10-Q

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, 2024

☐ 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 14, 2024, the registrant had 16,309,393 common shares outstanding.

TABLE OF CONTENTS


		Page

PART I—FINANCIAL INFORMATION		4
	Item 1 – Financial Statements	4
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3 – Qualitative and Quantitative Disclosures about Market Risk	33
	Item 4 – Controls and Procedures	33

PART II—OTHER INFORMATION		34
	Item 1 – Legal Proceedings	34
	Item 1A – Risk Factors	34
	Item 6 – Exhibits	35
	Signatures	36

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 U.S. Food and Drug Administration ("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;

•

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 (the "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);

•

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, 2023, 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.

PART I—FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

Condensed Consolidated Interim Financial Statements

(Unaudited)

APTOSE BIOSCIENCES INC.

For the three months ended March 31, 2024 and 2023

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of US dollars)

(unaudited)


	March 31, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	7,346		$	9,252
Investments		1,982			—
Prepaid expenses		1,819			2,042
Other current assets		674			600
Total current assets		11,821			11,894

Non-current assets:
Property and equipment		125			152
Right-of-use assets, operating leases		850			943
Total non-current assets		975			1,095
Total assets	$	12,796		$	12,989
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable to related parties	$	—		$	2,554
Accounts payable		2,421			3,492
Accrued liabilities		9,319			8,829
Current portion of lease liability, operating leases		399			394
Total current liabilities		12,139			15,269

Non-current liabilities:
Lease liability, operating leases		520			621
Total liabilities		12,659			15,890

Shareholders’ equity:
Share capital:
Common shares, no par value, unlimited authorized shares, 15,717,701 and 7,942,363 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		450,485			444,806
Additional paid-in capital		79,146			72,146
Accumulated other comprehensive loss		(4,317	)		(4,316	)
Deficit		(525,177	)		(515,537	)
Total shareholders’ equity		137			(2,901	)

Total liabilities and shareholders’ equity	$	12,796		$	12,989

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

Going concern, see Note 2.

Commitments, see Note 9.

Related party transactions, see Note 10.

Subsequent events, see Note 13.

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,
	2024			2023
Revenue	$	—		$	—

Expenses:
Research and development		6,445			8,811
General and administrative		3,315			5,285
Operating expenses		9,760			14,096

Other income/(expense):
Interest income		121			422
Foreign exchange loss		(1	)		(2	)
Total other income		120			420

Net loss	$	(9,640	)	$	(13,676	)

Other comprehensive loss:
Unrealized (loss) gain on available-for-sale securities		(1	)		4
Total comprehensive loss	$	(9,641	)	$	(13,672	)

Basic and diluted loss per common share	$	(0.73	)	$	(2.22	)

Weighted average number of common shares outstanding used in the calculation of (in thousands) Basic and diluted loss per common share		13,133			6,171

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

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, 2023		7,942	$	444,806	$	72,146		$	(4,316	)	$	(515,537	)	$	(2,901	)
Common shares and warrants issued under the Hanmi Subscription Agreement		2,105		2,043		1,659			—			—			3,702
Common shares and warrants issued in S-1 financing		5,649		3,595		4,532			—			—			8,127
Common shares issued under the 2023 Committed Equity Facility		10		23		—			—			—			23
Stock-based compensation		—		—		809			—			—			809
Common shares issued under the ESPP plan		11		18		—			—			—			18
Other comprehensive loss		—		—		—			(1	)		—			(1	)
Net loss		—		—		—			—			(9,640	)		(9,640	)
Balance, March 31, 2024		15,717	$	450,485	$	79,146		$	(4,317	)	$	(525,177	)	$	137
Balance, December 31, 2022		6,158	$	437,520	$	68,869		$	(4,318	)	$	(464,330	)	$	37,741
Common shares issued in exchange for RSUs		38		376		(376	)		—			—			—
Common shares issued under the 2022 ATM Facility		3		34		—			—			—			34
Common shares issued under the ESPP plan		1		16		—			—			—			16
Stock-based compensation		—		—		1,874			—			—			1,874
Other comprehensive gain		—		—		—			4			—			4
Net loss		—		—		—			—			(13,676	)		(13,676	)
Balance, March 31, 2023		6,200	$	437,946	$	70,367		$	(4,314	)	$	(478,006	)	$	25,993

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

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of US dollars)

(unaudited)


	Three months ended March 31,
	2024			2023
Cash flows used in operating activities:
Net loss for the period	$	(9,640	)	$	(13,676	)
Items not involving cash:
Stock-based compensation		809			1,874
Depreciation and amortization		16			28
Loss on disposal of property and equipment		10			—
Amortization of right-of-use assets		93			103
Interest on lease liabilities		19			25
Unrealized (gain)/loss on short-term investment		(1	)		(4	)
Accrued interest on investments		9			(5	)
Changes in non-cash operating assets and liabilities:
Prepaid expenses		246			256
Other current assets		(74	)		95
Operating lease liabilities		(115	)		(128	)
Accounts payable to related parties		(2,554	)		—
Accounts payable		(1,071	)		(807	)
Accrued liabilities		490			937
Cash used in operating activities		(11,763	)		(11,302	)

