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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 1-32001

APTOSE BIOSCIENCES INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Canada
(State or other jurisdiction of incorporation or organization)

98-1136802
(I.R.S. Employer Identification No.)

251 Consumers Road, Suite 1105

Toronto, Ontario, Canada

M2J 4R3

(Address of principal executive offices)

(Zip Code)

 

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

 

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 the 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 the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 8, 2023, the registrant had 93,653,662 common shares outstanding.

 

 

1

 

 


TABLE OF CONTENTS

 

Page

 

PART I—FINANCIAL INFORMATION

5

Item 1 – Financial Statements

5

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3 – Qualitative and Quantitative Disclosures about Market Risk

27

Item 4 – Controls and Procedures

27

 

PART II—OTHER INFORMATION

28

Item 1 – Legal Proceedings

28

Item 1A – Risk Factors

 

Item 6 – Exhibits

29

Signatures

30

 

 

 

2

 

 


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities law, which we collectively refer to as “forward-looking statements”. Such forward-looking statements reflect our current beliefs and are based on information currently available to us. In some cases, forward-looking statements can be identified by terminology such as “may,” “would,” “could,, “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “hope,” “foresee” or the negative of these terms or other similar expressions concerning matters that are not historical facts.

Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others:

our lack of product revenues and net losses and a history of operating losses;
our early stage of development, particularly the inherent risks and uncertainties associated with (i) developing new drug candidates generally, (ii) demonstrating the safety and efficacy of these drug candidates in clinical studies in humans, and (iii) obtaining regulatory approval to commercialize these drug candidates;
our need to raise substantial additional capital in the future and our ability to raise such funds when needed and on acceptable terms;
further equity financing, which may substantially dilute the interests of our existing shareholders;
clinical studies and regulatory approvals of our drug candidates are subject to delays, and may not be completed or granted on expected timetables, if at all, and such delays may increase our costs and could substantially harm our business;
our reliance on external contract research/manufacturing organizations for certain activities and if we are subject to quality, cost, or delivery issues with the preclinical and clinical grade materials supplied by contract manufacturers, our business operations could suffer significant harm;
clinical studies are long, expensive and uncertain processes and the FDA, or other similar foreign regulatory agencies that we are required to report to, may ultimately not approve any of our product candidates;
our ability to comply with applicable governmental regulations and standards;
our inability to achieve our projected development goals in the time frames we announce and expect;
difficulties in enrolling patients for clinical trials may lead to delays or cancellations of our clinical trials;
our reliance on third parties to conduct and monitor our preclinical studies;
our ability to attract and retain key personnel, including key executives and scientists;
any misconduct or improper activities by our employees;
our exposure to exchange rate risk;
our ability to commercialize our business attributed to negative results from clinical trials;
the marketplace may not accept our products or product candidates due to the intense competition and technological change in the biotechnical and pharmaceuticals, and we may not be able to compete successfully against other companies in our industries and achieve profitability;
our ability to obtain and maintain patent protection;
our ability to afford substantial costs incurred with defending our intellectual property;
our ability to protect our intellectual property rights and not infringe on the intellectual property rights of others;
our business is subject to potential product liability and other claims;
potential exposure to legal actions and potential need to take action against other entities;
commercialization limitations imposed by intellectual property rights owned or controlled by third parties;
our ability to maintain adequate insurance at acceptable costs;
our ability to find and enter into agreements with potential partners;

 

3

 

 


extensive government regulation;
data security incidents and privacy breaches could result in increased costs and reputational harm;
our share price has been and is likely to continue to be volatile;
future sales of our common shares by us or by our existing shareholders could cause our share price to drop;
changing global market and financial conditions;
changes in an active trading market in our common shares;
difficulties by non-Canadian investors to obtain and enforce judgments against us because of our Canadian incorporation and presence;
potential adverse U.S. federal tax consequences for U.S. shareholders because we are a “passive foreign investment company”;
our “smaller reporting company” status;
any failures to maintain an effective system of internal controls may result in material misstatements of our financial statements, or cause us to fail to meet our reporting obligations or fail to prevent fraud;
our ability to issue and sell common shares under the 2022 ATM Facility (as defined below) or the 2022 Base Shelf (as defined below);
our broad discretion in how we use the proceeds of the sale of common shares; and
our ability to expand our business through the acquisition of companies or businesses.

