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 ~~September~~June 30, ~~2020~~2021

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

For the Transition Period fromto

Commission File Number: 1-35447

APTOSE BIOSCIENCES INC.

(Exact Name of Registrant as Specified in Its Charter)

Canada

98-1136802

(State or other jurisdiction of incorporation or

organization)

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

251 Consumers Road, Suite 1105

Toronto, Ontario, CanadaM2J 4R3
(Address of principal executive offices)

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 ☒~~No☒

~~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~~

As of ~~November 10, 2020~~August 3, 2021 the registrant had ~~88,861,737~~88,948,744 common shares outstanding.

PART I—FINANCIAL INFORMATION

~~Item~~ITEM 1 – ~~Financial Statements~~ FINANCIAL STATEMENTS

Condensed Consolidated Interim Financial Statements

(Unaudited)

APTOSE BIOSCIENCES INC.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of US dollars)

(unaudited)

		September 30, 2020			December 31, 2019		June 30, 2021			December 31, 2020
Assets

Current assets:
Cash and cash equivalents	$	99,727		$	79,842		$	83,343		$	117,393
Investments		32,997			17,758			19,999			5,000
Prepaid expenses		1,106			1,025			1,822			2,554
Other current assets		115			141			141			129
Total current assets		133,945			98,766			105,305			125,076

Non-current assets:
Property and equipment		272			334			208			261
Right-of-use assets, operating leases		1,041			1,376			698			925
Total non-current assets		1,313			1,710			906			1,186

Total assets	$	135,258		$	100,476		$	106,211		$	126,262

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable	$	1,529		$	1,960		$	2,914		$	2,171
Accrued liabilities		3,378			3,058			4,283			4,102
Current portion of lease liability, operating leases		537			521			508			539
Total current liabilities		5,444			5,539			7,705			6,812

Non-current liabilities:
Lease liability, operating leases		658			1,011			321			535
Total liabilities		6,102			6,550			8,026			7,347


Shareholders’ equity:
Share capital:
Common shares, no par value, unlimited authorized shares, 88,861,737 and 76,108,031 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		429,457			365,490
Common shares, no par value, unlimited authorized shares, 88,948,744 and 88,881,737 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively								429,795			429,523
Additional paid-in capital		46,454			34,649			59,556			50,861
Accumulated other comprehensive loss		(4,315	)		(4,298	)		(4,316	)		(4,316	)
Deficit		(342,440	)		(301,915	)		(386,850	)		(357,153	)
Total shareholders’ equity		129,156			93,926			98,185			118,915

Total liabilities and shareholders’ equity	$	135,258		$	100,476		$	106,211		$	126,262

See accompanying notes to condensed consolidated interim financial statements (unaudited).

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim ~~Statement~~Statements of Loss and Comprehensive Loss

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

(unaudited)



	Three months ended September 30						Nine months ended September 30						Three months ended June 30						Six months ended June 30
		2020			2019			2020			2019		2021			2020			2021			2020

Revenue	$	-		$	-		$	-		$	-		$	0		$	0		$	0		$	0

Expenses:
Research and development		7,519			4,751			20,319			11,582			9,831			6,866			18,059			12,800
General and administrative		5,775			2,276			20,690			7,391			3,657			9,015			11,681			14,915
Operating expenses		13,294			7,027			41,009			18,973			13,488			15,881			29,740			27,715

Other income (expense):
Interest income		46			187			485			407			23			116			50			439
Foreign exchange losses		(1	)		(4	)		(1	)		(2	)
Foreign exchange gains/(losses)														(5	)		15			(7	)		0
Total other income		45			183			484			405			18			131			43			439

Net loss	$	(13,249	)		(6,844	)	$	(40,525	)	$	(18,568	)	$	(13,470	)	$	(15,750	)	$	(29,697	)	$	(27,276	)

Other comprehensive gain/(loss):
Unrealized gain/(loss) on securities available-for-sale		(2	)		(5	)		(17	)		13
Unrealized loss on securities available-for-sale														0			(15	)		0			(15	)
Total comprehensive loss	$	(13,251	)		(6,849	)	$	(40,542	)	$	(18,555	)	$	(13,470	)	$	(15,765	)	$	(29,697	)	$	(27,291	)


Basic and diluted loss per common share	$	(0.15	)	$	(0.12	)	$	(0.51	)	$	(0.39	)	$	(0.15	)	$	(0.21	)	$	(0.33	)	$	(0.36	)

Weighted average number of common shares outstanding used in the calculation of basic and diluted loss per common share (in thousands)		85,860			55,454			79,477			47,315

Weighted average number of common shares outstanding used in the calculation of (in thousands)
Basic and diluted loss per common share														88,946			76,275			88,915			76,251

See accompanying notes to condensed consolidated interim financial statements (unaudited)

Accumulated
Common Shares Additional other
Shares paid-in comprehensive
(thousands) Amount capital loss Deficit Total
Balance, December 31, 2019 76,108 365,490 34,649 (4,298 ) (301,915 ) 93,926
Common shares issued pursuant to the public offering 11,854 58,234 - - - 58,234
Common shares issued upon exercise of stock options 215 932 (401 ) - - 531
Stock-based compensation - - 17,007 - - 17,007
Common shares issued upon redemption of restricted share units 685 4,801 (4,801 ) - - -
Other comprehensive loss - - - (17 ) - (17 )
Net loss - - - - (40,525 ) (40,525 )
Balance, September 30, 2020 88,862 $ 429,457 $ 46,454 $ (4,315 ) $ (342,440 ) $ 129,156

Balance, December 31, 2018 38,162 261,072 32,963 (4,316 ) (275,638 ) 14,081
Common shares issued pursuant to the public offering 11,500 19,594 - - - 19,594
Common shares issued pursuant to 2019 share purchase agreement 171 360 - - - 360
Common shares issued under the 2018 ATM 77 178 - - - 178
Common shares issued pursuant to 2018 share purchase agreement 5,502 10,000 - - - 10,000
Common shares issued upon exercise of stock options 34 60 (24 ) - - 36
Common shares issued upon redemption of restricted share units 40 80 (80 ) - - -
Stock-based compensation - - 1,734 - - 1,734
Other comprehensive gain - - - 13 - 13
Net loss - - - - (18,568 ) (18,568 )
Balance, September 30, 2019 55,486 $ 291,344 $ 34,593 $ (4,303 ) $ (294,206 ) $ 27,428

	Common Shares				Additional			Accumulated other
	Shares (thousands)		Amount		paid-in capital			comprehensive loss			Deficit			Total
Balance, December 31, 2020		88,882	$	429,523	$	50,861		$	(4,316	)	$	(357,153	)	$	118,915
Common shares issued upon exercise of stock options		67		272		(112	)		0			0			160
Stock-based compensation		-		-		8,807			-			-			8,807
Net loss		-		-		-			-			(29,697	)		(29,697	)
Balance, June 30, 2021		88,949	$	429,795	$	59,556		$	(4,316	)	$	(386,850	)	$	98,185

Balance, December 31, 2019		76,108	$	365,490	$	34,649		$	(4,298	)	$	(301,915	)	$	93,926
Common shares issued upon exercise of stock options		191		847		(365	)		0			0			482
Stock-based compensation		-		-		12,102			-			-			12,102
Other comprehensive loss		-		0		0			(15	)		0			(15	)
Net loss		-		-		-			-			(27,276	)		(27,276	)
Balance, June 30, 2020		76,299	$	366,337	$	46,386		$	(4,313	)	$	(329,191	)	$	79,219

See accompanying notes to 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 September 30						Nine months ended September 30						Three months ended June 30						Six months ended June 30
		2020			2019			2020			2019		2021			2020			2021			2020

Cash flows from/(used in) operating activities:
Cash flows from (used in) operating activities:
Net loss for the period	$	(13,249	)	$	(6,844	)	$	(40,525	)	$	(18,568	)	$	(13,470	)	$	(15,750	)	$	(29,697	)	$	(27,276	)
Items not involving cash:
Stock-based compensation		4,905			504			17,007			1,734			2,164			7,701			8,807			12,102
Shares issued to Aspire Capital as commitment fees		-			-			-			360
Depreciation and amortization		37			33			115			115			35			37			70			78
Amortization of right-of-use assets		116			115			345			346			117			115			234			229
Interest on lease liabilities		17			22			54			69			12			19			25			37
Unrealized foreign exchange gain		-			5			9			2
Unrealized foreign exchange (loss)/gain														(2	)		3			(5	)		10
Accrued interest on investments		9			(58	)		22			(77	)		2			88			(2	)		28
Change in non-cash operating working capital:
Prepaid expenses		(83	)		437			(81	)		361			124			(137	)		732			2
Other current assets		2			59			26			(8	)
Other assets														(25	)		0			(12	)		24
Operating lease payments		(136	)		(126	)		(401	)		(345	)		(140	)		(134	)		(277	)		(265	)
Account payable		(374	)		(66	)		(431	)		(141	)		1,306			(114	)		743			(57	)
Accrued liabilities		486			735			320			825			1,052			1,008			181			(166	)
Cash used in operating activities		(8,270	)		(5,184	)		(23,540	)		(15,327	)		(8,825	)		(7,164	)		(19,201	)		(15,254	)

