payment, is up to $125 million. Aptose
now owns worldwide (excluding Korea) Rights, including an issued patent in China, to luxeptinib, a first-in-class, highly potent
oral small molecule being developed for AML, B-cell malignancies and other hematologic malignancies. Future possible royalties
that might be paid under these agreements are determined on a country-by-country and product-by-product basis, on net sales during
the period of time beginning on the first commercial sale of such product in such country and continuing until the later of: (i)
the expiration of the last-to-expire valid claim of the CG Patents in such country covering such product; and (ii) ten (10) years
after the first commercial sale of such product in such country.
Luxeptinib exhibits a picomolar half maximal
inhibitory concentration (“IC50”) toward FLT3 with the Internal Tandem Duplication (“FLT3-ITD”), potency
against the wild type FLT3 and a host of mutant forms of FLT3, as well as single-digit nanomolar IC50’s against BTK and its
C481S mutant (“BTK-C481S”). Consequently, luxeptinib is characterized as a mutation-agnostic FLT3/ BTK inhibitor. Further,
luxeptinib suppresses a small group of other relevant oncogenic kinases/pathways (including CSF1R, PDGFRα, TRK, and the ERK,
MYC, AKT/mTOR/S6K and AURK/H3S10 pathways) that are operative in AML and certain B cell malignancies, but does not inhibit the
TEC, EGFR and ErbB2/4 kinases that are responsible for safety concerns with certain other kinase inhibitors.
As a potent inhibitor of FLT3-ITD, luxeptinib
may become an effective therapy in a high-risk subset of AML patients. This is because the FLT3-ITD mutation occurs in approximately
30% of patients with AML and is associated with a poor prognosis. In murine xenograft studies of human AML (FLT3-ITD), CG-806 administered
orally resulted in tumor elimination (“cures”) without measurable toxicity. Importantly, luxeptinib targets other oncogenic
kinases which may also be operative in FLT3-ITD AML, thereby potentially allowing the agent to become an important therapeutic
option for a broader group of this difficult-to-treat AML patient population. The findings that luxeptinib targets all forms of
FLT3 and several other key oncogenic pathways, and that luxeptinib was well tolerated from a safety perspective during efficacy
and formal Good Laboratory Practice (“GLP”) toxicology studies, suggest that luxeptinib may also have applicability
in treating patients, particularly those over the age of 65, who cannot tolerate other therapies.
Separate from the AML and FLT3 story, luxeptinib
may be a therapeutic option for patients with B cell malignancies. Overexpression of the BTK enzyme can drive oncogenic signaling
of certain B cell malignancies, including CLL and certain NHL such as mantle cell lymphoma (“MCL”), follicular lymphoma
(“FL”), diffuse large cell B cell lymphoma (“DLBCL”) and others. Therapy of these patients with covalent,
irreversible BTK inhibitors, such as ibrutinib, that target the active site cysteine (“Cys”) residue of BTK can be
beneficial in many patients. However, therapy with covalent BTK inhibitors can select for BTK with a C481S mutation, thereby conferring
resistance to covalent BTK inhibitors. Furthermore, approximately half of CLL patients have discontinued treatment with ibrutinib
after 3.4 years of therapy. Discontinuation of ibrutinib is due to the development of drug resistance (in particular, patients
have malignancies that developed the BTK-C481S mutation), or due to refractory disease (patient tumors did not respond to ibrutinib)
or intolerance (side effects led to discontinuation of ibrutinib), according to a study performed at The Ohio State University.
The C481S mutation is observed in 5-10% of the patients, while 40-45% of the patients were intolerant or refractory to ibrutinib.
As a non-covalent, reversible inhibitor of BTK, luxeptinib does not rely on the Cysteine 481 residue (“C481”) for inhibition
of the BTK enzyme. Indeed, recent X-ray crystallographic studies (with wild type and C481S BTK) demonstrated that luxeptinib binds
productively to the BTK active site in a manner that is indifferent to the presence or absence of mutations at the 481 residue.
Moreover, in vitro studies demonstrated that luxeptinib kills B cell malignancy cell lines on average approximately 1000 times
more potently than ibrutinib and kills ibrutinib-resistance cancer cells, and that luxeptinib more potently killed primary malignant
cells taken from the bone marrow of CLL and ALL B-cell cancer patients. Yet, luxeptinib demonstrated a high degree of safety in
animal efficacy and GLP toxicology studies. Consequently, patients who are resistant, refractory or intolerant to ibrutinib or
other commercially approved or development-stage BTK inhibitors with B cell malignancies may continue to be sensitive to luxeptinib
therapy. This is particularly true since luxeptinib inhibits the wild type and mutant forms of BTK, as well as other kinases/pathways
that drive the survival and proliferation of B cell malignancies.
