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Aptose Biosciences Inc (NASDAQ:APTO) Is At An Inflection Point

Aptose Biosciences Inc (NASDAQ:APTO) Is At An Inflection Point
Written by
Chris Sandburg
Published on
June 21, 2017
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Aptose Biosciences Inc (NASDAQ:APTO) has been a tough stock to hold over the last 12 months. Back in October 2016, Aptose went for more than $2.77 a share. At last close, the company traded for just $1.20 – a close to 60% decline across the period. A number of factors have contributed to this depreciation, and – while some remain unresolved – the coming 6 to 12 months could be pivotal for the company in terms of turning around longer term.If this is the case, at its current price, Aptose could be a nice exposure.Here is what we are looking at as supportive of this statement.For those new to the company, Aptose is a development stage biotechnology company that is working to bring treatments to market in oncology indications. It has two lead assets, one called APTO-253 and the other called CG’806. The former is technically the more advanced of the two in terms of clinical pathway, but is currently stalled for reasons we will get into in a little more detail in a moment. The latter, therefore, while being further away from commercialization, is a de facto primary asset for the company.So, APTO-253 is targeting acute myeloid leukemia (AML) and completed a phase 1 study in this indication. Subsequent to completion, however, the company realized that the drug was causing what's called filter-clogging, which is a problem associated with intravenous (IV) delivery and that – just as its name implies – means that the drug is clogging up the IV filter. It's a serious issue and one that can lead to treatment-related complications, and as a result, the clinical development of this drug was essentially put on hold while Aptose figured out what was wrong and how to fix it. The company did this, but then experienced some manufacturing issues (as yet, we'd not had too much detail on just what these issues were) leading to the January announcement this year that resources were being focused on CG’806 development, while the company tried to get the issues resolved.CG’806 is also targeting ­AML, but with a different mechanism of action. This one is what is called a kinase inhibitor, which specifically inhibits something called Bruton’s tyrosine kinase (BTK). BTK plays a key role in the replicative nature of cancer (it's a signaling pathway kinase) and the ability of cancer cells to inhibit their own apoptosis (which is the process through which healthy cells die).Through inhibition of BTK, the company is hoping it can add CG’806 to a standard of care regimen and induce apoptosis in cancer cells, while concurrently limiting their potential for replication.The drug is currently in preclinical testing, but that is quite a lot of early-stage data indicative of clinical benefit. Management presented some of this data at Bloom and at AACR over the last couple of months, translated to some speculative loading, despite the early stage naturopathy drug in question.So with one drug on what amounts to a hold and another not even in the clinic, how can we suggest this one's worth a look?Well, management expects to resolve the manufacturing issues during the second half of this year and get a phase Ib restarted. Additionally, the company plans to start a human trial of the CG’806 asset (and we're quoting from a May 10Q PR here) "within a year". This means that we should see Aptose file an Investigational New Drug (IND) application the drug very near term. The IND will be based on the above-mentioned data (the data presented by management) and with it pointing towards potentially strong clinical benefit in the very underserved AML population, there's a great chance we'll see some speculative loading ahead of its entry into the clinic.To sum this up, we've got a company that's had some bad luck and is beaten down as a result. By the time 2018 comes around, Aptose should look like a different entity and – as it matures along the clinical development pathway with CG’806 in particular, it should recover quickly.We will be updating our subscribers as soon as we know more. For the latest updates on APTO, sign up below!Disclosure: We have no position in APTO and have not been compensated for this article.

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