Cash flows from financing activities:
Issuance of common shares under the S-1 Filing		8,127			—
Shares issuances to Hanmi under subscription agreement		3,702			—
Issuance of common shares under 2022 ATM Facility		—			34
Issuance of common shares under the ESPP plan		18			16
Cash from financing activities		11,847			50

Cash flows from/(used in) investing activities:
Disposal of property and equipment, net of purchases	1				—
Maturity /(acquisition) of investments, net		(1,992	)		(2,960	)
Cash used in investing activities		(1,991	)		(2,960	)

Effect of exchange rate fluctuations on cash and cash equivalents		1			4
Decrease in cash and cash equivalents	$	(1,906	)	$	(14,208	)
Cash and cash equivalents, beginning of period	$	9,252		$	36,970
Cash and cash equivalents, end of period	$	7,346		$	22,762

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

APTOSE BIOSCIENCES INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Three months ended March 31, 2024 and 2023

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

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. The Company's current cash, cash equivalents and investments will enable the support of operations through August 2024. 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, 2024, the Company had positive shareholder's equity of $0.1 million (December 31, 2023 negative shareholder's equity of $2.9 million); an accumulated deficit of approximately $525.2 million (December 31, 2023, $515.5 million); cash and cash equivalents and investment balances of approximately $9.3 million (December 31, 2023, $9.3 million); and negative working capital of approximately $0.3 million (December 31, 2023, negative working capital of $3.4 million). Management recognizes that in order to meet the capital requirements, and continue to operate, additional financing will be necessary. The Company plans to raise additional funds to fund our business operations through equity financing under the 2022 ATM Facility and other financing activities, as further described in Note 11 and Note 13. Management continues considering other options for raising capital including debt, equity, collaborations, and reorganization to reduce operational expenses. However, given the impact of the financial markets and the matter in Note 13, Subsequent events, that may impact the Company's ability to raise financing in the capital markets, the Company may be unable to access financing 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. These conditions raise substantial doubt about the Company’s ability to continue as a

going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. For information about financing events and the regulatory matter that may impact the Company's ability to raise financing in the capital markets which arose subsequent to March 31, 2024, see Note 13, Subsequent events.

On May 23, 2023, during the Aptose Annual and Special Meeting of Shareholders, our shareholders voted to approve special resolutions providing for an amendment to our articles of incorporation to effect a reverse share split of our outstanding Common Shares, at a ratio in the range of 1-for-10 to 1-for-20. Our Board of Directors then approved a ratio of 1-for-15 on May 23, 2023. On May 24, 2023, we filed articles of amendment under the Canada Business Corporations Act ("CBCA") to give effect to the reverse stock split (consolidation) of our Common Shares on the basis of one post-consolidation Common Share for each 15 pre-consolidation Common Shares (the “Reverse Stock Split”). The Common Shares commenced trading on a post-Reverse Stock Split basis at market open on Tuesday, June 6, 2023. All references in this report to historical Common Share prices, numbers of Common Shares, and earnings per share calculations have been presented to reflect the effect of the Reverse Stock Split.

Significant accounting policies:

Basis of presentation - Going concern

These unaudited condensed consolidated interim 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, 2024, the Company had positive shareholder's equity of $0.1 million (December 31, 2023 negative shareholder's equity of $2.9 million); an accumulated deficit of approximately $525.2 million (December 31, 2023, $515.5 million); cash and cash equivalents and investment balances of approximately $9.3 million (December 31, 2023, $9.3 million); and negative working capital of approximately $0.3 million (December 31, 2023, negative working capital of $3.4 million). Management recognizes that in order to meet the 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 financial markets and the matter in Note 13, Subsequent events, the Company may be unable to access further equity when needed. As the Company is primarily pursuing one compound that is licensed from a related party with significant licensing payments who will have influence on the Company, other investors may not be willing to invest in the Company. 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 Company's current cash, cash equivalents and investments will enable the support of operations through August 2024. The unaudited condensed consolidated interim 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.

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.

Significant accounting policies, estimates and judgments:

During the three months ended March 31, 2024, 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, 2023 filed with the SEC on March 26, 2024.

The preparation of the unaudited 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 unaudited condensed consolidated interim financial statements and reported amounts of revenue and expenses during the reporting period. Actual outcomes could differ from those estimates. The unaudited condensed consolidated interim financial statements include estimates, which, by their nature, are uncertain.

The impacts of such estimates are pervasive throughout the unaudited 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.

Recent Accounting Pronouncements

We have adopted no new accounting pronouncements during the three months ended March 31, 2024. 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.

Foreign currency:

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

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.

Cash and cash equivalents:

Cash and cash equivalents as of March 31, 2024, consist of cash of $2,898 thousand (December 31, 2023 ‑ $2,764 thousand), deposits in high interest savings accounts, money market funds and accounts with maturities of less than 90 days totaling of $4,448 thousand (December 31, 2023 ‑ $6,488 thousand).