Role of BTK in B-cell signaling
BTK, a member of the TEC family kinase,
is an essential element of B-cell receptor (“BCR”) signaling, which is required for B-cell maturation, survival and
proliferation. It is an upstream activator of multiple pro-survival / anti-apoptotic pathways, including the NF-KB, mTOR-AKT, RAS,
ERK and MAPK pathways. BTK is overexpressed in malignant cells from patients with various B-cell malignancies, such as CLL, MCL,
FL, and DLBCL. Disruption of BCR signaling via inhibition of BTK, has been shown to lead to clinical remissions in these patients.
Luxeptinib as a Non-covalent, Reversible
Kinase Inhibitor
Binding studies of luxeptinib have confirmed
non-covalent, reversible inhibition of BTK, FLT3-ITD and Aurora Kinase A. Ibrutinib, a commercially-approved, covalent BTK inhibitor,
possesses a Michael acceptor to react with C481 in BTK and irreversibly inactivates the BTK enzyme. In contrast, luxeptinib does
not require reactivity with the C481 residue for inhibition of the BTK enzyme, thereby allowing luxeptinib to inhibit the wild
type and C481 mutant form of the BTK enzyme.
Preclinical In Vitro Evaluation of Luxeptinib
Luxeptinib is a potent inhibitor of BTK
and FLT3 wild types, as well as the BTK C481S and FLT3-ITD mutants, which are strongly associated with clinical relapse or are
negative prognostic factors in patients. In enzymatic assays, luxeptinib has demonstrated potency against the BTK C481S mutant
with a half maximal IC50 of 2.5 nanomolar (nM). CG-806 also has potent activity against the FLT-ITD mutation, occurring in 30-35%
of AML patients, with an IC50 against the purified enzyme of 0.8nM (800pM). Likewise, luxeptinib exerts low nM IC50 values against
the FLT3 enzyme having various mutations in the tyrosine kinase domain (TKD) and the Gatekeeper region, and luxeptinib has the
ability to potently suppress the CSF1R, PDGFRα, SYK, AKT/mTOR/S6K, ERK, MAPK, MYC and AURK/H3S10 pathways. Finally, luxeptinib
does not exhibit any inhibition of epidermal growth factor receptor (“EGFR”), TEC or ErbB2/4 kinases. Inhibition of
one or more of these kinases has been speculated to contribute to the toxicity observed from the commercially approved BTK inhibitor.
Luxeptinib Xenograft Studies
In vivo subcutaneous AML tumor models of
anti-cancer efficacy revealed luxeptinib induced rapid and sustained tumor eradication (Figure 1a). Luxeptinib was administered
orally once daily, for 14 days. Moreover, luxeptinib exhibited the sustained tumor elimination post therapy, while demonstrating
no impact to murine body weight, no impacts to hematology cell counts or visible organ toxicities – necropsy and clinical
pathology findings did not reveal any abnormal observations. A maximum tolerated dose has not yet been identified with murine xenograft
studies.
Figure 1a. Efficacy of luxeptinib (CG-806)
in MV4-11 xenograft model.
MV4-11 tumor bearing mice were administered
an oral suspension once daily for 14 days of luxeptinib (CG-806) at 2 mg/kg (blue line), 10 mg/kg (green line) or 100 mg/kg (red
line), Ibrutinib at 12 mg/kg (turquoise line), or vehicle (Control; black line) with 7-day post-treatment follow-up. Tumor volumes
and body weights were measured 3 times weekly.
In a separate MV4-11 xenograft study (Figure
1b), the antitumor efficacy of luxeptinib and mouse survival over 120 days were evaluated when mice were treated orally for 28
consecutive days with luxeptinib at dose levels of 0 (vehicle only, red), 10 (olive), 30 (green), 100 (blue), or 300 mg/kg
(magenta). In this study, the clinical formulation (luxeptinib co-micronized with 2.5% sodium lauryl sulfate (SLS)) and the dosing
schedule (“BID”) was utilized. Luxeptinib produced slower tumor growth and extended survival at the 10 and 30mg/kg
dose levels, while 100% cure rates were achieved at the 100 and 300 mg/kg dose levels (11/11 mice survived in the latter two groups).
Moreover, no signs of toxicity were noted at any dose level.
Figure 1b. Luxeptinib (CG-806) Extends
Survival in a Dose-Dependent Way in MV4-11 AML Xenograft Mouse Model Following Oral BID Dosing for 28 Consecutive Days.
Although the above murine xenograft models
demonstrate potent antitumor activity with no observed toxicity, the models utilize an AML cell line rather than cells derived
from an AML patient. In a study performed at the University of Texas MD Anderson Cancer Center (“MDACC”), the efficacy
of luxeptinib was evaluated in a patient derived xenograft (“PDX”) model (Figure 1c). Bone marrow cells were collected
from an AML patient that had relapsed on a clinical trial. The patient entered the trial with FLT3-ITD AML and was placed on sorafenib
and azacytidine. After one cycle, the patient had a complete response but then relapsed after cycle 3. Genetic analysis demonstrated
that the AML cells had acquired a second mutation in AML, and this was the D835 mutation, making the patient dual mutant FLT3-ITD/D835.
