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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 June 30, 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 August 10, 2023, the registrant had 6,519,201 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

19

Item 3 – Qualitative and Quantitative Disclosures about Market Risk

30

Item 4 – Controls and Procedures

30

 

PART II—OTHER INFORMATION

31

Item 1 – Legal Proceedings

31

Item 1A – Risk Factors

 

Item 6 – Exhibits

32

Signatures

33

 

 

 

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), the 2022 Base Shelf (as defined below), or the 2023 Equity 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, 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

 

img238804965_0.jpg 

 

 

Condensed Consolidated Interim Financial Statements

 

(Unaudited)

 

APTOSE BIOSCIENCES INC.

 

For the three months and six months ended June 30, 2023 and 2022

 

5

 

 


APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of US dollars)

(unaudited)

 

 

 

June 30,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,400

 

 

$

36,970

 

Investments

 

 

14,906

 

 

 

9,989

 

Prepaid expenses

 

 

1,736

 

 

 

2,303

 

Other current assets

 

 

217

 

 

 

257

 

Total current assets

 

 

25,259

 

 

 

49,519

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

Property and equipment

 

 

190

 

 

 

211

 

Right-of-use assets, operating leases

 

 

1,126

 

 

 

1,297

 

Total non-current assets

 

 

1,316

 

 

 

1,508

 

 

 

 

 

 

 

 

Total assets

 

$

26,575

 

 

$

51,027

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,501

 

 

$

6,326

 

Accrued liabilities

 

 

8,084

 

 

 

5,657

 

Current portion of lease liability, operating leases

 

 

387

 

 

 

301

 

Total current liabilities

 

 

11,972

 

 

 

12,284

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

Lease liability, operating leases

 

 

817

 

 

 

1,002

 

Total liabilities

 

 

12,789

 

 

 

13,286

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Share capital:

 

 

 

 

 

 

Common shares, no par value, unlimited authorized shares, 6,375,983
   and
6,157,749 shares issued and outstanding as of June 30, 2023 and
   December 31, 2022, respectively

 

 

439,100

 

 

 

437,520

 

Additional paid-in capital

 

 

71,136

 

 

 

68,869

 

Accumulated other comprehensive loss

 

 

(4,315

)

 

 

(4,318

)

Deficit

 

 

(492,135

)

 

 

(464,330

)

Total shareholders’ equity

 

 

13,786

 

 

 

37,741

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

26,575

 

 

$

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
June 30,

 

 

Six months ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

10,582

 

 

 

7,341

 

 

 

19,393

 

 

 

14,734

 

General and administrative

 

 

3,870

 

 

 

3,332

 

 

 

9,155

 

 

 

7,439

 

Operating expenses

 

 

14,452

 

 

 

10,673

 

 

 

28,548

 

 

 

22,173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

326

 

 

 

111

 

 

 

748

 

 

 

133

 

Foreign exchange loss

 

 

(3

)

 

 

(3

)

 

 

(5

)

 

 

(6

)

Total other income

 

 

323

 

 

 

108

 

 

 

743

 

 

 

127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(14,129

)

 

$

(10,565

)

 

$

(27,805

)

 

$

(22,046

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss)/gain on available-for-sale securities

 

 

(1

)

 

 

(37

)

 

 

3

 

 

 

(37

)

Total comprehensive loss

 

$

(14,130

)

 

$

(10,602

)

 

$

(27,802

)

 

$

(22,083

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per common share

 

$

(2.27

)

 

$

(1.72

)

 

$

(4.47

)

 

$

(3.59

)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

6,234

 

 

 

6,150

 

 

 

6,219

 

 

 

6,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

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

 

 

171

 

 

 

1,138

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,138

 

Common shares issued under the ESPP plan

 

 

1

 

 

 

16

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

16

 

Commitment Shares, 2023 Equity Facility

 

 

8

 

 

 

50

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

50

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

2,643

 

 

 

-

 

 

 

-

 

 

 

2,643

 

Other comprehensive gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3

 

 

 

-

 

 

 

3

 

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

 

(27,805

)

 

 

(27,805

)

Balance, June 30, 2023

 

 

6,376

 