More detailed information about risk factors and their underlying assumptions are included in our Annual Report on Form 10-K for the year ended December 31, 2022, under Item 1A – Risk Factors. Except as required under applicable securities legislation, we undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

4

 

 


PART I—FINANCIAL INFORMATION

 

ITEM 1FINANCIAL STATEMENTS

 

img238802083_0.jpg 

 

 

Condensed Consolidated Interim Financial Statements

 

(Unaudited)

 

APTOSE BIOSCIENCES INC.

 

For the three months ended March 31, 2023 and 2022

 

5

 

 


APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of US dollars)

(unaudited)

 

 

 

March 31,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,762

 

 

$

36,970

 

Investments

 

 

12,958

 

 

 

9,989

 

Prepaid expenses

 

 

2,047

 

 

 

2,303

 

Other current assets

 

 

162

 

 

 

257

 

Total current assets

 

 

37,929

 

 

 

49,519

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

Property and equipment

 

 

183

 

 

 

211

 

Right-of-use assets, operating leases

 

 

1,218

 

 

 

1,297

 

Total non-current assets

 

 

1,401

 

 

 

1,508

 

 

 

 

 

 

 

 

Total assets

 

$

39,330

 

 

$

51,027

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

5,519

 

 

$

6,326

 

Accrued liabilities

 

 

6,594

 

 

 

5,657

 

Current portion of lease liability, operating leases

 

 

306

 

 

 

301

 

Total current liabilities

 

 

12,419

 

 

 

12,284

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

Lease liability, operating leases

 

 

918

 

 

 

1,002

 

Total liabilities

 

 

13,337

 

 

 

13,286

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Share capital:

 

 

 

 

 

 

Common shares, no par value, unlimited authorized shares, 93,005,278
   and
92,367,275 shares issued and outstanding as of March 31, 2023 and
   December 31, 2022, respectively

 

 

437,946

 

 

 

437,520

 

Additional paid-in capital

 

 

70,367

 

 

 

68,869

 

Accumulated other comprehensive loss

 

 

(4,314

)

 

 

(4,318

)

Deficit

 

 

(478,006

)

 

 

(464,330

)

Total shareholders’ equity

 

 

25,993

 

 

 

37,741

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

39,330

 

 

$

51,027

 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements (unaudited).

Going concern, see Note 2.

Commitments, see Note 9.

Subsequent events, see Note 12.

 

 

6

 

 


APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Expressed in thousands of US dollars, except for per common share data)

(unaudited)

 

 

 

Three months ended
March 31,

 

 

 

2023

 

 

2022

 

Revenue

 

$

 

 

$

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

Research and development

 

 

8,811

 

 

 

7,393

 

General and administrative

 

 

5,285

 

 

 

4,107

 

Operating expenses

 

 

14,096

 

 

 

11,500

 

 

 

 

 

 

 

 

Other income/(expense):

 

 

 

 

 

 

Interest income

 

 

422

 

 

 

22

 

Foreign exchange loss

 

 

(2

)

 

 

(3

)

Total other income

 

 

420

 

 

 

19

 

 

 

 

 

 

 

 

Net loss

 

$

(13,676

)

 

$

(11,481

)

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

Unrealized gain on available-for-sale securities

 

 

4

 

 

 

 

Total comprehensive loss

 

$

(13,672

)

 

$

(11,481

)

 

 

 

 

 

 

 

Basic and diluted loss per common share

 

$

(0.15

)

 

$

(0.12

)

 

 

 

 

 

 

 

Weighted average number of common shares outstanding used in the calculation of
 (in thousands)
     Basic and diluted loss per common share

 

 

92,562

 

 

 

92,226

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements (unaudited).