Prepaid expenses:

Prepaid expenses as of March 31, 2024 and December 31, 2023 are shown below. Other prepaid expenses primarily consist of subscriptions, software, conference deposits and deposits for general and administrative items.


	March 31,		December 31,
	2024		2023
Prepaid research and development expenses	$	852	$	720
Prepaid insurance		610		882
Other prepaid operating expenses		357		440
Total	$	1,819	$	2,042

Right-of-use assets:


	March 31,			December 31,
	2024			2023
Right-of-use assets, beginning of period	$	3,124		$	3,100
Additions to right-of-use assets		—			24
Right-of-use assets, end of period		3,124			3,124
Accumulated amortization		(2,274	)		(2,181	)
Right-of use assets, NBV	$	850		$	943

Investments:

Investments consisted of the following as of March 31, 2024 and December 31, 2023:


	March 31, 2024
	Cost		Unrealized gain/(loss)			Market value
United States Treasury Bills		1,983		(1	)		1,982
Total	$	1,983	$	(1	)	$	1,982

         
        December 31, 2023

         
        Cost

        Unrealized gain/(loss)

        Market value

United States Treasury Bills

—

—

—

Total

—

—

—

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;

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, 2024		Level 1		Level 2		Level 3
Assets
High interest savings account	$	1,461		—	$	1,461		—
United States Treasury Bills		4,969		—		4,969		—
Total	$	6,430		—	$	6,430		—


	December 31, 2023		Level 1		Level 2		Level 3
Assets
High interest savings accounts	$	2,002		—	$	2,002		—
United States Treasury Bills		4,486		—		4,486		—
Total	$	6,488		—	$	6,488		—

Accrued liabilities:

Accrued liabilities as of March 31, 2024 and December 31, 2023 consisted of the following:


	March 31,		December 31,
	2024		2023
Accrued personnel related costs	$	1,144	$	1,989
Accrued research and development expenses		8,052		6,527
Other accrued expenses		123		313
Total	$	9,319	$	8,829

Lease liability:

Aptose leases office space in San Diego, California and Toronto, Canada. The lease for the San Diego office space is scheduled to expire in May 31, 2026. We lease office space in Toronto, Ontario, Canada, with this lease scheduled to expire 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.

Minimum payments, undiscounted, under our operating leases are as follows:


Years ending December 31,
2024	$	344
2025		462
2026		197
Total	$	1,003

The following table presents the weighted average remaining term of the leases and the weighted average discount rate:


	March 31, 2024			December 31, 2023
Weighted-average remaining term – operating leases (years)		1.9			2.4
Weighted-average discount rate – operating leases		7.38	%		7.38	%

Lease liability, current portion	$	399		$	394
Lease liability, long-term portion		520			621
Total	$	919		$	1,015

Operating lease costs and operating cash flows from our operating leases are as follows:


	Three months ended March 31,
	2024		2023
Operating lease cost	$	112	$	128
Operating cash flows from operating leases	$	115	$	128

10.

Related party transactions:

Hanmi Pharmaceutical Co. Ltd.

On November 4, 2021, Aptose entered a licensing agreement with the South Korean company Hanmi Pharmaceutical Co. Ltd. ("Hanmi" and the "Hanmi Licensing Agreement") for the clinical and commercial development of tuspetinib. Under the terms of the Hanmi Licensing Agreement, Hanmi granted Aptose exclusive worldwide rights to tuspetinib for all indications. Hanmi received an upfront payment of $12.5 million, including $5 million in cash and $7.5 million in Common Shares. Aptose issued Hanmi 215,703 Common Shares in this upfront licensing payment. Hanmi will also receive up to $407.5 million in future milestone payments contingent upon achieving certain clinical, regulatory and sales milestones across several potential indications, as well as tiered royalties on net sales. The Hanmi milestone payments are based on the progression of research as outlined in Note 14, Collaborative Agreements, to the Annual report on Form 10-K for the year ended December 31, 2023. The term of the agreement will continue on a product-by-product and country-by-country basis until the expiration of the royalty period for such product in such country. The licenses to Aptose pursuant to the Hanmi Licensing Agreement will survive and become non-exclusive, perpetual, irrevocable and fully paid-up on a product-by-product and country-by-country basis, upon their natural expiration under the terms of the Hanmi Licensing Agreement.

In 2022, the Company and Hanmi also entered into a separate supply agreement for additional production of new drug substance ("API") and drug product to support further tuspetinib clinical development, for which the Company pays Hanmi per batch of production. Expenses related to this supply agreement have been recognized by the Company, amounting to nil and $0.6 million for the three months ended March 31, 2024 and 2023, respectively. Since inception to March 31, 2024, $7.1 million has been recognized for the period under the supply agreement.