Cash flows from/(used in) financing activities:
Issuance of common shares pursuant to Public Offering, net of broker commission and agent legal fees		58,234			-			58,234			19,736
Issuance of common shares under 2018 Share Purchase Agreement		-			-			-			10,000
Issuance of common shares under the 2018 ATM, net of broker commission		-			-			-			178
Cost of offerings		-			-			-			(142	)
Cash flows from (used in) financing activities:
Issuance of common shares upon exercise of stock options		49			17			531			36			85			46			160			482
Cash provided by financing activities		58,283			17			58,765			29,808			85			46			160			482

Cash flows from/(used in) investing activities:
Cash flows from (used in) investing activities:
Maturity (acquisition) of investments, net		(4,398	)		(1,000	)		(15,278	)		(9,000	)		4,999			1,516			(14,996	)		(10,895	)
Purchase of property and equipment		-			(42	)		(53	)		(92	)		0			(37	)		(17	)		(53	)
Cash used in investing activities		(4,398	)		(1,042	)		(15,331	)		(9,092	)
Cash provided by (used in) investing activities														4,999			1,479			(15,013	)		(10,948	)

Effect of exchange rate fluctuations on cash and cash equivalents held		-			(3	)		(9	)		(2	)		1			(3	)		4			(10	)

Increase/decrease in cash and cash equivalents		45,615			(6,212	)		19,885			5,387
Decrease in cash and cash equivalents														(3,740	)		(5,642	)		(34,050	)		(25,730	)

Cash and cash equivalents, beginning of period		54,112			26,898			79,842			15,299			87,083			59,754			117,393			79,842
Cash and cash equivalents, end of period	$	99,727		$	20,686		$	99,727		$	20,686		$	83,343		$	54,112		$	83,343		$	54,112

See accompanying notes to condensed consolidated interim financial statements (unaudited)

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

Aptose Biosciences Inc. (“Aptose” or the “Company”) is a ~~clinical-stage~~clinical‑stage biotechnology company committed to discovering and developing personalized therapies addressing unmet medical needs in oncology. The Company’s executive offices are located in San Diego, California and its head office is located in Toronto, Canada.

Aptose has two clinical-stage programs and a second program that is discovery-stage and partnered with another company. ~~CG026806 (“CG-806”~~Luxeptinib ( previously named CG-806), Aptose’s pan-FMS-like tyrosine kinase 3 / pan-Bruton’s tyrosine kinase inhibitor, is currently enrolling patients in a Phase 1, multicenter, open label, dose-escalation study with expansions to assess the safety, tolerability, PK, and preliminary efficacy of ~~CG-806~~luxeptinib in patients with chronic lymphocytic leukemia (CLL/SLL) or non-Hodgkin lymphomas (NHL). Aptose was granted IND allowance from the U.S Food and Drug Administration (FDA) to initiate a separate Phase 1 trial in patients with relapse or refractory acute myeloid leukemia (AML) in June ~~2020. APTO-253,~~2020, and this trial is also enrolling patients. APTO-253, Aptose’s second program, is a small molecule MYC inhibitor and is currently enrolling patients in a Phase 1b clinical trial for the treatment of patients with R/R blood cancers, including AML and high-risk Myelodysplastic Syndrome.

We are advancing ~~first-in-class~~first-in-class targeted agents to treat life-threatening cancers that, in most cases, are not elective for patients and require immediate treatment. However, ~~COVID-19~~COVID-19 has caused global economic and social disruptions that could adversely affect our ongoing and planned research and development of our clinical-stage programs including but not limited to drug manufacturing campaigns, clinical trial activities including enrollment of patients in our ongoing and planned clinical trials, collection and analysis of patient data and eventually, the reporting of results from our trials.

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, drug manufacturing costs, laboratory supplies and materials, and professional fees.

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.

We believe that our cash, cash equivalents and investments on hand at ~~September~~June 30, ~~2020~~ 2021 will be sufficient to finance our operations for at least 12 months from the issuance date of these financial statements. 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.

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 related to ~~COVID-19,~~COVID-19, 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.

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.

The accompanying unaudited condensed consolidated interim financial statements have been prepared in conformity with generally accepted accounting principles in the United States, or GAAP, for the interim financial information and the rules and regulations of the Securities and Exchange Commission, or SEC, related to quarterly reports on Form ~~10-Q.~~10-Q. Accordingly, they do not include all of the information and disclosures required by GAAP for annual audited financial statements and should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form ~~10-K,~~10-K, or Annual Report, filed with the SEC on March ~~10, 2020.~~ 23, 2021. In the opinion of management, these condensed consolidated interim financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year.

Three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019~~2020

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

During the ~~three and nine~~six months ended ~~September~~June 30, ~~2020,~~ 2021, there have been no changes to our significant accounting policies as described in our Annual Report on Form ~~10-K~~10-K for the fiscal year ended December 31, ~~2019.~~2020.

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. Significant accounting policies and estimates made by management are the assumptions used in determining the valuation of share-based compensation and the estimates related to prepaid and accrued research and development costs.

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.

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~~R1‑low or ~~A-low~~A‑low investments and the Company invests only in ~~instruments that are issued by~~ highly rated ~~Canadian~~ corporations and treasury bills, which are capable of prompt liquidation.

Cash and cash equivalents consists of cash of ~~$3.362 million (December~~ $764 thousand ( December 31, ~~2019 - $1.640 million)~~2020 ‑ $329 thousand), deposits in high interest savings accounts, money market funds and ~~other term deposits~~accounts with ~~original~~ maturities less than 90 days totaling ~~$96.365~~$82.579 million ~~(December~~ ( December 31, ~~2019 - $78.202~~2020 ‑ $117.064 million).

Three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019~~2020

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

4.	Right-of-use ~~assets, operating leases:~~assets:

		Nine months ended September 30, 2020		Year ended December 31, 2019		Six months ended June 30, 2021			Year ended December 31, 2020

Right-of-use assets, beginning of period	$	1,837		1,570		$	1,848		$	1,837
Additions to right-of-use assets		10		267			7			11
Right-of-use assets, end of period		1,847		1,837			1,855			1,848
Accumulated amortization		(806	)	(461	)		(1,157	)		(923	)
Right-of use assets, NBV		1,041		1,376		$	698		$	925

5.	Investments:

Investments consisted of the following as of ~~September~~June 30, ~~2020~~ 2021 and December 31, ~~2019:~~2020:

September 30, 2020
Cost Unrealized gain Market value

Commercial notes $ 8,999 1 9,000
United States Treasury Bills 23,997 - 23,997
$ 32,996 1 32,997

	June 30, 2021
	Cost		Unrealized gain		Market value

Commercial notes	$	19,999		0		19,999
	$	19,999		0		19,999

	December 31, 2020

	Cost		Unrealized gain		Market value

United States Treasury Bills	$	5,000		0		5,000
	$	5,000		0		5,000

December 31, 2019
Cost Unrealized gain Market value

Guaranteed investment certificates, issued by a Canadian financial institution $ 12,008 18 12,026
Commercial notes 3,736 - 3,736
Canadian provincial promissory note 1,996 - 1,996
$ 17,740 18 17,758

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.

APTOSE BIOSCIENCES INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019~~2020

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

The following table presents the fair value of the Company’s financial instruments for the periods presented:


		September 30, 2020		Level 1		Level 2		Level 3	June 30, 2021		Level 1		Level 2		Level 3
Assets

High interest savings account	$	96,365	$	-	$	96,365		-
Money Market accounts									$	207	$	0	$	207	$	0
Money Market Funds										38,501		0		38,501		0
High interest savings accounts										43,871		0		43,871		0
Commercial notes		9,000		-		9,000		-		19,999		0		19,999		0
United States Treasury Bill		23,997		-		23,997		-
	$	129,362	$	-	$	129,362	$	-	$	102,578	$	0	$	102,578	$	0

	December 31, 2020		Level 1		Level 2		Level 3
Assets

Money Market accounts	$	668	$	0	$	668	$	0
Money Market Funds		44,000		0		44,000		0
High interest savings accounts		48,397		0		48,397		0
United States Treasury Bill		5,000		0		5,000		0
Government of Canada Treasury Bill		23,999		0		23,999		0
	$	122,064	$	0	$	122,064	$	0

December 31, 2019 Level 1 Level 2 Level 3

Assets

High interest savings account $ 2,989 $ - $ 2,989 $ -
Commercial notes 6,235 - 6,235 -
Canadian provincial promissory notes 5,493 - 5,493 -
Guaranteed investment certificates, issued by a Canadian financial institution 81,243 - 81,243 -
$ 95,960 $ - $ 95,960 $ -

Accrued liabilities:

Accrued liabilities as of ~~September~~June 30, ~~2020~~ 2021 and December 31, ~~2019~~ 2020 consisted of the following:

September 30, December 31,
2020 2019

Accrued personnel related costs $ 1,674 $ 1,739
Accrued research and development costs 1,526 1,062
Other accrued costs 178 257
$ 3,378 $ 3,058

	June 30,		December 31,
	2021		2020

Accrued personnel related costs	$	1,493	$	1,917
Accrued research and development expenses		2,158		1,932
Other accrued expenses		632		253
	$	4,283	$	4,102

Lease liability

Aptose leases office space and lab space in San Diego, California. The lease for the office space expires on March 31, 2023 and can be extended for an additional 5 year period. The lease for our lab space expires on February 28, 2022. We lease office space in Toronto, Ontario, ~~Canada. The~~Canada and the lease for this location expires on June 30, 2023 with an option to renew for another ~~5-year~~5-year period. 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.