 

7

 

 


APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

(Expressed in thousands of US dollars, except for per common share data)

(unaudited)

 

 

 

Common Shares

 

 

Additional

 

 

Accumulated other

 

 

 

 

 

 

 

 

 

Shares
(in thousands)

 

 

Amount

 

 

paid-in
capital

 

 

comprehensive
loss

 

 

Deficit

 

 

Total

 

Balance, December 31, 2022

 

 

92,368

 

 

$

437,520

 

 

$

68,869

 

 

$

(4,318

)

 

$

(464,330

)

 

$

37,741

 

Common shares issued in exchange for RSUs

 

 

570

 

 

 

376

 

 

 

(376

)

 

-

 

 

-

 

 

-

 

Common shares issued under the 2022 ATM
   Facility

 

 

46

 

 

 

34

 

 

-

 

 

-

 

 

-

 

 

 

34

 

Common shares issued under the ESPP plan

 

 

21

 

 

 

16

 

 

-

 

 

-

 

 

-

 

 

 

16

 

Stock-based compensation

 

-

 

 

-

 

 

 

1,874

 

 

-

 

 

-

 

 

 

1,874

 

Other comprehensive gain

 

-

 

 

-

 

 

-

 

 

 

4

 

 

-

 

 

 

4

 

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

 

(13,676

)

 

$

(13,676

)

Balance, March 31, 2023

 

 

93,005

 

 

$

437,946

 

 

$

70,367

 

 

$

(4,314

)

 

$

(478,006

)

 

$

25,993

 

Balance, December 31, 2021

 

 

92,215

 

 

$

437,386

 

 

$

63,673

 

 

$

(4,316

)

 

$

(422,507

)

 

$

74,236

 

Common shares issued upon exercise of stock
   options

 

 

14

 

 

 

26

 

 

 

(11

)

 

-

 

 

-

 

 

 

15

 

Stock-based compensation

 

-

 

 

-

 

 

 

2,514

 

 

-

 

 

-

 

 

 

2,514

 

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

 

(11,481

)

 

 

(11,481

)

Balance, March 31, 2022

 

 

92,229

 

 

$

437,412

 

 

$

66,176

 

 

$

(4,316

)

 

$

(433,988

)

 

$

65,284

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements (unaudited).

 

8

 

 


APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of US dollars)

(unaudited)

 

 

 

Three months ended
March 31,

 

 

 

2023

 

 

2022

 

Cash flows used in operating activities:

 

 

 

 

 

 

Net loss for the period

 

$

(13,676

)

 

$

(11,481

)

Items not involving cash:

 

 

 

 

 

 

Stock-based compensation

 

 

1,874

 

 

 

2,514

 

Depreciation and amortization

 

 

28

 

 

 

32

 

Loss on disposal of property and equipment

 

 

 

 

 

4

 

Amortization of right-of-use assets

 

 

103

 

 

 

114

 

Interest on lease liabilities

 

 

25

 

 

 

7

 

Unrealized foreign exchange loss

 

 

(4

)

 

 

(2

)

Accrued interest on investments

 

 

(5

)

 

 

(11

)

Changes in non-cash operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses

 

 

256

 

 

 

214

 

Other current assets

 

 

95

 

 

 

32

 

Operating lease liabilities

 

 

(128

)

 

 

(143

)

Accounts payable

 

 

(807

)

 

 

(555

)

Accrued liabilities

 

 

937

 

 

 

(370

)

Cash used in operating activities

 

 

(11,302

)

 

 

(9,645

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Issuance of common shares under 2022 ATM Facility

 

 

34

 

 

 

 

Issuance of common shares under ESPP plan

 

 

16

 

 

 

 

Issuance of common shares upon exercise of stock options

 

 

 

 

 

15

 

Cash from financing activities

 

 

50

 

 

 

15

 

 

 

 

 

 

 

 

Cash flows from/(used in) investing activities:

 

 

 

 

 

 

Maturity (acquisition) of investments, net

 

 

(2,960

)

 

 

7,505

 

Cash from/(used in) investing activities

 

 

(2,960

)

 

 

7,505

 

 

 

 

 

 

 

 

Effect of exchange rate fluctuations on cash and cash equivalents

 

 

4

 

 

 

2

 

Decrease in cash and cash equivalents

 

$

(14,208

)

 

$

(2,123

)

Cash and cash equivalents, beginning of period

 

$

36,970

 

 

$

39,114

 

Cash and cash equivalents, end of period

 

$

22,762

 

 

$

36,991

 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements (unaudited).