The Company paid supply costs to Hanmi of $2.6 million and $1.6 million in the three months ended March 31, 2024 and 2023, respectively. Since inception to March 31, 2024, payments of $7.1 million have been made under the supply agreement. At March 31, 2024, the Company did not have either accounts payable or accrued liabilities related to the Hanmi supply agreement. At December 31, 2023, there was $2.6 million in accounts payable and nil in accrued liabilities.

See Note 11, Share capital, for share capital transactions with Hanmi.

11.

Share capital:

The Company has authorized share capital of an unlimited number of Common Shares.

Equity issuances:

(i) Hanmi 2023 Investment

On August 10, 2023, the Company entered into a binding term sheet with Hanmi whereby Hanmi agreed at their sole discretion to invest, up to a maximum of $7 million in Aptose up to a total ownership of 19.99 percent of Aptose by Hanmi. On September 6, 2023, the Company entered into a subscription agreement with Hanmi, pursuant to which the Corporation agreed to sell 668,449 Common Shares to Hanmi for proceeds of $3 million.

(ii) January 2024 Public Offering and Private Placement

On January 31, 2024, the Company announced the closing of a $9.7 million public offering (the “Public Offering”) and a $4 million private placement (the “Private Placement”) with Hanmi Pharmaceutical. The Public Offering comprised 5,649,122 common shares of the Company (the “Common Shares”) and warrants at a combined offering price of US $1.71 per share. This included 736,842 Common Shares and warrants pursuant to a full exercise by the underwriter of its over-allotment option (the “Over-Allotment Option”). The Private Placement comprised 2,105,263 Common Shares of the Company sold at a price of $1.90, representing an 11% premium over the price of the Common Shares issued as part of the Public Offering. Nasdaq subsequently issued a letter to the Company regarding the value and the date of the Private Placement, as discussed in this note, below. Financing costs of approximately $1.4 million included underwriting costs of 7% and approximately $0.4 million in professional fees. The Company also issued Hanmi warrants to purchase Common Shares at an exercise price of US $1.71 per Warrant Share.

On February 29, 2024, the Company received a deficiency letter (the “2024 Deficiency Letter”) from the Nasdaq Listing Qualifications Department of Nasdaq notifying the Company that the Company’s January 2024 Private Placement of securities to Hanmi violated 5635(d) because the Company did not obtain shareholder approval prior to such issuance. Nasdaq stated that the Private Placement involved the issuance of greater than 20% of the issued and outstanding Common Shares of the Company at a discount to the Nasdaq official closing price on January 25, 2024, the date of the subscription agreement between the Company and Hanmi. The 2024 Deficiency Letter had no immediate effect on the listing of the Company’s Common Shares. In accordance with the Nasdaq Listing Rules, the Company was given forty-five (45) calendar days to submit a plan to regain compliance. See Note 13, Subsequent events.

(iii) 2023 Committed Equity Facility

On May 25, 2023, the Company and Keystone Capital Partners, LLC ("Keystone") entered into a committed equity facility, (the "2023 Committed Equity Facility"), which provides that subject to the terms and conditions set forth therein, we may sell to Keystone up to the lesser of (i) $25.0 million of the Common Shares and (ii) a number of Common Shares equal to 19.99% of the Common Shares outstanding immediately prior to the execution of the 2023 Committed Equity Facility Agreement. with Keystone which respect to the 2023 Committed Equity Facility (subject to certain exceptions) (the “Total Commitment”), from time to time during the 24-month term of the 2023 Committed Equity Facility. Additionally, on May 25, 2023, the Company entered into a Registration Rights Agreement with Keystone, pursuant to which the Company agreed to file a registration statement with the SEC covering the resale of Common Shares that are issued to Keystone under the 2023 Committed Equity Facility. This registration statement became effective on June 30, 2023 and the 2023 Committed Equity Facility commencement date was July 12, 2023 (the "Commencement Date").

Upon entering into the 2023 Committed Equity Facility, the Company agreed to issue to Keystone an aggregate of 25,156 Common Shares (the “Commitment Shares”) as consideration for Keystone’s commitment to purchase Common Shares upon the Company’s direction under the 2023 Committed Equity Facility. The Company issued 7,547 Common Shares, or 30% of the Commitment Shares, on the date of the 2023 Committed Equity Facility Agreement. An additional 7,547 Common Shares, or 30% of the Commitment Shares, were issued to Keystone in October 2023. In the three months ended March 31, 2024, the Company's issuance of Common Shares to Keystone consisted of the 10,062 Commitment Shares issued in January 2024.

In the year ended December 31, 2023, the Company's issuance of Common Shares to Keystone comprised 720,494 Common shares sold to Keystone at an average price of $2.91 per Common share for cash proceeds of $2.1 million and 15,094 Commitment Shares. See Note 13, Subsequent events.