APTOSE BIOSCIENCES INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019~~2020

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

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

Years ending December 31,
2020	$	136
2021		552	$	278
2022		464		467
2023		119		120
Thereafter		-		0
	$	1,271	$	865

To calculate the lease liability, the lease payments in the table above were discounted over the remaining term of the leases using the Company’s incremental borrowing rate as at January 1, 2019 for existing leases at the time of adopting the Topic 842, and for new leases after the date adoption, as at the date of the execution date of the new lease. The following table presents the weighted average remaining term of the leases and the weighted average discount rate:

September 30, 2020 December 31, 2019
Weighted-average remaining term – operating leases (in years) 2.4 3.3
Weighted-average discount rate – operating leases 5.40 % 5.43 %

Lease liability, current portion 537 521
Lease liability, long term portion 658 1,011
Lease liability, total 1,195 1,532

~~Right-of-use assets obtained in exchange for operating lease liabilities are as follows:~~

Nine months ended
September 30, 2020 Nine months ended
September 30, 2019

Right-of-use assets recorded upon adoption of Topic 842, beginning of period $ - $ $1,570
Right-of-use assets obtained in exchange for new operating lease liabilities in the period $ 10 $ $267

	June 30,			December 30,
	2021			2020
Weighted-average remaining term – operating leases	1.64 Years			2.1 Years
Weighted-average discount rate – operating leases		5.39	%		5.40	%

Lease liability, current portion	$	508		$	539
Lease liability, long term portion		321			535
Lease liability, total	$	829		$	1,074

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

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020

Operating lease cost	$	129	$	134	$	259	$	267
Operating cash flows from operating leases	$	140	$	134	$	277	$	265

Three months ended
September 30, Nine months ended
September 30,
2020 2019 2020 2019

Operating lease cost $ 132 $ 142 $ 399 $ 431
Operating cash flows - operating leases $ 136 $ 126 $ 401 $ 345

Share capital:

The Company has authorized share capital of an unlimited number of common voting shares.

~~(a)~~

Equity issuances:

~~(i)~~

~~July/August 2020 Confidentially Marketed Public Offering (CMPO)~~

2020 At‑The‑Market (“ATM”) Facility

On ~~July 20,~~May 5, 2020, and August 10, 2020, the Company completed a confidentially marketed public offering through the issuance of 11,854,472 common shares at a price of $5.25 per share for gross proceeds of $62.236 million (approximately $58.234 million net of share issue costs). Costs associated with the proceeds consisted of a 6% cash commissions and share issue costs, which consisted of agent commission, legal and professional fees and listing fees.

~~(ii)~~

~~June 2019 Confidentially Marketed Public Offering (CMPO)~~

On June 3, 2019, the Company completed a confidentially marketed public offering through the issuance of 11,500,000 common shares at a price of $1.85 per share for gross proceeds of $21.275 million (approximately $19.594 million net of share issue costs). Costs associated with the proceeds consisted of a 7% cash commissions and share issue costs, which consisted of agent commission, legal and professional fees and listing fees.

~~(iii)~~

~~2019 Share Purchase agreement~~

On May 7, 2019, the Company entered into the 2019 Aspire Purchase Agreement, which provided that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $20 million of Common Shares over approximately 30 months. Pursuant to the terms of this agreement, on May 13, 2019, the Company issued 171,428 Common Shares (“Commitment Shares”) to Aspire Capital in consideration for entering into the 2019 Aspire Purchase Agreement for a total cost of $360 thousand. The Aspire share purchase agreement was terminated on December 16, 2019. As at September 30, 2019, the Company had not issued any shares under the 2019 Aspire Purchase Agreement, other than the Commitment Shares.

~~(iv)~~

~~2018 Share Purchase agreement~~

On May 30, 2018, the Company entered into the 2018 Aspire Purchase Agreement, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $20 million of Common Shares over approximately 30 months. Pursuant to the terms of this agreement, on June 8, 2018, the Company issued 170,261 Common Shares (“Commitment Shares”) to Aspire Capital in consideration for entering into the 2018 Aspire Purchase Agreement for a total cost of $600 thousand. During the period from January 1, 2019 up to May 24, 2019, the date the 2018 Aspire Purchase Agreement was terminated, the Company issued 5,502,433 common shares under the agreement at an average price of $1.82 per share for gross and net proceeds of $10 million. On a cumulative basis up to May 24, 2019, the Company raised a total of approximately $11.9 million gross and net proceeds under the 2018 Aspire Purchase Agreement. As of May 24, 2019, the Company has issued 6,409,980, the maximum number of shares issuable under this facility without shareholder approval.

~~(v)~~

~~2018 At-The-Market (“ATM”) Facility~~

~~On March 27, 2018,~~ the Company entered into an ~~“At-The-Market” Facility (“ATM”)~~ equity distribution agreement with ~~Cantor Fitzgerald~~Piper Sandler and Canaccord Genuity acting as ~~sole agent.~~co-agents in connection with the 2020 ATM Facility. Under the terms of ~~this facility,~~the 2020 ATM Facility, the Company may, from time to time, sell ~~shares of our common stock~~Common Shares having an aggregate offering value of up to ~~$30~~$75 million through ~~Cantor Fitzgerald~~Piper Sandler and Canaccord Genuity on the Nasdaq Capital Market. During the ~~nine~~year ended December 31, 2020 and in the six months period ended ~~September~~June 30, ~~2019,~~ 2021, the Company ~~issued 77,349~~did not issue any shares under ~~this~~the 2020 ATM equity facility at an average price of $2.37 for gross proceeds of $183 thousand ($178 thousand net of share issue costs). Costs associated with the proceeds consisted of a 3% cash commission. On a cumulative basis to September 30, 2019, the Company has raised a total of $11.2 million gross proceeds ($10.9 million net of share issue costs) under the ATM Facility. ~~The Company terminated this agreement on May 24, 2019.~~

APTOSE BIOSCIENCES INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019~~2020

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

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

The effect of any potential exercise of the Company’s stock options outstanding during the three and ~~nine~~six month periods ended ~~September~~June 30, 2021 and June 30, 2020 ~~and September 30, 2019~~ has been excluded from the calculation of diluted loss per common share as it would be ~~anti-dilutive.~~

~~10.~~

~~Stock-based~~Stock‑based compensation:

~~(a)~~

Stock ~~options~~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) 6,343,242, 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 Plan.

Under both the ~~Company’s stock~~Share Option Plan and the New Incentive Plan, the exercise price of each option plan, options, rights and other entitlements may be granted to directors, officers, employees and consultants of the Company to purchase up to a maximum of 17.5% of the total number of outstanding common shares, estimated at 15.6 million options, rights and other entitlements as at September 30, 2020. Options are granted at the fair market value of the common shares onequals 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. ~~Options vest~~Vesting is provided for at ~~various rates (immediate~~the discretion of the Board of Directors and the expiration of options is to ~~four years) and have a term~~be no greater than 10 years from the date of ~~10 years.~~grant.

~~Stock~~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 ~~transactions for~~grant using the ~~nine months ended September 30, 2020 and September 30, 2019, are summarized~~Black‑Scholes option pricing model at the grant date. The stock‑based compensation cost of the options is recognized as ~~follows:~~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.

Option numbers are in (000’s)
Nine months ended
September 30, 2020
Options Weighted average
exercise price Weighted average remaining
contractual
life (years)

Outstanding, beginning of period 5,941 $ 2.84
Granted 6,352 6.82
Exercised (215 ) 2.49
Forfeited (71 ) 2.87
Outstanding, end of the period 12,007 4.93 8.2
Exercisable, end of the period 4,310 2.99 6.5
Vested and expected to vest, end of period 10,853 4.82 8.1

The ESPP, which will be administered by the Board of Directors, allows eligible employees of the Company with an opportunity to purchase Common Shares through accumulated payroll deductions up to a maximum 15% of eligible compensation. The ESPP will be implemented by 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 made available for sale under the ESPP will be 1,700,000 Common Shares.

APTOSE BIOSCIENCES INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019~~2020

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

The Company has not established a first offering period; there are 0 options outstanding under the ESPP as of June 30, 2021.

Stock option transactions for the six months ended June 30, 2021 and June 30, 2020, are summarized as follows:

As of ~~September~~June 30, ~~2020,~~ 2021, there was ~~$14.1~~$9.34 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 ~~1.7~~1.73 years.

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

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

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:

the current period related to these modifications for the vested and unvested options, respectively.

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. The following table presents the activity under the SIP plan for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019~~2020 the units outstanding.

On March 10, 2020, the Company granted 645,000 restricted share units (RSUs) with a vesting term of three months. On May 5, 2020, the vesting term on the RSUs was extended from three months to four months. On July 10, 2020, all of these restricted share units were vested and were redeemed for 645,000 common shares.

On June 3, 2019, the Company granted 80,000 restricted share units (RSUs), 40,000 of which have a vesting term of three months and the balance have a vesting term of one year. On May 5, 2020, the vesting term on the balance was extended from one year to one year and one month. On July 2, 2020, the remaining of these restricted share units were vested and were redeemed for 40,000 common shares.

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

The grant date fair value of the ~~March 10, 2020 and June 3, 2019~~ RSUs ~~were~~was determined as the closing value of the common shares of the Company on the Nasdaq Stock Market on the date prior to the date of grant.