Bone marrow cells from the patient (AML FLT3-ITD/D835) were implanted in mice to establish a PDX model. Expansion of the human
AML cells in the bone marrow and peripheral blood of the mice took approximately one month. In the vehicle (15% Transcutol HP/85%
PEG-400) treated mice, the leukemic burden in the peripheral blood increased from day 31 through day 50 and beyond. However, treatment
with 100 mg/kg luxeptinib (orally daily for 5 consecutive days followed by 2 days off every week), resulted in significant reduction
in the leukemic burden and reductions in splenomegaly at 52 days post-implantation. These data suggest that luxeptinib may be used
to treat patients whose disease has become resistant to other FLT3 inhibitors.
Figure 1c. Luxeptinib (CG-806) Efficacy
in PDX Model Against AML Patient Cells with FLT3-ITD+D835Y Mutations
APTO-253 Program
Overview
APTO-253, our second clinical-stage program,
is a novel small molecule therapeutic agent that inhibits expression of the MYC oncogene, leading to cell cycle arrest and programmed
cell death (apoptosis) in human-derived solid tumor and hematologic cancer cells, without causing general myelosuppression of the
healthy bone marrow. The MYC oncogene is overexpressed in hematologic cancers, including AML. MYC is a transcription factor that
regulates cell growth, proliferation, differentiation and apoptosis, and overexpression amplifies new sets of genes to promote
oncogenesis. APTO-253 dramatically down-regulates expression of the MYC oncogene in AML cells and depletes those cells of the MYC
oncoprotein, leading to apoptotic cell death in AML cells. Thus APTO-253 may serve as a safe and effective MYC inhibitor for AML
that combines well with other agents and does not impact the normal bone marrow.
During 2015, we were evaluating APTO-253
in a Phase 1a/b clinical trial in patients with R/R hematologic malignancies, particularly AML and MDS, before being placed on
clinical hold by the FDA in November 2015. The Phase 1a/b trial was placed on clinical hold in order to solve a chemistry-based
formulation issue, and the chemistry of the active pharmaceutical ingredient (“API”) and the formulation underwent
minor modifications to deliver a stable and soluble drug product for return to the clinical setting. In December 2016, we announced
that we had successfully manufactured multiple non-GMP batches of a new drug product formulation for APTO-253, including a batch
that had been stable and soluble for over six months. However, the 40L batch that was the intended clinical supply encountered
an unanticipated mishap during the filling process that compromised the stability of that batch of drug product. On January 23,
2017, we announced that the root cause and corrective action studies would take longer than originally expected and that we would
temporarily delay clinical activities with APTO-253 in order to elucidate the cause of manufacturing mishap, with the intention
of restoring the molecule to a state supporting clinical development and partnering. Formal root cause analyses studies were completed
to identify the reason for the drug product stability failure, and a correction action was implemented. We then manufactured a
new GMP clinical supply of drug product and performed the studies required to demonstrate the fitness of the drug product for clinical
usage, and presented the findings to the FDA in the second quarter of 2018. On June 28, 2018, the FDA notified us that it had lifted
the clinical hold on APTO-253. This was followed by resubmission of the revised clinical protocol to Institutional Review Boards
(“IRB”) at multiple clinical sites.
On November 28, 2018, we announced that
we dosed the first patient in the re-initiation of the Phase 1a/b Clinical Study of APTO-253. Since then, we have completed the
first four dose cohorts (20mg/m2, 40mg/m2, 66mg/m2 and 100mg/m2) and are currently dosing patients in the fifth dose cohort at
150mg/m2 dose level. In the patients we have dosed at the first four dose levels, we observed meaningful reductions in MYC expression
in the patient PBMC samples and noted that the drug product is well tolerated to date.
APTO-253 Studies on Solid Tumors
In January 2011, Aptose announced the first
patient enrollment in a Phase 1 dose-escalation study for APTO-253 in patients with advanced or metastatic solid tumors who are
unresponsive to conventional therapy or for whom no effective therapy is available. The study was initially being conducted at
Memorial Sloan-Kettering Cancer Center in New York. Objectives of the study included determination or characterization of the safety
profile, maximum tolerated dose, and antitumor activity of APTO-253, as well as pharmacokinetics and a recommended Phase 2 dose
for subsequent clinical trials.
In June 2012, MDACC in Houston was added
as a second site under the direction of Dr. Jennifer Wheler as the principal investigator. In addition, Aptose announced that the
study had successfully completed the accelerated drug dose escalation stage (Stage 1), with further escalation under way in the
non-accelerated dose escalation stage (Stage 2) for the purpose of determining the maximal tolerated dose level and recommended
Phase 2 dose. The addition of a second site expanded patient availability for enrollment.