 

9

 

 


APTOSE BIOSCIENCES INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Three months ended March 31, 2023 and 2022

(Tabular amounts in thousands of United States dollars, except as otherwise noted)

1.
Reporting entity:

Aptose Biosciences Inc. (“Aptose,” the “Company,” “we,” “us,” or “our”) is a science-driven clinical stage biotechnology company committed to the development and commercialization of precision medicines addressing unmet clinical needs in oncology, with an initial focus on hematology. The Company's small molecule cancer therapeutics pipeline includes products designed to provide single agent efficacy and to enhance the efficacy of other anti-cancer therapies and regimens without overlapping toxicities. The Company’s executive offices are located in San Diego, California, and our head office is located in Toronto, Canada.

We are advancing targeted agents to treat life-threatening hematologic cancers that, in most cases, are not elective for patients and require immediate treatment. We have two clinical-stage investigational products for hematological malignancies: tuspetinib, an oral, potent myeloid kinase inhibitor, and luxeptinib, an oral, dual lymphoid and myeloid kinase inhibitor.

Since our inception, we have financed our operations and technology acquisitions primarily from equity financing, proceeds from the exercise of warrants and stock options, and interest income on funds held for future investment. Our uses of cash for operating activities have primarily consisted of salaries and wages for our employees, facility and facility-related costs for our offices and laboratories, fees paid in connection with preclinical and clinical studies, licensing fees, drug manufacturing costs, laboratory supplies and materials, and professional fees.

Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We plan to raise additional funds to fund our business operations but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern, see Note 2(a). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our ability to raise additional funds could be affected by adverse market conditions, the status of our product pipeline, possible delays in enrollment in our trial, and various other factors and we may be unable to raise capital when needed, or on terms favorable to us. If necessary funds are not available, we may have to delay, reduce the scope of, or eliminate some of our development programs, potentially delaying the time to market for any of our product candidates.

We do not expect to generate positive cash flow from operations for the foreseeable future due to the early stage of our clinical trials. It is expected that negative cash flow will continue until such time, if ever, that we receive regulatory approval to commercialize any of our products under development and/or royalty or milestone revenue from any such products exceeds expenses.

Our cash needs for the next twelve months include estimates of the number of patients and rate of enrollment of our clinical trials, the amount of drug product that we will require to support our clinical trials, and our general corporate overhead costs to support our operations, and our reliance on our manufacturers. We have based these estimates on assumptions and plans which may change and which could impact the magnitude and/or timing of operating expenses and our cash runway, See Note 2(a).

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of March 31, 2023, the Company had an accumulated deficit of approximately $478.0 million (December 31, 2022, $464.3 million); cash and cash equivalents and investment balances of approximately $35.7 million (December 31, 2022, $47.0 million); and working capital of approximately $25.5 million (December 31, 2022, $37.2 million).

On July 18, 2022, we received a letter from the Nasdaq Stock Market, LLC (“Nasdaq”) indicating that, for the last 30 consecutive business days, the bid price for our Common Shares had closed below the minimum $1.00 per share required for continued inclusion on the Nasdaq Capital Market under the Nasdaq Listing Rules. Under Nasdaq Listing Rule 5810(c)(3)(A), if during the 180 calendar day period following the date of the notice the closing bid price of our Common Shares is at or above $1.00 for a minimum of 10 consecutive business days, we would regain compliance with the Minimum Bid Price requirement and our Common Shares would continue to be eligible for listing on the Nasdaq Capital Market, absent noncompliance with any other requirement for continued listing.