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

~~Item~~ITEM 2 – ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ 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, 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~~“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”~~“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as updated and supplemented in Part II, Item 1A in this Quarterly Report on Form 10-Q. 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~~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 interim financial statements and accompanying notes contained in this Quarterly Report on Form 10-Q and our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Aptose Biosciences Inc. (“we”, “our”, “us”, “Aptose” or the “Company”) is a science-driven biotechnology company advancing first-in-class targeted agents to treat life-threatening cancers, such as acute myeloid leukemia (“AML”), high-risk myelodysplastic syndromes (“MDS”), chronic lymphocytic leukemia (“CLL”) and other hematologic malignancies. Based on insights into the genetic and epigenetic profiles of certain cancers and patient populations, Aptose is building a pipeline of novel oncology therapies directed at dysregulated processes and signaling pathways. Aptose is developing targeted medicines for precision treatment of these diseases to optimize efficacy and quality of life by minimizing the side effects associated with conventional therapies. We currently have in development two molecules: ~~CG026806 (“CG-806”)~~luxeptinib (CG-806) and APTO-253, both being evaluated for safety, tolerability, pharmacokinetics and signals of efficacy in Phase 1 clinical trials. Each molecule is described below.

~~CG-806~~Luxeptinib is an orally administered, highly potent first-in-class FMS-like tyrosine kinase 3 (“FLT3”)/Bruton’s tyrosine kinase (“BTK”) inhibitor that selectively targets defined clusters of kinases ~~that are~~ operative in myeloid and lymphoid hematologic malignancies. This mutationally agnostic small molecule anticancer agent is currently being evaluated in a Phase 1a/b study for the treatment of patients having B-cell malignancies including classic CLL, small lymphocytic lymphoma (“SLL”) and certain non-Hodgkin’s lymphomas (“NHL”) that are resistant/refractory/intolerant to other therapies. ~~In addition, Aptose recently received IND allowance and has initiated patient dosing~~Under a separate Investigational New Drug (“IND”), luxeptinib is being evaluated in a Phase 1a/b study ~~to develop CG-806~~ for the treatment of patients with relapsed/refractory ~~acute myeloid leukemia~~AML (“R/R AML”), including the emerging populations resistant to FLT3 inhibitors. In this trial of patients with R/R AML, the CG-806 starting dose of 450 mg BID was selected because the plasma from B-cell cancer patients at that dose completely inhibited phospho-FLT3, suggesting that this starting dose might be active in the AML patient population. It is ~~important to note that CG-806 now is undergoing formal clinical development in both~~hoped luxeptinib can serve patients across lymphoid and myeloid ~~hematologic malignancies.~~malignancies and combine well with other agents to extend its application to multiple lines of therapy.

APTO-253 is a first-in-class small molecule therapeutic agent that clinically inhibits expression of the MYC oncogene without causing, to date, general myelosuppression of the bone marrow. The MYC oncogene is overexpressed across many hematologic cancers, including AML and certain B cell malignancies, as well as certain solid tumor indications. MYC acts as a transcription factor that regulates cell growth, proliferation, differentiation and apoptosis, and overexpression of MYC amplifies new sets of genes to promote survival of cancer cells. APTO-253 ~~suppresses expression of the MYC oncogene in AML cells and depletes those cells of the MYC oncoprotein, leading to apoptotic cell death. APTO-253~~ is currently being evaluated in a Phase 1b1a/b study for the treatment of patients with R/R AML and high-risk MDS. APTO-253 may serve as a safe and effective MYC inhibitor for AML/MDS patients that combines well with other agents and does not significantly impact the normal bone marrow.

CG-806 is being developed with the intent to deliver the agent as an oral therapeutic for the treatment of R/R AML and for the treatment of a spectrum of B cell malignancies (including but not limited to CLL, SLL and NHL).

On March 25, 2019, we announced that the U.S Food and Drug Administration (“FDA”) granted Aptose Investigational New Drug (“IND”) allowance to initiate its Phase 1a/b clinical trial for CG-806. The clinical trial is a multicenter, open label, dose-escalation study with additional optional expansion cohorts to assess the safety, tolerability, pharmacokinetics and pharmacodynamic effects, and preliminary efficacy of CG-806 in patients with CLL, SLL or NHL. In this study, CG-806 is administered in gelatin capsules twice daily (“BID”) during a 28-day cycle.

As of the date of this report, we have initiated thirty clinical sites for the Phase 1a/b trial in patients with CLL/SLL or NHL which include specialty regional cancer care centers as well as large hospitals and key academic institutions. As of the date of this report, we have completed the first, second, third and fourth dose levels (150 mg, 300 mg, 450 mg and 600 mg BID, respectively). Cohort 5 (750mg) enrollment is ongoing. Under an FDA-approved accelerated titration protocol, only one patient was required at each of the first two dose levels, followed by three patients at each dose level thereafter. Intra-patient dose escalation is allowed if the higher dose is safe in three or more patients, and additional patients may be enrolled at dose levels previously declared safe. To date, we have reported that among enrolled patients with an array of B-cell malignancies, three classic CLL patients have received CG-806 and all three demonstrated inhibition of phospho-BTK and “on-target” lymphocytosis, indicating target engagement and pharmacologic activity of CG-806. As CG-806 moves from low/intermediate dose levels and into the higher dose levels, it is hoped that an optimal dose can be selected that demonstrates formal clinical responses without excessive toxicity.

Aptose is also advancing CG-806 into myeloid malignancies, with an initial focus on AML, in a separate Phase 1a/b trial. On June 29, 2020, the Company announced that it had received allowance from the FDA to proceed into a study in R/R AML with a starting dose of 450 mg BID, and subsequently on October 19, 2020, announced that it had initiated dosing of the first patient with AML. As of the date of this report we have initiated five clinical sites for the Phase 1a/b trial.

The clinical trial is a multicenter, open label, dose-escalation study with additional optional expansion cohorts to assess the safety, tolerability, pharmacokinetics and pharmacodynamic effects, and preliminary efficacy of CG-806 in patients with R/R AML. In this study, CG-806 is administered in gelatin capsules BID during a 28-day cycle. Our strategy was to identify a starting dose of CG-806 that we believe could be therapeutically active in critically ill patients with R/R AML. In our ongoing Phase 1a/b study in patients with CLL and other B-cell malignancies, 450 mg BID CG-806 delivered plasma levels that completely inhibited phospho-FLT3 in a plasma inhibitory activity (PIA) reporter cell assay, suggesting that the 450 mg BID dose may be active in patients with AML. Aptose plans to dose escalate beyond the 450 mg BID dose level, provided the 450 mg BID dose level is safe and well tolerated in R/R AML patients. Based on strong preclinical evidence of CG-806’s activity against AML – including demonstration of mutation-agnostic and genotype-agnostic potency, particularly compared against other FLT3 inhibitors, and its ability to safely cure AML in murine leukemia models – we believe CG-806 may offer hope to the fragile and difficult-to-treat AML patient population.

The FDA has granted orphan drug designation to CG-806 for the treatment of patients with AML. 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.

During fiscal years 2017 and 2018, we created a scalable chemical synthetic route for the manufacture of CG-806 drug substance and have scaled the manufacture of API (active pharmaceutical ingredient, or drug substance) to multi-kg levels, we completed the manufacture of a multi-kg batch of API under Good Manufacturing Product (“GMP”) conditions as our API supply for our first-in-human clinical trials, and we manufactured under GMP conditions two dosage strengths of capsules to serve as our clinical supply in those human studies. During fiscal 2019, we completed successful manufacture of multiple batches of API and drug product, and planned numerous GMP production campaigns to supply the ongoing trial and planned trials into the future. To date we have been able to manufacture API and capsules to support clinical supplies under GMP conditions. We are continuing our manufacturing campaigns in the current 2020 fiscal period and have commenced scale-up and tech transfer activities to support additional manufacturing capacity for the ongoing and planned clinical trials of CG-806. Additional research and development funds are being utilized to support exploratory formulation studies in an ongoing effort to craft a superior formulation for later stage development of CG-806.

On April 27, 2020, we presented the early clinical data on CG-806 at the AACR Virtual Annual Meeting I (April 27-28) in lieu of the live oral presentation originally planned. A video summary of Abstract # 9967 - ~~Early clinical findings from a Phase 1a/b dose escalation trial to evaluate the safety and tolerability of CG-806 in patients with relapsed or refractory CLL/SLL or non-Hodgkin’s lymphomas~~ described the first-in-human tests of CG-806 which are being carried out in a Phase 1a/b clinical study in patients with significant unmet needs including patients with relapsed or refractory CLL, SLL or NHL who had been failed by or been intolerant to two lines of established therapy. We noted that the second patient, treated at the 300 mg BID dose level, represented a classic CLL patient that developed a brisk lymphocytosis (evidence of BTK target engagement and evidence of pharmacologic activity), and that enrollment was continuing.

~~On June 12, 2020, we presented new clinical data on CG-806 in a poster presentation at the 25th Congress of the EHA. The poster,~~ ~~Early Clinical Findings from a Phase 1 a/b Dose Escalation Trial to Evaluate the Safety and Tolerability of CG-806 in Patients with Relapsed or Refractory CLL/SLL or Non-Hodgkin’s Lymphomas~~ (EHA2020 Abstract# EP711), reviewed CG-806 data for eight patients (as of the data cut-off date on May 5, 2020) with relapsed or refractory CLL,SLL or NHL in the first in-human Phase 1a/b, open-label, single arm, multicenter dose-escalation clinical study. Data from the ongoing trial demonstrated CG-806 was well-tolerated in patients treated at 150 mg, 300 mg, 450 mg BID over multiple cycles, with no dose-limiting toxicities or serious adverse events observed, supporting continued dose escalation. CG-806 treatment achieved human steady state PK levels known to be effective in murine tumor models and led to complete inhibition of phospho-BTK and multiple CLL survival pathways. CG-806 treatment also led to lymphocytosis in both classic CLL patients entering study with elevated lymphocyte counts and led to complete inhibition of phospho-FLT3, suggesting that dose levels evaluated in this study may be therapeutic in patients with AML.