In January 2013, Aptose announced that
Phase 1 clinical study of APTO-253 had successfully escalated to the target dose level based on predicted and observed clinical
effects without limitation by toxicity. The success of this study allowed Aptose to initiate a biomarker clinical investigation
to further explore the effects of the drug at relevant doses determined in the clinical trial.
In April 2013, Aptose announced that studies
demonstrated the antitumor activity of APTO-253 in animal models of human non-small cell lung cancer (“NSCLC”) with
a dose-response effect in NSCLC.
In July 2013, Aptose announced the results
of the Phase 1 clinical trial of APTO-253. In this first-in-man dose-escalation clinical study, APTO-253 demonstrated a favorable
safety profile, as well as encouraging signs of antitumor activity in patients with solid tumors. The design of this trial consisted
of APTO-253 as a single agent in patients with advanced solid tumors resistant to multiple standard therapies. The study enrolled
27 patients, all of which had failed a median of four prior chemotherapies. Although this was primarily a dose-escalation safety
study, efficacy and pharmacokinetics were also explored.
The clinical trial enrolled patients at
seven dose levels ranging from 20 to 229 mg/m2. Of the 27 patients enrolled, 17 were evaluable for efficacy. Of these 17 patients,
seven (41%) achieved stable disease by Response Evaluation Criteria In Solid Tumors (“RECIST”). This included patients
with colorectal, lung, appendiceal, liver and uterine cancers. Dose related activity was demonstrated at the higher dose levels
(176 and 229 mg/m2). At these two highest dose levels, four of five evaluable patients (80%) achieved sustained stable disease
by RECIST ranging from 5.6 months to 8 months, representative of disease control. Of these, a patient with NSCLC at the highest
dose level additionally demonstrated non-index tumor shrinkage.
The safety assessment indicated that APTO-253
was well tolerated at all dose levels tested in this trial. The dose escalation was not limited by toxicity. The most common adverse
event was Grade 1 or 2 fatigue seen in three patients. There was one Grade 3 toxicity, asymptomatic low blood phosphate level that
was reversible by supplementation with phosphates. The pharmacokinetic profile was consistent with the predictive profile seen
preclinically, and the elimination profile and half-life in patients were suggestive of a very rapid distribution phase and prolonged
retention. No further studies were performed after late 2013.
APL-581 Program
In November 2015, Aptose announced an exclusive
drug discovery partnership with Laxai Avanti Life Sciences (“LALS”) for their expertise in next generation epigenetic-based
therapies. Under the agreement, LALS was to be responsible for developing multiple clinical candidates, including optimizing candidates
that exert dual BRD4 / kinase inhibitory activity. Based on available resources, Aptose halted further investment in the collaboration
with LALS in late 2016. However, the program delivered novel intellectual property and hit molecules (such as APL-581). Consequently,
Aptose chose to out-license the program.
On March 7, 2018, Aptose entered into an
exclusive global license agreement with OHM, an affiliate of LALS that was formed in 2016 to advance the clinical development of
compelling molecules derived from the LALS initiative, for the development, manufacture and commercialization of APL-581, as well
as related molecules, from Aptose’s dual BET protein and kinase inhibitor program. Under the agreement, Aptose retained reacquisition
rights to certain molecules, while OHM/LALS has the rights to develop and sublicense all other molecules. Aptose received a nominal
upfront cash payment and is eligible to receive up to $125 million of additional payments based on the achievement of certain developmental,
regulatory and sales milestones, as well as significant royalties on future sales generated from the program, if any. We have not
received any milestone or royalty payments pursuant to this agreement. Future possible royalties that might be paid by OHM to Aptose
under these agreements are determined on a country-by-country and product-by-product basis, on net sales during the period of time
beginning on the first commercial sale of such product in such country and continuing until the later of: (i) the expiration of
the last-to-expire valid claim of the patents in such country covering such product; and (ii) ten (10) years after
the first commercial sale of such product in such country.
Competitive Conditions
The biotechnology and pharmaceutical industries
are characterized by rapidly evolving technology and intense competition. There are numerous companies in these industries that
are focusing their efforts on activities similar to ours. Some of these are companies with established positions in the pharmaceutical
industry and may have substantially more financial and technical resources, more extensive research and development capabilities,
and greater marketing, distribution, production and human resources than Aptose. In addition, we face competition from other companies
for opportunities to enter into partnerships with biotechnology and pharmaceutical companies and academic institutions.