 

$

439,100

 

 

$

71,136

 

 

$

(4,315

)

 

$

(492,135

)

 

$

13,786

 

Balance, December 31, 2021

 

 

6,148

 

 

$

437,386

 

 

$

63,673

 

 

$

(4,316

)

 

$

(422,507

)

 

$

74,236

 

Common shares issued under the 2020 ATM
   Facility

 

 

2

 

 

 

29

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

29

 

Common shares issued upon exercise of stock
   options

 

 

1

 

 

 

26

 

 

 

(11

)

 

 

-

 

 

-

 

 

 

15

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

3,293

 

 

-

 

 

-

 

 

 

3,293

 

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(37

)

 

-

 

 

 

(37

)

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

 

(22,046

)

 

 

(22,046

)

Balance, June 30, 2022

 

 

6,151

 

 

$

437,441

 

 

$

66,955

 

 

$

(4,353

)

 

$

(444,553

)

 

$

55,490

 

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
June 30,

 

 

Six months ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cash flows used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

$

(14,129

)

 

$

(10,565

)

 

$

(27,805

)

 

$

(22,046

)

Items not involving cash:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

769

 

 

 

779

 

 

 

2,643

 

 

 

3,293

 

Depreciation and amortization

 

 

22

 

 

 

30

 

 

 

50

 

 

 

62

 

Loss on disposal of property and equipment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4

 

Amortization of right-of-use assets

 

 

92

 

 

 

111

 

 

 

195

 

 

 

225

 

Interest on lease liabilities

 

 

25

 

 

 

6

 

 

 

50

 

 

 

13

 

Foreign exchange on cash

 

 

2

 

 

 

5

 

 

 

(2

)

 

 

3

 

Accrued interest on investments

 

 

(17

)

 

 

18

 

 

 

(12

)

 

 

7

 

Deferred financing expenses

 

 

50

 

 

 

-

 

 

 

50

 

 

 

-

 

Changes in non-cash operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

311

 

 

 

599

 

 

 

567

 

 

 

813

 

Other current assets

 

 

(55

)

 

 

(20

)

 

 

40

 

 

 

12

 

Operating lease liabilities

 

 

(45

)

 

 

(134

)

 

 

(173

)

 

 

(277

)

Accounts payable

 

 

(2,018

)

 

 

1,249

 

 

 

(2,825

)

 

 

694

 

Accrued liabilities

 

 

1,490

 

 

 

875

 

 

 

2,427

 

 

 

505

 

Cash used in operating activities

 

 

(13,503

)

 

 

(7,047

)

 

 

(24,795

)

 

 

(16,692

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares under 2022 ATM Facility

 

 

1,109

 

 

 

-

 

 

 

1,143

 

 

 

-

 

Cost of offering

 

 

(5

)

 

 

-

 

 

 

(5

)

 

 

-

 

Issuance of common shares under 2020 ATM Facility

 

 

-

 

 

 

29

 

 

 

-

 

 

 

29

 

Issuance of common shares under ESPP plan

 

 

-

 

 

 

-

 

 

 

16

 

 

 

-

 

Issuance of common shares upon exercise of stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15

 

Cash from financing activities

 

 

1,104

 

 

 

29

 

 

 

1,154

 

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from/(used in) investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Maturity (acquisition) of investments, net

 

 

(1,931

)

 

 

10,090

 

 

 

(4,902

)

 

 

17,595

 

Purchase of property and equipment

 

 

(29

)

 

 

(24

)

 

 

(29

)

 

 

(24

)

Cash from/(used in) investing activities

 

 

(1,960

)

 

 

10,066

 

 

 

(4,931

)

 

 

17,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate fluctuations on cash and cash equivalents

 

 

(3

)

 

 

(5

)

 

 

2

 

 

 

(3

)

Increase (decrease) in cash and cash equivalents

 

$

(14,362

)

 

$

3,043

 

 

$

(28,570

)

 

$

920

 

Cash and cash equivalents, beginning of period

 

$

22,762

 

 

$

36,991

 

 

$

36,970

 

 

$

39,114

 

Cash and cash equivalents, end of period

 

$

8,400