~~On June 22, 2020, we presented new preclinical data on CG-806 in a poster presentation at the AACR Virtual Annual II 2020. The poster,~~ ~~CG-806, a First-in-Class FLT3/BTK Inhibitor, and Venetoclax Synergize to Inhibit Cell Proliferation and to Induce Apoptosis and Aggressive B-cell Lymphomas~~, illustrated how CG-806 simultaneously inhibits the driver BCR pathway and PI3K/AKT, NFᴋB and MAPK-mediated rescue pathways to kill aggressive double-hit and double-expressor B-cell lymphoma cells. Overall, the presented work provided additional mechanistic evidence to support the clinical development of CG-806 as a single agent or in combination with venetoclax in patients with aggressive B-cell lymphomas harboring unfavorable BCL2/MYC/BCL6 translocations and / or overexpression.

APTO-253, a small molecule inhibitor of MYC gene expression, is being evaluated by Aptose in a Phase 1b clinical trial in patients with R/R hematologic malignancies, particularly R/R AML and high-risk MDS. The Phase 1b, multicenter, open-label, dose-escalation clinical trial of APTO-253 is designed to assess the safety, tolerability, pharmacokinetics and pharmacodynamic responses and efficacy of APTO-253 as a single agent and determine the recommended Phase 2 dose. APTO-253 is being administered once weekly, over a 28-day cycle. The dose escalation stage of the study could potentially enroll up to 20 patients with R/R AML or high-risk MDS. The study is designed to then transition, as appropriate, to single-agent expansion cohorts in R/R AML and/or high-risk MDS.

As of the date of this report, we have multiple active sites recruiting patients in the dose escalation stage of the trial. As of the date of this report, we have completed enrollment and treatment of patients on the first, second, third and fourth dose levels (20, 40, 66, and 100 mg/m², respectively). Under an FDA-approved accelerated titration protocol, only one patient was required at each of the first two dose levels, followed by three patients at each dose level thereafter. Aptose is currently enrolling and treating patients in the fifth dose level (150 mg/m²) of APTO-253. During the second quarter of 2020, the FDA allowed an amendment for Aptose to initiate more aggressive dose escalations with APTO-253, provided the tolerability profile remains favorable. The first four dosing cohorts have enrolled a mix of patients with AML and MDS. To date, we have observed meaningful reductions in MYC expression in peripheral blood mononuclear cells (PBMCs) from treated patients with AML and MDS, demonstrating MYC target engagement and mechanistic proof of concept in different indications.

~~We are continuing to manufacture additional drug substance and drug product for use in the ongoing trial.~~

We are exploring additional drug delivery methods for APTO-253 and plan to initiate additional non-clinical studies for solid tumor and hematologic cancer development. As preparing, submitting, and advancing applications for regulatory approval, developing drugs and drug product and clinical trials are sometimes complex, costly, and time-consuming processes, an estimate of the future costs is not reasonable at this time.

We are advancing first-in-class targeted agents to treat life-threatening cancers that, in most cases, are not elective for patients and require immediate treatment. However, COVID-19 has caused global economic and social disruptions that could adversely affect our ongoing or planned research and development and clinical trial activities including enrollment of patients in our ongoing clinical trials, collection and analysis of patient data and eventually, the reporting of top-line results from our trials.

Our team proactively addressed these new challenges swiftly and appropriately, implementing safeguards and procedures to ensure both the safety of our employees and stakeholders, and accommodate the potential challenges due to COVID-19. Aptose was early in directing its employees to work-from-home and provided the tools to minimize productivity disruptions. Our ~~Clinical Operations~~clinical operations team reached out to active and future clinical sites to determine their needs and challenges and assist where possible, including virtual monitoring of patients, which reduces patients’ visits. We also have contacted our drug manufacturers to identify any potential supply chain disruptions and are adjusting accordingly. ~~During the early part of~~Since the first quarter of 2020, we began to carefully monitor the potential impact of COVID-19, and on a regular basis, we communicated with investigators at our clinical sites to gain an evolving understanding of competing COVID-19 related activities and clinical trial related activities.

In the beginning of April 2020, we learned that some of our larger clinical sites that are impacted by COVID-19 may either postpone or face delays in the enrollment of patients on all on-going clinical trials dueorder to a number of factors, including the re-allocation of resources and to avoid clinical trial patients being exposed to COVID-19. Such measures taken at the clinical sites could lead to a slowdown in the enrollment of patients on our trials at these sites. To minimize the impact of COVID-19 on the enrollment of patients into our trials, we ~~focused~~continue to focus efforts ~~on our other~~across a diverse range of clinical sites, including both larger clinical sites ~~and~~as well as regional cancer care ~~sites that are not/less impacted by COVID-19 to recruit patients into the fourth cohort.~~sites. While it is difficult to estimate the ~~duration and~~potential impact of COVID-19 on the larger clinical sites and regional cancer care sites, as of the date of this report, we have not experienced and do not foresee material delays to the enrollment of patients or timelines for the ~~CG-806 Phase 1a/b B-cell malignancy trial~~luxeptinib clinical trials due to the variety of clinical sites that we have actively ~~recruited for this trial.~~recruited. APTO-253, which is administered intravenously, requires the need for hospital / clinical site resources to assist and monitor patients during each infusion and based on the current conditions caused by COVID-19, future enrollment of patients on this trial is likely to be negatively impacted.

While as of the date of this report we have not experienced any material delays in initiating our CG-806 Phase 1 clinical study in AML due to COVID-19, we are conducting site initiation visits remotely which could result in delays in site activations and negatively impact this trial. Additionally, COVID-19 could negatively impact patient enrollment if our clinical sites are unable to enroll patients due to either a lack of administrative resources at their sites or decisions made at the clinical sites to limit patient exposure to COVID-19.

As of the date of this report, we have not experienced material delays in the manufacturing of ~~CG-806~~luxeptinib or APTO-253 related to ~~COVID-19.~~COVID‑19. Should our manufacturers experience shortages in staffing or be required to shut down their facilities due to COVID-19 for an extended period of time, our trials may be negatively impacted.

Luxeptinib is being developed with the intent to deliver the agent as an oral therapeutic for the treatment of R/R AML and for the treatment of a spectrum of B cell malignancies (including but not limited to CLL, SLL and NHL).

On March 25, 2019, we announced that the U.S. Food and Drug Administration (“FDA”) granted Aptose IND allowance to initiate its Phase 1a/b clinical trial for luxeptinib. The clinical trial is a multicenter, open label, dose-escalation study with additional optional expansion cohorts to assess the safety, tolerability, pharmacokinetics and pharmacodynamic effects, and preliminary efficacy of luxeptinib in patients with CLL, SLL or NHL. In this study, luxeptinib is administered in gelatin capsules twice daily (BID during a 28-day cycle).

As of the date of this report, we have multiple active clinical sites for the Phase 1a/b trial in patients with CLL/SLL or NHL which include specialty regional cancer care centers as well as large hospitals and key academic institutions. As of the date of this report, we have completed the first, second, third and fourth dose levels (150 mg, 300 mg, 450 mg and 600 mg BID, respectively). Patient treatment in cohort 5 (750 mg) is ongoing. Under an FDA-approved accelerated titration protocol, only one patient was required at each of the first two dose levels, followed by three patients at each dose level thereafter. Intra-patient dose escalation is allowed if the higher dose is safe in three or more patients, and additional patients have been and may continue to be enrolled at dose levels previously declared safe. To date, we have reported that among treated patients with an array of B-cell malignancies, we have observed inhibition of phospho-BTK and modest tumor reductions in different tumor types, indicating target engagement and pharmacologic activity of luxeptinib. Of note, during the European Hematology Association (EHA) Congress in June 2021, we reported that many of the heavily pretreated B-cell cancer patients previously receiving 2-12 prior regimens had rapidly progressed immediately before starting luxeptinib treatment, resulting in a trend of tumor growth early in treatment, often followed by tumor reductions after staying on treatment with luxeptinib. Response evaluations were available for 12 patients after starting treatment, and eight out of these 12 patients had various reductions of lesion size or IgM measurements compared to baseline, demonstrating anti-tumor activity. FDG PET-CT scans in one FL patient, who had 2 prior regimens, revealed lesion growth during treatment with luxeptinib at 450 mg BID for 7 cycles. After dose-escalation to 600 mg BID in Cycle 8, lesion measurements demonstrated continuous reduction. By C15D1, target lesions shrank by 42.5% and 11.3% when compared with peak tumor size and baseline measurements, respectively. In that patient luxeptinib was well-tolerated with single agent activity for the duration of 16+ cycles of therapy. One Waldenstrom’s macroglobulinemia (WM) patient in Cohort 5 (750 mg BID), who had 2 prior regimens including ibrutinib, had her IgM level reduced by 24.9% by C3D1 compared with baseline. As luxeptinib moves from low/intermediate dose levels and into the higher dose levels, it is hoped that an optimal dose can be selected that demonstrates formal clinical responses without excessive toxicity.