Competition with our potential products
may include chemotherapeutic agents, monoclonal antibodies, antisense therapies, small molecules, immunotherapies, vaccines and
other biologics with novel mechanisms of action. These drugs may kill cancer cells indiscriminately, or through a targeted approach,
and some have the potential to be used in non-cancer indications. We also expect that we will experience competition from established
and emerging pharmaceutical and biotechnology companies that have other forms of treatment for the cancers that we target, including
drugs currently in development for the treatment of cancer that employ a number of novel approaches for attacking these cancer
targets. Cancer is a complex disease with more than 100 indications requiring drugs for treatment. The drugs in competition with
our potential drugs have specific targets for attacking the disease, targets which are not necessarily the same as ours. These
competitive drugs, however, could potentially also be used together in combination therapies with our drugs to manage the disease.
Other factors that could render our potential products less competitive may include the stage of development, where competitors’
products may achieve earlier commercialization, as well as superior patent protection, better safety profiles, or a preferred cost-benefit
profile.
Luxeptinib Treatment for B Cell Malignancies
We are aware of a number of companies that
have developed and are pursuing different approaches to BTK inhibition, both for the wild type and to the C481S-mutant forms. Companies
that have developed approved or are currently developing inhibitors that directly target the wild type include AbbVie (IMBRUVICA)
and AstraZeneca (CALQUENCE) and Beigene Co., Ltd. (Zanubrutinib).
Others that are developing inhibitors that
target the C481S-mutant BTK include Merck (MK-1026), Roche, and Eli Lilly (LY3527727) among others.
Luxeptinib and APTO-253 for AML
We also face intense competition in AML
as there is a wide range of therapies that have been approved and are under development for the treatment of AML. Companies that
have developed approved or are currently developing non-targeted therapies include Jazz (VYXEOS), Pfizer (MYLOTARG) and AbbVie
(VENCLEXTA), among others. Others that have developed or are developing highly targeted therapies such as FLT3 inhibitors include
Novartis (RYDAPT), Astellas (XOSPATA), Daiichi Sankyo (quizartinib), Arog (crenolanib), and IDH1/2 inhibitors include Agios/Servier
(TIBSOVO) and Celgene/BMS (IDHIFA) among others.
Manufacturers, Suppliers and Other Third
Party Contractors
Contract manufacturing organizations (“CMOs”)
manufacture our product candidates for all preclinical studies and clinical trials. We rely on CMOs for manufacturing, filling,
packaging, storing and shipping of drug product in compliance with Current Good Manufacturing Practice (“cGMP”) regulations
applicable to our products. The FDA ensures the quality of drug products by carefully monitoring drug manufacturers’ compliance
with cGMP regulations. The cGMP regulations for drugs contain minimum requirements for the methods, facilities and controls used
in manufacturing, processing and packing of a drug product. These CMOs are reputable companies active in the biotechnology industry.
Pricing is predictable as there are many alternatives of such supplies that are readily available.
We rely and will continue to rely on third
party contract research organizations (“CROs”) to conduct a significant portion of our preclinical and clinical development
activities. Preclinical activities include in vivo studies providing access to specific disease models, pharmacology and
toxicology studies, and assay development. Clinical development activities include trial design, regulatory submissions, clinical
patient recruitment, clinical trial monitoring, clinical data management and analysis, safety monitoring and project management,
contract manufacturing and quality assurance.
Intellectual Property
We believe that our issued patents and
pending applications are important in establishing and maintaining a competitive position with respect to our products and technology.
CG-806
A Patent Cooperation Treaty (“PCT”)
application providing composition of matter and use protection for CG-806 was filed in late 2013, with a potential expiry in 2033
before extension opportunities, across all major geographies
In May 2018, we paid $2.0 million in cash
and licensed the Rights to CG-806, for all fields of use, in all territories outside of the Republic of Korea and China, by exercising
an option we obtained through a June 2016 option-license agreement with CG that had granted us an exclusive option to research,
develop and commercialize CG-806.
In June 2018, we entered into a separate
license agreement with CG for Aptose to gain a license for the China Rights. This license agreement was formally executed by Aptose
through an upfront payment to CG of $3.0 million for the China Rights. CG is eligible for payments upon the achievement of developmental,
regulatory and commercial-based milestones, as well as single-digit royalties on product sales in China. Aptose now owns worldwide
Rights to CG-806, including an issued patent in China but excluding any Rights in Korea.
US Patent No. 9,758,508
On September 12, 2017, we announced that
United States Patent and Trademark Office (“USPTO”) issued patent number 9,758,508, entitled “2,3-dihydro-isoindole-1-on
derivative as BTK kinase suppressant, and pharmaceutical composition including same”, which claims numerous compounds, including
the CG-806 compound, pharmaceutical compositions comprising the CG-806 compound, and methods of treating various diseases. The
patent is expected to provide protection until December of 2033.
US Patent No. 10,604,508
The issued patent, issued on March 21,
2020, claims a genus that covers the CG-806 compound, pharmaceutical compositions comprising a compound from the genus, and methods
of treating various diseases caused by abnormal or uncontrolled activation of protein kinases, including lymphoma and leukemia.