(iv) 2022 At-The-Market Facility ("ATM")

On December 9, 2022, the Company entered into an equity distribution agreement pursuant to which the Company may, from time to time, sell Common Shares having an aggregate offering value of up to $50 million through Jones Trading Institutional Services LLC ("Jones Trading") on Nasdaq (the "2022 ATM Facility"). During the three months ended March 31, 2023, the Company issued 3,095 shares under this 2022 ATM Facility at an average price of $11.32 per Common Share for gross proceeds of $35 thousand ($34 thousand net of share issuance costs). The Company did not issue shares under the 2022 ATM Facility in the three months ended March 31, 2024. Since inception to March 31, 2024, the Company has raised a total of $1.9 million of gross proceeds ($1.9 million net of share issuance costs) under the 2022 ATM Facility. Costs associated with the proceeds consisted of a 3% cash commission. See Note 13, Subsequent events.

Loss per share:

Loss per share is calculated using the weighted average number of Common Shares outstanding and is presented in the table below:


	Three months ended March 31,
	2024			2023
Net loss	$	(9,640	)	$	(13,676	)
Weighted-average common shares – basic and diluted (in thousands)		13,133			6,171
Net loss per share – basic and diluted	$	(0.73	)	$	(2.22	)

The effects of any potential exercise of the Company’s stock options outstanding during the three-month periods ended March 31, 2024, and March 31, 2023 have been excluded from the calculation of diluted loss per share, since such securities would be anti‑dilutive.

12.

Stock‑based compensation:

All references in this report to historical Common Share prices, numbers of Common Shares, and earnings per share calculations have been presented to reflect the effect of the Reverse Stock Split.

Stock option plan and employee stock purchase plan

Effective June 1, 2021, the Company adopted a new stock incentive plan (“New Incentive Plan”) and an employee stock purchase plan (“ESPP”).

The New Incentive Plan authorizes the Board of Directors to administer the New Incentive Plan to provide equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units and dividend equivalents.

The Corporation currently maintains its existing Share Option Plan and 2015 Stock Incentive Plan (2015 SIP). Effective June 1, 2021 no further grants will be made under the Share Option Plan or 2015 SIP, though existing grants under the Share Option Plan will remain in effect in accordance with their terms.

The aggregate number of our Common Shares, no par value, that may be issued under all awards under the New Incentive Plan is (i) 691,400, plus (ii) any of our Common Shares subject to any outstanding award under our prior plans that, after June 1, 2021, are not purchased or are forfeited or reacquired by us, or otherwise not delivered to the participant due to termination, cancellation or cash settlement of such award subject to the share counting provisions of the New Incentive Plan.

Under both the Share Option Plan and the New Incentive Plan, the exercise price of each option equals the closing trading price of the Company’s stock on the day prior to the grant if the grant is made during the trading day or the closing trading price on the day

of grant if the grant is issued after markets have closed. Vesting is provided for at the discretion of the Board of Directors and the expiration of options is to be no greater than ten years from the date of grant.

The Company uses the fair value-based method of accounting for employee awards granted under both plans. The Company calculates the fair value of each stock option grant using the Black-Scholes option pricing model at the grant date. The stock-based compensation cost of the options is recognized as stock-based compensation expense over the relevant vesting period of the stock options using an estimate of the number of options that will eventually vest.

The ESPP, which is administered by the Board of Directors, allows eligible employees of the Company to purchase Common Shares through accumulated payroll deductions up to a maximum 15% of eligible compensation. The ESPP is implemented in consecutive offering periods with a new offering period commencing on the first trading day on or after February 1 and August 1 each year, or on such other date as the Board of Directors will determine and continuing thereafter until terminated in accordance with the Plan. Unless the Board of Directors provides otherwise, the purchase price will be equal to eighty-five percent (85%) of the fair market value of a Common Share on the offering date or the exercise date, whichever is lower.

The maximum number of Common Shares which will be available for sale under the ESPP is 113,333 Common Shares. There were 10,891 and 1,438 Common Shares issued under the ESPP during the three months ended March 31, 2024 and March 31, 2023, respectively.

Stock option transactions for the three months ended March 31, 2024 and March 31, 2023 are summarized as follows:


				Three months ended March 31, 2024
	Options (in thousands)			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding, beginning of period		1,184		$	44.78		—
Granted		408			2.00		—
Exercised		—			—		—
Forfeited		(87	)		11.46		—
Outstanding, end of the period		1,505		$	34.98		7.04
Exercisable, end of the period		896		$	53.41		5.56
Vested and expected to vest, end of period		1,340		$	36.76		7.03


				Three months ended March 31, 2023
	Options (in thousands)			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding, beginning of period		1,100		$	52.20		—
Granted		215			8.40		—
Exercised		—			0.00		—
Forfeited		(59	)		18.00		—
Outstanding, end of the period		1,256		$	46.65		7.01
Exercisable, end of the period		733		$	62.55		5.54
Vested and expected to vest, end of period		1,162		$	48.30		6.84

As of March 31, 2024, there was $1.12 million of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over an estimated weighted-average period of 1.73 years. As of March 31, 2024, total compensation cost not yet recognized related to grants under the ESPP was approximately $7 thousand, which is expected to be recognized over four months.