We are also advancing luxeptinib into myeloid malignancies, with an initial focus on AML, in a separate Phase 1a/b trial. On June 29, 2020, we announced that we had received allowance from the FDA to proceed into a study in R/R AML with a starting dose of 450 mg BID, and subsequently on October 19, 2020, announced that we had initiated dosing of the first patient with AML. The clinical trial is a multicenter, open label, dose-escalation study with additional optional expansion cohorts to assess the safety, tolerability, pharmacokinetics and pharmacodynamic effects, and preliminary efficacy of luxeptinib in patients with R/R AML. As of the date of this report we have multiple active clinical sites for the Phase 1a/b trial. Aptose completed the 450 mg BID and 600 mg BID dose cohorts and has fully enrolled patients with the 750 mg BID dose cohort. During the EHA Congress in June 2021, no data were presented on the 600 mg and 750 mg dose levels, but we did present dose-dependent inhibition of phospho-FLT3, -BTK, -SYK, and -PDGFRα signaling, and disease evaluation revealed anti-leukemic activity of luxeptinib in three relapsed AML patients in Cohort 1 (450 mg). One heavily pretreated AML patient (8 prior regimens including alloSCT and FLT3 inhibitors gilteritinib and crenolanib) had 99% reduction of blasts in peripheral blood, though the decrease in blasts reversed during Cycle 2. Another AML patient (2 prior regimens) experienced an 80% reduction in the FLT3-ITD VAF by C4D9, and this patient had simultaneous reductions of multiple clones with mutations. Importantly, one FLT3-ITD AML patient (6 prior regimens including 2 AHSC transplants and FLT3 inhibitors) experienced a complete response (CR) with no detectable AML disease (MRD-negative). Based on strong preclinical evidence of luxeptinib’s activity against AML – including demonstration of mutation-agnostic and genotype-agnostic potency, particularly compared against other FLT3 inhibitors, and its ability to safely cure AML in murine leukemia models – we believe that luxeptinib may offer hope to the fragile and difficult-to-treat AML patient populations. The FDA has granted orphan drug designation to luxeptinib for the treatment of patients with AML. 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.

During fiscal years 2017 and 2018, we created a scalable chemical synthetic route for the manufacture of luxeptinib drug substance and have scaled the manufacture of API (active pharmaceutical ingredient, or drug substance) to multi-kg levels, we completed the manufacture of a multi-kg batch of API under GMP conditions as our API supply for our first-in-human clinical trials, and we manufactured under GMP conditions two dosage strengths of capsules to serve as our clinical supply in those human studies. During fiscal years 2019 and 2020, we completed successful manufacture of multiple batches of API and drug product. We are continuing our manufacturing campaigns in the current 2021 fiscal period and continue scale-up and tech transfer activities to support additional manufacturing capacity for the ongoing and planned clinical trials of luxeptinib. Additional research and development funds are being utilized to support exploratory formulation studies in an ongoing effort to craft an improved formulation for later stage development of luxeptinib. In addition, the patient population to be treated with APTO-253 has been expanded beyond R/R-AML and MDS to include patients with MYC-driven B-cell cancers, in particular those with MYC rearrangements, including Burkitt’s lymphoma, double hit lymphoma and triple hit lymphoma.

On April 15, 2018, at the 2018 Annual Meeting of the American Association for Cancer Research (“AACR”), we presented with the OHSU Knight Cancer Institute preclinical data demonstrating that luxeptinib, a pan-FLT3/pan-BTK inhibitor, demonstrates broader activity and superior potency to other FLT3 and BTK inhibitors against primary bone marrow samples from patients with hematologic malignancies. We also presented preclinical data demonstrating that luxeptinib targets multiple pathways to kill diverse subtypes of AML and B-cell malignancies in vitro.

On June 15, 2018, at the 23rd Congress of the European Hematology Association (“EHA”), we presented, during a poster presentation, preclinical data demonstrating a unique binding mode of luxeptinib to wild type and C481S mutant BTK. Further, we presented that luxeptinib suppresses the BCR, AKT/PI3K, ERK and NFkB signaling pathways and exerts broader and far greater potency of direct cancer cell killing that ibrutinib against malignant bone marrow cells from patients with CLL, ALL and a host of other hematologic malignancies.

On December 3, 2018, we announced two separate poster presentations at the American Society of Hematology (“ASH”) Annual Meeting. The OHSU Knight Cancer Institute and Aptose presented data in one poster and the team at The University of MDACC presented data in a separate poster. These presentations highlighted several key findings. First, in collaboration with the MDACC, orally administered luxeptinib demonstrated efficacy in a PDX study in which the bone marrow cells from a patient with AML having dual ITD and D835 mutations in FLT3 were implanted into a mouse. The dual FLT3 mutant form of AML represents a very difficult-to-treat population that has shown resistance to other FLT3 inhibitors, and data from the PDX model suggest that luxeptinib may be useful in treating such patients. Secondly, Aptose presented high level data from preclinical GLP toxicology studies that demonstrate orally administered luxeptinib is a well-tolerated targeted molecule. Finally, in collaboration with the OHSU Knight Cancer Center, studies of luxeptinib on 124 samples of freshly isolated bone marrow from CLL patients demonstrated both broader and greater cell killing potency for luxeptinib than Ibrutinib.

On April 1, 2019, at the 2019 Annual Meeting of the AACR, Aptose, along with our collaborators at OHSU Knight Cancer Institute, presented data highlighting luxeptinib was more potent in killing AML patient-derived samples than other FLT3 inhibitors including midostaurin, sorafenib, sunitinib, dovitinib, quizartinib, crenolanib and gilteritinib. Luxeptinib was equally potent against cells from patients in the adverse, intermediate and favorable risk groups (2017 ELN risk stratification), and cells from patients with relapsed or transformed AML (World Health Organization classification) were as sensitive as those from patients with de novo AML. The data demonstrated potency on primary AML patient samples across all AML subgroups including relapsed/refractory/transformed AML and those with genetic abnormalities related to poor prognosis. While patient samples with FLT3-ITD mutations were expected to have greater sensitivity to luxeptinib, the most surprising correlation was the sensitivity of patient samples with IDH1 R132 mutations. The enhanced sensitivity of IDH-1 mutant AML to luxeptinib warrants investigation in the clinical setting. Moreover, in studies of luxeptinib on AML patient bone marrow samples, we demonstrated that mutations in p53, ASXL1 and NPM1 do not hinder the potency of luxeptinib.

On June 14, 2019, we presented new preclinical data for luxeptinib in a poster presentation at the 24th Congress of the EHA in Amsterdam, the Netherlands. The poster, CG-806, preclinical in vivo efficacy and safety profile as a pan-FLT3 / pan-BTK inhibitor, highlights the in vivo anti-leukemic efficacy of luxeptinib and its GLP toxicology and toxicokinetic profile. In a preclinical MV4-11 FLT3-ITD AML xenograft mouse model, luxeptinib suppressed leukemia growth at all doses tested throughout the 28-day period of dosing. In the mice treated with 100 mg/kg, 5 of 11 (45%) were cured through day 120, and in the 300 mg/kg group, 10 of 11 (91%) of the mice were cured. Retreating the “uncured’ mice in these two dose groups for an additional 28 days beginning on day 88 led to rapid and robust antitumor response in all retreated mice through day 120. In the “re-treated” mice, no drug resistance and no toxicities were observed. GLP 28-day toxicology and TK studies mice and dogs showed no adverse luxeptinib-related effects on body weight, ophthalmic, respiratory or neurological examinations, clinical pathology (coagulation, clinical chemistry, or urinalysis), organ weight or macroscopic evaluations. No luxeptinib-related cardiovascular effects were noted in the 28-day GLP toxicology study or in a separate preclinical cardiovascular safety study.

On October 24, 2019, we presented preclinical data in a poster presentation at the 5th International Conference on Acute Myeloid Leukemia “Molecular and Translational” Advances in Biology and Treatment in Estoril, Portugal. The poster, CG-806 Pan-FLT3/Pan-BTK Inhibitor Simultaneously Suppresses Multiple Oncogenic Signaling Pathways to Treat AML, highlighted that luxeptinib acts on large xenograft tumors with no evidence of drug resistance and with no observed toxicity, enhances killing of patient-derived AML and B-cell cancer cells when combined with venetoclax, and retains activity in patient-derived AML cells even when cells harbor mutations of FLT3, IDH-1, NPM1, ASXL1 or p53.