This US patent is expected to provide protection until December 2033.
European Patent No. EP2940014B1
The granted patent claims the CG-806 compound,
pharmaceutical compositions comprising the CG-806 compound, and uses for treating diseases caused by abnormal or uncontrolled activation
of protein kinases, such as cancer. This European patent will be nationalized in, and cover, approximately twenty European countries
including the United Kingdom, France, Germany, Italy, Netherlands and Spain. The patent is expected to provide protection until
December of 2033.
Australian Patent Nos. 2013371146 and 2018214134
The granted patents claim numerous compounds,
including the CG-806 compound, pharmaceutical compositions comprising the CG-806 compound, and methods of treating various diseases,
including treating cancers such as lymphoma and leukemia. The patent is expected to provide protection until December of 2033.
Chinese Patent No. CN 104995184 B
The granted patent claims numerous compounds,
including the CG-806 compound, pharmaceutical compositions comprising the CG-806 compound, and the use of such a compound for the
manufacture of a pharmaceutical composition for treating a disease caused by an abnormal or uncontrolled protein kinase. The patent
is expected to provide protection until December of 2033.
Japanese Patent Nos. 6325573 and 6596537
The granted patents claim numerous compounds,
including the CG-806 compound, pharmaceutical compositions comprising the CG-806 compound, and the use of such a compound for the
manufacture of a pharmaceutical composition for treating a disease caused by an abnormal or uncontrolled protein kinase, and pharmaceutical
compositions for treating various diseases, including treating cancers such as lymphoma and leukemia. The patents are expected
to provide protection until December of 2033.
Canadian Patent No. 2896711
The granted patent claims numerous compounds,
including the CG-806 compound, pharmaceutical compositions comprising the CG-806 compound, and the use of such a compound for the
manufacture of a pharmaceutical composition for treating a disease caused by an abnormal or uncontrolled protein kinase. The patent
is expected to provide protection until December of 2033.
Russian Patent No. 2671847
The granted patent claims various compounds,
including the CG-806 compound, pharmaceutical compositions comprising the CG-806 compound, and methods for treating diseases caused
by abnormal or uncontrolled activation of protein kinases, and uses for the treatment, relief or prevention of cancer. The patent
is expected to provide protection until December 2033.
APTO-253
As of March 23, 2021, we are the owner
of record of five issued U.S. patents, which together provide coverage for the APTO-253 compound, its pharmaceutical composition
and methods of treating various cancers with APTO-253, including solid tumors and leukemia. The APTO-253 composition of matter
has patent protection until February, 2028 in the United States and May, 2026 in other countries. We also hold 23 international
(non-U.S.) granted patents which together provide coverage for APTO-253, three of which are granted European patents, validated
in at least eight countries in Europe. Our patents also include several compounds that are similar to APTO-253, which provide protection
from competitors seeking to develop anticancer products that are related in chemical structure to APTO-253.
Environmental Protection
The Company’s research and development
activities involve the controlled use of hazardous and radioactive materials and, accordingly, the Company is subject to federal,
provincial and local laws and regulations in the United States and Canada governing the use, manufacture, storage, handling and
disposal of such materials and certain waste products. To the knowledge of the Company, compliance with such environmental laws
and regulations does not and will not have any significant impact on its capital spending, profits or competitive position within
the normal course of its operating activities. There can be no assurance, however, that the Company will not be required to incur
significant costs to comply with environmental laws and regulations in the future or that its operations, business or assets will
not be materially adversely affected by current or future environmental laws or regulations.
Employees
As at December 31, 2020, we employed 39
full-time persons and two part-time persons in research and drug development and administration activities. Six of our employees
hold Ph.D.s and numerous others hold degrees and designations such as MD, MSc, BSc, CPA (CA), CPA (California) and MBA. To encourage
a focus on achieving long-term performance, employees and members of the board of directors of the Company (the “Board”)
have the ability to acquire an ownership interest in the Company through Aptose’s share option and alternate compensation
plans. Of note, in January of 2020, Aptose hired a Chief Medical Officer holding an MD and a Ph.D.
The business of the Company requires personnel
with specialized skills and knowledge in oncology. Researchers must be able to design and implement studies to assess the efficacy
of anticancer drugs. Specialized knowledge and skills relating to chemistry and formulation process development are also needed.
Such knowledge and skills are needed to develop product specific analytical methods and formulation processes. The Company’s
business also requires clinical and regulatory expertise and knowledge. The Company has trained scientists and personnel with broad
experience in these fields.
None of our employees are unionized, and
we consider our relations with our employees to be good.