The following table presents the weighted average assumptions that were used in the Black‑Scholes option pricing model to determine the fair value of stock options granted during the period, and the resulting weighted-average fair values:


	Three months ended March 31, 2024			Three months ended March 31, 2023
Risk-free interest rate		4.07	%		3.41	%
Expected dividend yield		—			—
Expected volatility		83.1	%		80.3	%
Expected life of options (years)	5 years			5 years
Grant date fair value	$	1.36		$	6.60

The Company uses historical data to estimate the expected dividend yield and expected volatility of its Common Shares in determining the fair value of stock options. The expected life of the options represents the estimated length of time the options are expected to remain outstanding.

The following table presents the vesting terms of options granted in the period:


	Three months ended March 31, 2024		Three months ended March 31, 2023
	Number of options (in thousands)		Number of options (in thousands)
3-year vesting (50%-25%-25%)		20		48
4-year vesting (50%-16 2/3%-16 2/3%-16 2/3%)		388		167
Total stock options granted in the period		408		215

The Company has a stock incentive plan (SIP) pursuant to which the Board may grant stock-based awards comprised of restricted stock units or dividend equivalents to employees, officers, consultants, independent contractors, advisors and non-employee directors of the Company. Each restricted unit is automatically redeemed for one common share of the Company upon vesting. During the three-month period ended March 31, 2024, the Company granted nil (March 31, 2023 - 38,000) restricted stock units ("RSUs") with immediate vesting and an exercise price of $9.90. On February 6, 2023, all of these RSUs were redeemed for 38,000 Common Shares. The following table presents the vesting and redemption of the RSUs granted in the three months ended March 31, 2024 and 2023.


	Three months ended March 31, 2024				Three months ended March 31, 2023
	Number of options (in thousands)		Weighted average grant date fair value		Number of options (in thousands)			Weighted average grant date fair value
Outstanding, beginning of period		—	$	—		—		$	—
Granted		—		—		38			9.90
Vested and redeemed		—		—		(38	)		9.90
Outstanding, ending of period		—	$	—		—		$	—

Share-based payment expense

The Company recorded share-based payment expense related to stock options and RSUs as follows:


	Three months ended March 31,
	2024		2023
Research and development	$	328	$	652
General and administrative		481		1,222
	$	809	$	1,874

13.

Subsequent events

In April 2024, the Company issued 510,101 Common Shares to Keystone at an average price of $1.36 per Common Share for cash proceeds of $694,000. In April 2024, the Company's issuances of Common Shares to Keystone reached the Total Commitment of

the Committed Equity Facility, i.e. 19.99% of the Common Shares outstanding immediately prior to the execution of the 2023 Committed Equity Facility Agreement.

Subsequent to March 31, 2024, the Company issued 81,591 Common Shares under this 2022 ATM Facility at an average price of $1.22 for gross proceeds of $100 thousand ($97 thousand net of share issuance costs).

On April 2, 2024, the Company received a letter (the “Notification Letter”) from Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1) (the “Rule”) because the stockholders’ equity of the Company as of December 31, 2023, as reported in the Company’s Annual Report on Form 10-K, was below the minimum requirement of $2.5 million (the "Stockholders’ Equity Requirement"). The Company's stockholder's equity as of March 31, 2024 was positive $0.1 million. As of the date of this report, the Company does not have a market value of listed securities of $35 million, or net income from continued operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years, the alternative quantitative standards for continued listing on the Nasdaq Capital Market. The Notification Letter received has no immediate effect on the Company's continued listing on the Nasdaq Capital Market, subject to the Company's compliance with the other continued listing requirements. Pursuant to Nasdaq’s Listing Rules, the Company has 45 calendar days to submit a plan to evidence compliance with the Rule (a “Compliance Plan”). The Company intends to submit a Compliance Plan within the required time, although there can be no assurance that the Compliance Plan will be accepted by Nasdaq. If the Compliance Plan is accepted by Nasdaq, the Company will be granted an extension of up to 180 calendar days from April 2, 2024 to evidence compliance with the Rule. In the event the Compliance Plan is not accepted by Nasdaq, or in the event the Compliance Plan is accepted but the Company fails to evidence compliance within the extension period, the Company will have the right to a hearing before Nasdaq’s Hearing Panel. The hearing request would stay any suspension or delisting action pending the conclusion of the hearing process and the expiration of any additional extension period granted by the panel following the hearing. The Company intends to submit the Compliance Plan on or before May 17, 2024, monitor its stockholders’ equity and, if appropriate, consider further available options to evidence compliance with the Stockholders’ Equity Requirement.

In response to the 2024 Deficiency Letter from Nasdaq received on February 29, 2024 regarding the Private Placement with Hanmi, the Company submitted a plan to regain compliance on April 15, 2024. On April 25, 2024, the Company received a letter (the “April Letter”) from the Listing Qualifications Department (the “Staff”) of Nasdaq notifying the Company of the Staff’s determination that the Company had regained compliance with Nasdaq Listing Rule 5635(d) and the Staff has determined that the matter is now closed. Pursuant to the Company's plan to regain compliance, on April 26, 2024, the Company announced that it had amended the warrant agreement with Hanmi to prohibit the exercise of the Hanmi warrants in excess of the Nasdaq 19.99% limitation (the "Nasdaq 19.99% cap"), unless shareholder approval is first obtained to exceed the Nasdaq 19.99% Cap.