On December 8 and 9, 2019, we presented new preclinical data in two separate poster presentations at the 61st ASH Annual Meeting. On December 8, 2019, the poster CG-806, a First-in-Class Pan-FLT3/Pan-BTK Inhibitor, Exhibits Broad Signaling Inhibition in Chronic Lymphocytic Leukemia Cells compared luxeptinib and ibrutinib, the standard of care, on primary patient cells of CLL highlighting that CG-806 broadly inhibits B-cell receptor signaling in CLL cells, resulting in CLL cell apoptosis and reduced proliferation, luxeptinib is more potent than ibrutinib in inducing apoptosis of MEC1 CLL cells and, finally, luxeptinib targets elements of the CLL microenvironment, and thereby potentially targets pro-survival signals from the microenvironment. The poster presented on December 9, 2019 titled Synergistic Targeting of BTK and E-Selectin/CXCR4 in the Microenvironment of Mantle Cell Lymphomas, explored the effects of luxeptinib on cells of MCL, a rare subtype of aggressive B cell non Hodgkin lymphoma that is incurable with standard therapy, and investigated the molecular mechanisms of acquired resistance to treatment, highlighted that luxeptinib demonstrated superior anti-lymphoma effects compared with ibrutinib, exerting potent cell growth inhibitory effects on ibrutinib-resistant MCL cells, luxeptinib suppresses phospho-BTK, -Stat3, -AKT, -ERK, -Src, NF-kB, and the anti-apoptotic protein Mcl1, while upregulating p53, luxeptinib increased autophagy in MCL cells, which may be associated with resistance to luxeptinib-mediated apoptosis. Inhibition of autophagy re-sensitizes MCL cells to luxeptinib-induced apoptosis, luxeptinib treatment upregulates CXCR4/E-selectin levels in MCL cells and finally, combination of CXCR4/E-selectin antagonists with luxeptinib enhances luxeptinib-induced apoptotic killing of MCL cells in the presence of the tumor microenvironment. On December 7, 2019, Aptose also hosted a corporate event and clinical update, where the company’s management and invited Key Opinion Leaders highlighted some early clinical observations on safety, tolerability, pharmacokinetics, and activity, including. The discussion focused on key findings from dose levels one and two of luxeptinib in heavily pretreated R/R CLL patients, including: the clean safety profile to date, with no myelosuppression, drug-related adverse events or dose-limiting toxicity observed; meaningful oral absorption and predictable pharmacokinetic (“PK”) profile; evidence of target engagement manifesting as inhibition of Phospho-BTK, Phospho-SYK and Phospho-ERK in a plasma inhibitory assay (“PIA”) using plasma from the CLL patient on dose level two, and early evidence of clinical activity in the same patient manifesting as increase in peripheral blood lymphocytes (lymphocytosis), typically associated with BTK inhibition.

On April 27, 2020, we presented the early clinical data on luxeptinib at the AACR Virtual Annual Meeting I in lieu of the live oral presentation originally planned. A video summary of Abstract # 9967 - Early clinical findings from a Phase 1a/b dose escalation trial to evaluate the safety and tolerability of CG-806 in patients with relapsed or refractory CLL/SLL or non-Hodgkin’s lymphomas described the first-in-human tests of luxeptinib which are being carried out in a Phase 1a/b clinical study in patients with significant unmet needs including patients with relapsed or refractory CLL, SLL or NHL who had been failed by or been intolerant to two lines of established therapy. We noted that the second patient, treated at the 300 mg BID dose level, represented a classic CLL patient that developed a brisk lymphocytosis (evidence of BTK target engagement and evidence of pharmacologic activity), and that enrollment was continuing.

On June 12, 2020, we presented new clinical data on luxeptinib in a poster presentation at the 25th Congress of the EHA. The poster, Early Clinical Findings from a Phase 1 a/b Dose Escalation Trial to Evaluate the Safety and Tolerability of CG-806 in Patients with Relapsed or Refractory CLL/SLL or Non-Hodgkin’s Lymphomas (EHA2020 Abstract# EP711), reviewed luxeptinib data for eight patients (as of the data cut-off date on May 5, 2020) with relapsed or refractory CLL, SLL or NHL in the first in-human Phase 1a/b, open-label, single arm, multicenter dose-escalation clinical study. Data from the ongoing trial demonstrated that luxeptinib was well-tolerated in patients treated at 150 mg, 300 mg, 450 mg BID over multiple cycles, with no dose-limiting toxicities or serious adverse events observed, supporting continued dose escalation. Luxeptinib treatment achieved human steady state PK levels known to be effective in murine tumor models and led to complete inhibition of phospho-BTK and multiple CLL survival pathways. Luxeptinib treatment also led to lymphocytosis in both classic CLL patients entering study with elevated lymphocyte counts and led to complete inhibition of phospho-FLT3, suggesting that dose levels evaluated in this study may be therapeutic in patients with AML.

On June 22, 2020, we presented new preclinical data on luxeptinib in a poster presentation at the AACR Virtual Annual II 2020. The poster, CG-806, a First-in-Class FLT3/BTK Inhibitor, and Venetoclax Synergize to Inhibit Cell Proliferation and to Induce Apoptosis and Aggressive B-cell Lymphomas, illustrated how luxeptinib simultaneously inhibits the driver BCR pathway and PI3K/AKT, NFᴋB and MAPK-mediated rescue pathways to kill aggressive double-hit and double-expressor B-cell lymphoma cells. Overall, the presented work provided additional mechanistic evidence to support the clinical development of CG-806 as a single agent or in combination with venetoclax in patients with aggressive B-cell lymphomas harboring unfavorable BCL2/MYC/BCL6 translocations and / or overexpression.

On December 6, 2020, we presented new clinical data in a virtual poster presentation at the 62^nd ASH Annual Meeting. The poster, A Phase 1 a/b Dose Escalation Study of the Mutation Agnostic BTK/FLT3 Inhibitor CG-806 in Patients with Relapsed or Refractory CLL/SLL or Non-Hodgkin’s Lymphomas, reviewed luxeptinib data for fourteen patients (as of the cutoff date of November 2, 2020) with relapsed or refractory CLL, SLL or NHL in the first in-human Phase 1a/b, open-label, single arm, multicenter dose-escalation clinical study. Data from the ongoing trial demonstrated that luxeptinib was generally well-tolerated in patients treated at 150 mg, 300 mg, 450 mg, and 600 mg BID over multiple cycles, supporting continued dose escalation. At the ongoing 750 mg dose, luxeptinib achieved steady state plasma concentration greater than 2 micromolar at the end of Cycle 1. Luxeptinib treatment also led to modest reductions in tumor volume in patients with different B-cell malignancies. On December 6, 2020, Aptose also hosted a corporate event and clinical update, where the company’s management highlighted some early clinical observations on safety, tolerability, pharmacokinetics, and activity from the Phase 1a/b study in B-cell malignancies as well as from the recently initiated Phase 1a/b study in AML.

On June 11, 2021, we reported clinical data on luxeptinib a poster presentation at the 2021 Annual European Hematology Association (EHA) Congress titled A Phase 1 a/b Dose Escalation Study of the Mutation Agnostic BTK/FLT3 Inhibitor CG-806 in Patients with Relapsed or Refractory B-Cell Malignancies. In addition, on June 11, 2021, we held a virtual corporate update event to provide updated clinical findings from the same study. We reported that many of the patients rapidly progressed immediately before luxeptinib treatment was initiated, resulting in a trend of tumor growth early in treatment, often followed by tumor reductions. We observed dose-dependent anti-leukemic activity to luxeptinib in patients who received dose escalation, including one follicular lymphoma patient who experienced tumor growth while on 450mg BID followed by tumor reduction (43% from peak, 12% from baseline) upon dose escalation to 600 mg BID. In that patient, luxeptinib was well-tolerated with single agent activity for the duration of 16+ cycles of therapy.

Also, on June 11, 2021, during a virtual corporate update event, we provided updated clinical findings with luxeptinib for the treatment of patients with relapsed or refractory AML. We presented dose-dependent inhibition of phospho-FLT3, -BTK, -SYK, and -PDGFRα signaling and that R/R-AML patients with FLT3-ITD mutations who received 450 mg BID luxeptinib (the lowest dose) for 28 days experienced blast reductions. Two patients experienced blast reduction of 67-90% but later experienced disease progression. However, one patient who previously failed chemotherapy twice, FLT3 inhibitor therapy, venetoclax and decitabine treatment, and AHSC transplants twice, later achieved complete remission (CR) with monotherapy of 450mg BID luxeptinib, and the patient continues on study with MRD-negative status.

APTO-253, a small molecule inhibitor of MYC gene expression, is being evaluated in a Phase 1a/b clinical trial in patients with R/R AML and high-risk MDS. The multicenter, open-label, dose-escalation clinical trial is designed to assess the safety, tolerability, pharmacokinetics and pharmacodynamic responses and efficacy of APTO-253 as a single agent and determine the recommended Phase 2 dose. APTO-253 is being administered once weekly, over a 28-day cycle. The dose escalation stage of the study could potentially enroll up to 20 patients with R/R AML or high-risk MDS. The study is designed to then transition, as appropriate, to single-agent expansion cohorts in R/R AML and/or high-risk MDS.

As of the date of this report, we have multiple active sites recruiting patients in the dose escalation stage of the trial. As of the date of this report, we have completed enrollment and treatment of patients on the first, second, third, fourth, and fifth dose levels (20, 40, 66, 100, and 150 mg/m2, respectively). Under an FDA-approved accelerated titration protocol, only one patient was required at each of the first two dose levels, followed by three patients at each dose level thereafter. Aptose is currently enrolling patients in the sixth dose level (210 mg/m2) of APTO-253. During the second quarter of 2020, the FDA allowed an amendment for Aptose to initiate more aggressive dose escalations with APTO-253, provided the tolerability profile remains favorable. The first five dosing cohorts have enrolled a mix of patients with AML and MDS. To date, we have observed reductions in MYC expression in peripheral blood mononuclear cells (PBMCs) from treated patients with AML and MDS, demonstrating MYC target engagement and mechanistic proof of concept.

We are continuing to manufacture additional drug substance and drug product for use in the ongoing trial.

~~We are~~Aptose is an early stage development company and we currently do not earn any revenues from our drug candidates. The continuation of our research and development activities and the commercialization of the targeted therapeutic products are dependent upon our ability to successfully finance and complete our research and development programs through a combination of equity financing and payments from strategic partners.

The following table presents our cash and cash equivalents, investments and working capital as at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

Working capital represents primarily cash, cash equivalents, investments and other current assets less current liabilities.

We believe that our cash, cash equivalents and investments on hand at ~~September~~June 30, ~~2020~~2021 will be sufficient to finance our operations for at least 12 months from the issuance date of these financial statements. 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.