Government Regulation
Overview
Our overall regulatory strategy is to work
with the appropriate government departments which regulate the use and sale of therapeutic drug products. This includes the FDA
in the United States, Health Canada in Canada, the European Medicines Agency (“EMA”) in Europe, and other local regulatory
agencies with oversight of preclinical studies, clinical trials and marketing of therapeutic products. Where possible, we intend
to take advantage of opportunities for accelerated development of drugs designed to treat rare and serious or life-threatening
diseases. We also intend to pursue priority evaluation of any application for marketing approval filed in Canada, the United States
or the European Union and to file additional drug applications in other markets where commercial opportunities exist. We may not
be able to pursue these opportunities successfully.
Regulation(s) by government authorities
in the United States, Canada, and the European Union are significant factors in guiding our current research and drug development
activities. To clinically test, manufacture and market drug products for therapeutic use, we must be in compliance with guidance
and regulations established by the regulatory agencies in the countries in which we currently operate or intend to operate.
The laws of most of these countries require
the licensing of manufacturing facilities, carefully controlled research and the extensive testing of products. Biotechnology companies
must establish the safety and efficacy of their new products in clinical trials; they must establish and comply with cGMPs for
the manufacturing of the product and control over marketing activities before being allowed to market a product. The safety and
efficacy of a new drug must be shown through human clinical trials of the drug carried out in accordance with the guidance and
regulations established by local and federal regulatory agencies.
The process of completing clinical trials
and obtaining regulatory approval for a new drug takes a number of years and requires the expenditure of substantial resources.
Once a new drug or product license application is submitted, regulatory agencies may not review the application in a timely manner
and may not approve the product. Even after a New Drug Application (“NDA”) submission has occurred and/or approval
has been obtained, further studies, including post-marketing studies, may be required to provide additional data on the efficacy
and safety necessary to confirm the approved indication or to gain approval for the use of the new drug as a treatment for clinical
indications other than those for which the new drug was initially tested. Also, regulatory agencies require post-marketing surveillance
programs to monitor a new drug’s side effects, safety and long-term effects of the product. A serious safety or effectiveness
problem involving an approved new drug may result in a regulatory agency mandating a withdrawal of the new drug from the market
and possible civil action. It is possible that we could encounter such difficulties or excessive costs in our efforts to secure
necessary approvals, which could delay or prevent us from manufacturing or marketing our products.
In addition to the regulatory product approval
framework, biotechnology companies, including Aptose, are subject to regulation under local, provincial, state and federal law,
including requirements regarding occupational safety, laboratory practices, environmental protection and hazardous substance control,
and may be subject to other present and future local, provincial, state, federal and foreign regulation, including possible future
regulation of the biotechnology industry.
Approval of New Drugs in Canada
In Canada, the manufacture and sale of
new drugs are controlled by Health Canada. New drugs must pass through a number of testing stages, including pre-clinical testing
and human clinical trials. Pre-clinical testing involves testing the new drug’s chemistry, pharmacology and toxicology in
vitro and in vivo. Successful results (that is, potentially valuable pharmacological activity combined with an acceptable low level
of toxicity) enable the developer of the new drug to file a clinical trial application to begin clinical trials involving humans.
To study a drug in Canadian patients, a
clinical trial application submission must be filed with Health Canada. The clinical trial application submission must contain
specified information, including the results of the pre-clinical tests completed at the time of the submission and any available
information regarding use of the drug in humans. In addition, since the method of manufacture may affect the efficacy and safety
of a new drug, information on manufacturing methods and standards and the stability of the drug substance and dosage form must
be presented. Production methods and quality control procedures must be in place to ensure an acceptably pure product, essentially
free of contamination, and to ensure uniformity with respect to all quality aspects.
In addition, all federally regulated trials
must be approved and monitored by an independent committee of doctors, scientists, advocates and others to ensure safety and ethical
standards, IRBs or Ethics Review Boards (“ERBs”). The review boards study and approve all study-related documents before
a clinical trial begins and also carefully monitor data to detect benefit or harm, and validity of results.
Provided Health Canada does not reject
a clinical trial application submission and IRB or ERB approval has been obtained, clinical trials can begin. Clinical trials for
product candidates in Canada, as in the United States, are generally carried out in three phases. Phase 1 involves studies
to evaluate toxicity and ideal dose levels in healthy humans. The new drug is administered to human patients who have met the clinical
trial entry criteria to determine pharmacokinetics, human tolerance and prevalence of any adverse side effects. Phases 2 and
3 involve therapeutic studies. In Phase 2, efficacy, dosage, side effects and safety are established in a small number of patients
who have the disease or disorder that the new drug is intended to treat. In Phase 3, there are controlled clinical trials in which
the new drug is administered to a large number of patients who are likely to receive benefit from the new drug. In Phase 3, the
effectiveness of the new drug in patients is compared to that of standard accepted methods of treatment in order to provide sufficient
data for the statistical proof of safety and efficacy for the new drug.