On January 18, 2023, we qualified for a 180-day extension to July 18, 2023. If we are unable to meet the minimum closing bid price requirement under Nasdaq Listing Rule 5810(c)(3)(A) by then, Nasdaq will provide notice that our securities will be subject to

 

10

 

 


delisting. In order to regain compliance with such rule, we are considering a reverse stock split of the Company’s outstanding Common Shares at a ratio in the range of 1-for-10 to 1-for-20 (the Reverse Stock Split”). The Reverse Stock Split is conditional upon the approval of the shareholders of the Company at the annual and special meeting of shareholders to be held on May 23, 2023 and upon the approval of the Board of Directors of the Company which, if it determines to proceed with the Reverse Stock Split, will also determine its exact ratio and date.

2.
Significant accounting policies
a.
Basis of presentation - Going concern

These unaudited consolidated condensed financial statements have been prepared in conformity with generally accepted accounting principles in the United States, or GAAP and the rules and regulations of the Securities and Exchange Commission, or SEC, related to quarterly reports filed on Form 10-Q, assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company's ability to continue as a going concern exists.

As of March 31, 2023, the Company had an accumulated deficit of approximately $478.0 million (December 31, 2022, $464.3 million); cash and cash equivalents and investment balances of approximately $35.7 million (December 31, 2022, $47.0 million); and working capital of approximately $25.5 million (December 31, 2022, $37.2 million). In order for the Company to meet its capital requirements, and continue to operate, additional financing will be necessary. The Company is evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, obtaining equity financing, debt financing, committed equity facilities or other financing instruments and restructuring of operations to decrease expenses. However, given the impact of the economic downturn on the U.S. and global financial markets, the Company may be unable to access further equity when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. The consolidated financial statements do not reflect any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. Such adjustments may be material.

b.
Basis of consolidation:

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions, balances, revenue, and expenses are eliminated on consolidation.

c.
Significant accounting policies, estimates and judgments:

During the three months ended March 31, 2023, there have been no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 23, 2023.

The preparation of the condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. Actual outcomes could differ from those estimates. The condensed consolidated interim financial statements include estimates, which, by their nature, are uncertain.

The impacts of such estimates are pervasive throughout the condensed consolidated interim financial statements and may require accounting adjustments based on future occurrences.

The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

d.
Recent Accounting Pronouncements

We have adopted no new accounting pronouncements during the three months ended March 31, 2023. There were various accounting standards and interpretations issued recently, none of which are expected to have a material impact on our financial position, operations or cash flows.

e.
Foreign currency:

The functional and presentation currency of the Company is the US dollar.

 

11

 

 


f.
Concentration of risk:

The Company is subject to credit risk from the Company’s cash and cash equivalents and investments. The carrying amount of the financial assets represents the maximum credit exposure. The Company manages credit risk associated with its cash and cash equivalents and investments by maintaining minimum standards of R1‑low or A‑low investments and the Company invests only in highly rated corporations and treasury bills, which are capable of prompt liquidation.

3.
Cash and cash equivalents:

Cash and cash equivalents as of March 31, 2023, consist of cash of $1.132 million (December 31, 2022 ‑ $596 thousand), deposits in high interest savings accounts, money market funds and accounts and other term deposits with maturities of less than 90 days totaling of $21.630 million (December 31, 2022 ‑ $36.374 million).