On April 29, 2024, the Company entered into (a) a Second Amended and Restated Executive Employment Agreement with its Chairman, President, and Chief Executive Officer, Dr. William G. Rice (the “Rice Amendment”); (b) an Amended and Restated Executive Employment Agreement with its Senior Vice President and Chief Medical Officer, Dr. Rafael Bejar (the “Bejar Amendment”); and (c) an Amended and Restated Executive Employment Agreement with its Senior Vice President, Chief Financial Officer, Chief Business Officer, and Corporate Secretary, Mr. Fletcher Payne (the “Payne Amendment”), each of which amended the compensation agreements currently in place with such individuals to harmonize the change of control provisions in the compensation agreements of such individuals.

The Rice Amendment updated the terms of the severance paid to Mr. Rice in connection with a change of control and its potential tax consequences. The amendment also clarified Mr. Rice’s job description and compensation package. Mr. Rice’s annual base salary increased to $648,960 as of January 1, 2024. Mr. Rice is entitled to receive an annual bonus of up to 55% of his current base salary and an annual automobile allowance of $18,000. All other terms of Mr. Rice’s employment agreement remain in full force and effect.

The Bejar Amendment increased Mr. Bejar’s annual base salary to $509,600 as of January 1, 2024 and updated the terms of the severance paid to Mr. Bejar in connection with a change of control. The amendment also added the title of Senior Vice President to Mr. Bejar’s position, and added a provision requiring Mr. Bejar’s cooperation in any internal investigation, any administrative, regulatory or judicial investigation or proceeding, or any dispute with a third party. All other terms of Mr. Bejar’s employment agreement remain in full force and effect.

The Payne Amendment increased Mr. Payne’s annual base salary to $479,440 as of January 1, 2024 and updated the terms of the severance paid to Mr. Payne in connection with a change of control. The amendment also added the titles of Chief Business Officer and Corporate Secretary to Mr. Payne’s position. All other terms of Mr. Payne’s employment agreement remain in full force and effect.

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created by those sections. For more information, see “Cautionary Note Regarding Forward-Looking Statements.” When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that impact our business. In particular, we encourage you to review the risks and uncertainties described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this report. These forward-looking statements are made as of the date of this management’s discussion and analysis, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law.

The following discussion should be read in conjunction with our condensed consolidated financial statements and accompanying notes thereto contained in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, and with our audited consolidated financial statements and accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.

All amounts are expressed in United States dollars unless otherwise stated.

OVERVIEW

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.

Aptose Programs

Tuspetinib, ("Tuspetinib" or "TUS"), Aptose’s lead program, is being developed for frontline combination therapy in newly diagnosed acute myeloid leukemia ("AML”) patients to unlock the most significant patient impact and greatest commercial opportunity. AML is a highly aggressive cancer of the bone marrow and blood, and there is a tremendous unmet need for a therapy that can extend survival of newly diagnosed AML patients and improve their quality of life. Newly diagnosed AML patients typically fail all frontline (1L) therapies, and responses to subsequent salvage therapies in the relapsed or refractory (R/R) setting are limited, highlighting the need for a more effective triple drug (“triplet”) combination therapy to increase survival in the frontline setting.

Current standard of care treatment in the 1L setting for many newly diagnosed AML patients includes a doublet combination of venetoclax and a hypomethylating agent (VEN+HMA). Exploratory triplet therapies using current agents added to VEN+HMA have achieved notable response rates but are inadequate because of toxicities and the limited activity across subpopulations of AML patients. In contrast, tuspetinib is a convenient, orally administered, once-daily kinase inhibitor that targets select kinases operative in AML and exerts broad activity across AML populations with adverse genetics. However, tuspetinib avoids kinases that typically cause toxicities associated with other kinase inhibitors and has demonstrated an excellent safety profile. These properties position tuspetinib as an ideal agent for addition to the VEN+HMA backbone therapy to create a superior triplet (TUS+VEN+HMA) frontline therapy to treat newly diagnosed AML.

The goal for the tuspetinib program is to rapidly move the TUS+VEN+HMA triplet into newly diagnosed AML patients, and a triplet pilot study in newly diagnosed AML patients is planned to begin the summer of 2024 and deliver important clinical data (CR and MRD negativity rates, safety, and survival) over the following 6 to 12 months. It was essential to understand the safety, tolerability, and response activities of tuspetinib as a single agent and as the TUS+VEN doublet combination before advancing to the TUS+VEN+HMA triplet. We therefore performed a clinical trial of TUS single agent in patients with relapsed or refractory (R/R) AML and then performed a trial with the TUS+VEN doublet therapy in R/R AML patients and are now prepared to move into the TUS+VEN+HMA triplet pilot study in newly diagnosed AML patients.