If clinical studies establish that a new
drug has value, the manufacturer submits a new drug submission application to Health Canada for marketing approval. The new drug
submission contains all information known about the new drug, including the results of pre-clinical testing and clinical trials.
Information about a substance contained in new drug submission includes its proper name, its chemical name, and details on its
method of manufacturing and purification, and its biological, pharmacological and toxicological properties. The new drug submission
also provides information about the dosage form of the new drug, including a quantitative listing of all ingredients used in its
formulation, its method of manufacture, manufacturing facility information, packaging and labelling, the results of stability tests,
and its diagnostic or therapeutic claims and side effects, as well as details of the clinical trials to support the safety and
efficacy of the new drug. Furthermore, for biological products, an on-site evaluation is completed to assess the production process
and manufacturing facility. It is required prior to the issuance of a notice of compliance. All aspects of the new drug submission
are critically reviewed by Health Canada. If a new drug submission is found satisfactory, a notice of compliance is issued permitting
the new drug to be sold for the approved use. In Canada, an establishment license must be obtained prior to marketing the product.
Health Canada has a policy of priority
evaluation of new drug submissions for all drugs intended for serious or life-threatening diseases for which no drug product has
received regulatory approval in Canada and for which there is reasonable scientific evidence to indicate that the proposed new
drug is safe and may provide effective treatment.
An exception to the foregoing requirements
relating to the manufacture and sale of a new drug is the limited authorization that may be available in respect of the sale of
new drugs for emergency treatment. Under the special access program, Health Canada may authorize the sale of a quantity of a new
drug for human use to a specific practitioner for the emergency treatment of a patient under the practitioner’s care. Prior
to authorization, the practitioner must supply Health Canada with information concerning the medical emergency for which the new
drug is required, such data as is in the possession of the practitioner with respect to the use, safety and efficacy of the new
drug, the names of the institutions at which the new drug is to be used and such other information as may be requested by Health
Canada. In addition, the practitioner must agree to report to both the drug manufacturer and Health Canada the results of the new
drug’s use in the medical emergency, including information concerning adverse reactions, and must account to Health Canada
for all quantities of the new drug made available.
The Canadian regulatory approval requirements
for new drugs outlined above are similar to those of other major pharmaceutical markets. While the testing carried out in Canada
is often acceptable for the purposes of regulatory submissions in other countries, individual regulatory authorities may request
supplementary testing during their assessment of any submission. Therefore, the clinical testing conducted under Health Canada
authorization or the approval of regulatory authorities of other countries may not be accepted by regulatory authorities outside
Canada or other countries.
Approval of New Drugs in the United
States
In the United States, the FDA controls
and investigates the investigation, manufacturing, and sale of new drugs. New drugs require FDA approval of an NDA prior to commercial
sale. In the case of certain biological products, a Biological License Application (“BLA”) must be obtained prior to
marketing and batch releasing. As in Canada, to obtain marketing approval, data from adequate and well-controlled human clinical
trials, demonstrating to the FDA’s satisfaction a new drug’s safety and effectiveness for its intended use, are required.
Data are generated in studies conducted pursuant to an IND submission, similar to that required for a clinical trial application
in Canada. Clinical trials with human subjects are characterized as Phase 1, Phase 2 and Phase 3 trials or a combination thereof.
In a marketing application, the manufacturer must also demonstrate the identity, potency, quality and purity of the active ingredients
of the new drug involved, and the stability of those ingredients. Further, the manufacturing facilities, equipment, processes and
quality controls for the new drug must comply with the FDA’s current cGMP regulations for drugs both in a pre-licensing inspection
before product licensing and in subsequent periodic inspections after licensing. An establishment license grants the sponsor permission
to fabricate, package, label, distribute, import, wholesale or test the newly approved drug.
Federally regulated trials must be approved
and monitored by an independent committee of doctors, scientists, advocates and others to ensure safety and ethical standards,
IRBs or ERBs. The review boards study and approve all study-related documents before a clinical trial begins and also carefully
monitor data to detect benefit or harm, and validity of results.
Post-Approval Regulation
The monitoring of a new drug does not cease
once it is on the market. For example, a manufacturer of a new drug must report any new information received concerning serious
side effects, as well as the failure of the new drug to produce desired effects. If Health Canada determines it to be in the interest
of public health, a notice of compliance for a new drug may be suspended and the new drug may be removed from the market.
A post surveillance program involves clinical
trials conducted after a drug is marketed (referred to as Phase 4 studies in the United States) and is an important source of information
on as yet undetected adverse outcomes, especially in populations that may not have been involved in the premarketing trials (e.g.,
children, the elderly, pregnant women) and the drug’s long-term morbidity and mortality profile. Regulatory authorities may
require companies to conduct Phase 4 studies as a condition of market approval. Companies often conduct post-marketing studies
in the absence of a regulatory mandate.