4.
Prepaid expenses:

 

 

 

March 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Prepaid research and development expenses

 

$

1,208

 

 

$

1,271

 

Prepaid insurance

 

 

684

 

 

 

893

 

Other prepaid expenses

 

 

155

 

 

 

139

 

Total

 

$

2,047

 

 

$

2,303

 

 

5.
Right-of-use assets:

 

 

 

March 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Right-of-use assets, beginning of period

 

$

3,100

 

 

$

1,860

 

Additions to right-of-use assets

 

 

24

 

 

 

1,240

 

Right-of-use assets, end of period

 

 

3,124

 

 

 

3,100

 

Accumulated amortization

 

 

(1,906

)

 

 

(1,803

)

Right-of use assets, NBV

 

$

1,218

 

 

$

1,297

 

 

6.
Investments:

Investments consisted of the following as of March 31, 2023 and December 31, 2022:

 

 

 

March 31, 2023

 

 

 

Cost

 

 

Unrealized gain/(loss)

 

 

Market value

 

United States Treasury Bills

 

$

9,984

 

 

$

1

 

 

$

9,985

 

Commercial Notes

 

 

2,972

 

 

 

1

 

 

$

2,973

 

Total

 

$

12,956

 

 

$

2

 

 

$

12,958

 

 

 

 

 

December 31, 2022

 

 

 

Cost

 

 

Unrealized gain/(loss)

 

 

Market value

 

United States Treasury Bills

 

$

9,991

 

 

$

(2

)

 

$

9,989

 

Total

 

$

9,991

 

 

$

(2

)

 

$

9,989

 

 

7.
Fair value measurements and financial instruments:

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value.

Level 1 ‑ inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

12

 

 


Level 2 ‑ inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data or other means; and

Level 3 ‑ inputs are unobservable (supported by little or no market activity).

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

The following table presents the fair value of Company's assets that are measured at fair value on a recurring basis for the periods presented:

 

 

 

March 31,
2023

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money Market funds

 

$

14,126

 

 

$

 

 

$

14,126

 

 

$

 

High interest savings account

 

 

1,537

 

 

 

 

 

 

1,537

 

 

 

 

United States Treasury Bills, classified as cash equivalents

 

 

5,967

 

 

 

 

 

 

5,967

 

 

 

 

United States Treasury Bills, classified as short-term investments

 

 

9,985

 

 

 

 

 

 

9,985

 

 

 

 

Commercial Note

 

 

2,973

 

 

 

 

 

 

2,973

 

 

 

 

Total

 

$

34,588

 

 

$

 

 

$

34,588

 

 

$

 

 

 

 

 

December 31,
2022

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money Market accounts

 

$

165

 

 

$

 

 

$

165

 

 

$

 

Money Market funds

 

 

22,343

 

 

 

 

 

 

22,343

 

 

 

 

High interest savings accounts

 

 

13,866

 

 

 

 

 

 

13,866

 

 

 

 

United States Treasury Bills

 

 

9,989

 

 

 

 

 

 

9,989

 

 

 

 

Total

 

$

46,363

 

 

$

 

 

$

46,363

 

 

$

 

 

8.
Accrued liabilities:

Accrued liabilities as of March 31, 2023 and December 31, 2022 consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Accrued personnel related costs

 

$

1,180

 

 

$

2,302

 

Accrued research and development expenses

 

 

5,005

 

 

 

3,122

 

Other accrued expenses

 

 

409

 

 

 

233

 

Total

 

$

6,594

 

 

$

5,657

 

9.
Lease liability

Aptose leases office space in San Diego, California and Toronto, Canada. The lease for the San Diego office space was scheduled to expire on March 31, 2023. On November 4, 2022, this lease was extended through May 31, 2026 (the "Third Amendment"). Management has determined that the Third Amendment represents a lease modification, as defined by ASC 842, Leases, does not meet the requirements for accounting as a separate contract and continues to meet the definition of an operating lease. Accordingly, the Company has accounted for the Third Amendment prospectively, via remeasurements, on the Modification Date, to the lease liability and corresponding right-of-use asset. Aptose previously leased lab space in San Diego, which we exited prior to the expiration of the lease on February 28, 2023. The costs incurred in exiting this laboratory space were not material. We lease office space in Toronto, Ontario, Canada, with this lease previously scheduled to expire on June 30, 2023. This lease was extended for one year on February 23, 2023, with this extension expiring on June 30, 2024. The Company has not included any extension periods in calculating its right-to-use assets and lease liabilities. The Company also enters into leases for small office equipment.