To be precise, we have now completed a dose escalation and dose exploration international Phase 1/2 clinical trial to assess the safety, tolerability, pharmacokinetics, pharmacodynamic responses, and efficacy of TUS single agent in patients with R/R AML. Significant bone marrow blast reductions and clinical responses without dose limiting toxicities were achieved at four dose levels across a broad diversity of mutationally-defined AML populations and with a highly favorable safety profile. Tuspetinib to date has

demonstrated a favorable safety profile and has caused no drug-related QTc prolongations, liver or kidney toxicities, muscle damage, or differentiation syndrome, and no myelosuppression with continuous dosing of patients in remission. At a dose of 80 mg, tuspetinib demonstrated notable response rates in R/R AML patients that had never been treated with venetoclax (VEN-naive AML): CR/CRh=36% among all-comers, CR/CRh=50% among patients with mutated FLT3, and CR/CRh=25% in patients with wildtype FLT3.

Following completion of the single agent dose escalation and exploration trial, tuspetinib advanced into the APTIVATE expansion trial of the Phase 1/2 program to evaluate the TUS+VEN doublet in R/R AML patient populations. The TUS+VEN doublet combination therapy maintained a favorable safety profile: no new or unexpected safety signals were observed, and there were no reported drug-related adverse events of QTc prolongation, differentiation syndrome, or deaths. The TUS+VEN doublet combination also achieved significant bone marrow reductions and clinical responses in heavily pretreated R/R AML patients, including those with mutated TP53, mutated NKRAS, wildtype or mutated FLT3, and those who failed prior therapy with venetoclax ("Prior-VEN") or FLT3 inhibitors ("Prior-FLT3i").

Collectively, the clinical safety and efficacy data with TUS single agent and TUS+VEN doublet in R/R AML patients position tuspetinib for development as the TUS+VEN+HMA triplet in newly diagnosed AML patients. Newly diagnosed AML patients are VEN-naïve, FLT3i-naïve, and HMA-naïve – this patient population is expected to be highly responsive to a tuspetinib-containing triplet therapy. Based on the safety and efficacy profile of tuspetinib, we believe that tuspetinib as part of the TUS+VEN+HMA triplet, if approved, could establish a new standard of care therapy for newly diagnosed patients with mutated or unmutated FLT3 and in patients with other adverse genetics. These beliefs related to the potential patient treatment and commercial opportunities are based on management’s current assumptions and estimates, which are subject to change, and there can be no assurance that tuspetinib will ever be approved or successfully commercialized and, if approved and commercialized, that it will ever generate significant revenues. See our “Risk Factors – “We are an early-stage development company with no revenues from product sales.” and “We have a history of operating losses. We expect to incur net losses and we may never achieve or maintain profitability.” in our Annual Report on Form 10-K filed with the SEC on March 26, 2024.

Luxeptinib ("LUX") is an orally administered, highly potent kinase inhibitor that selectively targets defined clusters of kinases that are operative in hematologic malignancies. LUX has demonstrated clinical activity in R/R AML and in R/R B-cell cancer patients but was not consistently achieving the desired exposure levels to drive responses. Absorption of the original G1 formulation hindered the effectiveness of luxeptinib, so a new G3 formulation was developed. Clinical evaluation of the G3 formulation has been completed in a single dose bioavailability study across five dose levels and then with continuous dosing using two different dose levels. The G3 formulation achieved our desired plasma exposure benchmark, with approximately 10-fold better absorption, and better tolerability than the original formulation. We are seeking alternative development paths and collaborations for LUX.

PROGRAM UPDATES

Tuspetinib

Indication and Clinical Trials:

Tuspetinib is an oral, highly potent, small molecule inhibitor of kinases operative in myeloid malignancies and known to be involved in tumor proliferation, resistance to therapy and differentiation. Preclinical in vitro and in vivo studies suggest that Tuspetinib may be an effective monotherapy and combination therapy in patients with hematologic malignancies including AML. An international Phase 1/2 clinical trial in patients with relapsed or refractory AML is ongoing. The dose escalation portion of this study to date has observed evidence of robust clinical activity, including multiple complete responses in R/R AML patients with various disease genotypes, and no toxicity trends that should prevent further dose escalation.

The FDA granted orphan drug designation to tuspetinib for the treatment of patients with AML in October 2018. Orphan drug designation is granted by the FDA to encourage companies to develop therapies for the treatment of diseases that affect fewer than 200,000 individuals in the United States. Orphan drug status provides research and development tax credits, an opportunity to obtain grant funding, exemption from FDA application fees and other benefits. The orphan drug designation also provides us with seven additional years of marketing exclusivity in this indication.

Manufacturing:

Following the Tuspetinib licensing agreement between Aptose and Hanmi on November 4, 2021 (the "Tuspetinib Licensing Agreement"), Aptose received from Hanmi an existing inventory of drug product expected to support continuation of the current Phase 1/2 study. The Company and Hanmi also entered into a separate supply agreement in 2022 for additional production of new drug

substance and drug product to support further clinical development. Additional ba