On July 20, 2020 and August 10, 2020, the Company completed a confidentially marketed public offering (“CMPO”), with Piper Sandler & Co. as the representative of the underwriters, through the issuance of, in the aggregate, 11,854,472 common shares for gross proceeds of $62.2 million (approximately $58.2 million net of share issue costs).

On May 5, 2020, the Company entered into an “At-The-Market” Facility equity distribution agreement with Piper Sandler & Co. and Canaccord Genuity LLC acting as co-agents (the “2020 ATM”). Under the terms of this facility, the Company may, from time to time, sell common shares having an aggregate offering value of up to $75 million through Piper Sandler and Canaccord Genuity on the Nasdaq Capital Market. ~~During~~As of the ~~nine month period ended September 30, 2020,~~date of this report, the Company ~~did~~has not ~~issue~~issued any shares under this 2020 ATM.

~~During the year ended December 31, 2019, the Company completed two CMPOs, with RBC Capital Markets, LLC~~COVID-19 has not had and Canaccord Genuity LLC, as representatives of the underwriters, and Piper Jaffray & Co., as the representative of the underwriters, respectively, through the issuance of, in the aggregate, 30,043,750 common shares for aggregate gross proceeds of $95.45 million (approximately $88.18 million net of share issue costs). The Company also raised capital pursuant to two separate share purchase agreements with Aspire Capital Fund, LLC (“Aspire Capital”) through the issuance of an aggregate of 7,302,433 common shares for aggregate gross proceeds of $14.4 million . Wewe do not expect ~~that COVID-19 will~~it to have a significant impact on our liquidity and capital resources and we are not incurring significant additional costs to support our ongoing operations during this time. We have not entered into long term manufacturing contracts and should there be a delay in our trials we have flexibility to reduce future planned manufacturing campaigns.

We expect that we will need to raise additional capital or incur indebtedness to continue to fund our operations in the future. In December 2019, we filed a short form base shelf prospectus (the “Base Shelf”) that allows us to distribute, upon the filing of prospectus supplements, up to $200,000,000 of common shares, warrants, or units comprising any combination of common shares and warrants. The Base Shelf was declared effective by the ~~SEC~~United States Securities Exchange Commission (the “SEC”) on January 9, 2020 and expires on January 9, 2023.

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 related to COVID-19, and various other factors and we may be unable to raise capital when needed, or on terms favorable to us. If the necessary funds are not available, we may need 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.

The following table presents a summary of our cash flows for the ~~three~~three-month and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:

Our cash used in operating activities for the ~~three months~~three-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 was approximately ~~$8.3~~$8.8 million and ~~$5.2~~$7.2 million, respectively. Our cash used in operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 was approximately ~~$23.5~~$19.2 million and $15.3 million, respectively. Net cash used in operating activities was higher in the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 as compared with the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019~~2020 resulting mostly from a higher net loss in the current periods. See “Results of Operations”. Our uses of cash for operating activities for both periods consisted 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, drug manufacturing costs, laboratory supplies and materials, and ~~office administrative costs.~~professional fees.

We do not expect to generate positive cash flow from operations for the foreseeable future due to additional research and development costs, including costs related to drug discovery, preclinical testing, clinical trials, and manufacturing, as well as operating expenses associated with supporting these activities, and potential milestone payments to our collaborators. 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 ~~used in~~provided by investing activities for the three months ended ~~September~~June 30, 2021 was $5.0 million, and consisted of maturity of investments. Our cash provided by investing activities in the three-months period ended June 30, 2020 was ~~$4.4~~$1.48 million and consisted of net ~~purchases~~maturity of investments of ~~$4.4 million. Our cash used in investing activities in the three-month period ended September 30, 2019 was $1.0~~$1.52 million and ~~consisted of net~~ purchases of ~~investments of $1.0 million and property and~~ equipment of ~~$42~~$37 thousand.

Our cash used in investing activities in the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2020~~2021 was ~~$15.3~~$15.0 million, and consisted of net purchases of investments of ~~$15.3~~$15.0 million and purchases of property and equipment of ~~$53~~$17 thousand. Our cash used in investing activities in the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2019~~2020 was ~~approximately $9.1~~$10.9 million, and consisted of net purchases of investments of ~~$9.0~~$10.9 million and ~~property and~~purchase of equipment of ~~$92~~$53 thousand.

The composition and mix of cash, cash equivalents and investments is based on our evaluation of conditions in financial markets and our near-term liquidity needs. We have exposure to credit risk, liquidity risk and market risk related to our investments. The Company manages credit risk associated with its cash and cash equivalents and investments by maintaining minimum standards of ~~R1-low~~R1‑low or ~~A-low~~A‑low investments. The Company invests only in highly rated financial instruments which are capable of prompt liquidation. The Company manages its liquidity risk by continuously monitoring forecasts and actual cash flows. The Company is subject to interest rate risk on its cash and cash equivalents and investments. The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates relative to interest rates on the investments, owing to the relative ~~short-term~~short‑term nature of the investments.

Our cash flow from financing activities for the three months ended ~~September~~June 30, ~~2020~~2021 was ~~$58.3 million,~~$85 thousand, and consisted of ~~11,854,472 shares issued pursuant to the CMPO in July and August 2020 for net~~ proceeds ~~of approximately $58.2 million and proceeds of approximately $49 thousand~~ from the exercise of stock options. Our cash flow from financing activities in the three-month period ended ~~September~~June 30, ~~2019~~2020 was ~~$17~~$46 thousand, and consisted of proceeds ~~of approximately $17 thousand~~ from the exercise of stock options.

Our cash flow from financing activities for the ~~nine~~six months ended ~~September~~June 30, 2021 was approximately $160 thousand, and consisted of proceeds of exercise of stock options. Our cash flow from financing activities in the six-month period ended June 30, 2020 was ~~approximately $58.8 million,~~$482 thousand, and consisted ~~mostly of the CMPO we completed in July and August 2020 as described above and~~ of proceeds from the exercise of stock options of $531 thousand. Net cash provided by financing activities in the nine-month period ended September 30, 2019 reflects mostly the 11,500,000 common shares issued pursuant to the CMPO we completed in June 2019 with RBC Capital Markets, LLC and Canaccord Genuity LLC, as representatives of the underwriters, for net proceeds of approximately $19.6 million, 5,502,433 shares issued to Aspire Capital pursuant to the 2018 Aspire Purchase Agreement, as described below, for net proceeds of approximately $10 million, and 77,349 shares issued pursuant to the 2018 ATM Facility with Cantor Fitzgerald, as described below, for net proceeds of approximately $178 thousand.

On May 5, 2020, the Company entered into an ATM equity distribution agreement with Piper Sandler & Co. and Canaccord Genuity LLC acting as co-agents. Under the terms of this facility, the Company may, from time to time, sell common shares having an aggregate offering value of up to $75 million through Piper Sandler and Canaccord Genuity on the Nasdaq Capital Market. ~~During the nine months ended September~~As of June 30, ~~2020,~~2021, the Company ~~did~~had not ~~issue~~issued any shares under this ATM equity facility.

On March 27, 2018, the Company entered into an ATM equity distribution agreement with Cantor Fitzgerald acting as sole agent (the “2018 ATM Facility”). Under the terms of this facility, the Company was allowed, from time to time, to sell common shares having an aggregate offering value of up to $30 million through Cantor Fitzgerald on the Nasdaq Capital Market. During the nine months ended September 30, 2019, the Company issued 77,349 shares under the 2018 ATM Facility at an average price of $2.37 for gross proceeds of $183 thousand ($178 thousand net of share issue costs). On a cumulative basis to September 30, 2019, the Company had raised a total of $11.2 million gross proceeds ($10.9 million net of share issue costs) under the 2018 ATM Facility. The Company terminated this agreement on May 24, 2019.

On May 30, 2018, the Company entered into a Common Share Purchase Agreement to sell up to $20.0 million of common shares to Aspire Capital over approximately 30 months (the “2018 Aspire Purchase Agreement”). Pursuant to the terms of this agreement, on June 8, 2018, the Company issued 170,261 common shares to Aspire Capital in consideration for entering into the 2018 Aspire Purchase Agreement for a total cost of $600 thousand. During the nine months ended September 30, 2019, the Company issued 5,502,433 common shares to Aspire Capital pursuant to the 2018 Aspire Purchase Agreement at an average price of $1.82 per share for gross and net proceeds of $10 million. On a cumulative basis, the Company raised a total of approximately $11.9 million gross and net proceeds under the 2018 Aspire Purchase Agreement. As of May 7, 2019 the Company had issued 6,409,980 common shares, the maximum number of shares issuable under this facility without shareholder approval, and the 2018 Aspire Purchase Agreement was accordingly terminated.

On May 7, 2019, the Company entered into the 2019 Aspire Purchase Agreement, which provided that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital was committed to purchase up to an aggregate of $20 million of Common Shares over approximately 30 months. Pursuant to the terms of this agreement, on May 13, 2019, the Company issued 171,428 Common Shares (“Commitment Shares”) to Aspire Capital in consideration for entering into the 2019 Aspire Purchase Agreement for a total cost of $360 thousand. During the period from October 1, 2019 up to December 16, 2019, the date the 2019 Aspire Purchase Agreement was terminated, the Company issued 1,800,000 common shares under the agreement at an average price of $2.43 per share for gross and net proceeds of $4.4 million.

There were no material changes to our contractual obligations and commitments described under Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, which can be found on EDGAR at www.sec.gov/edgar.shtml and on SEDAR at www.sedar.com.

A summary of the results of operations for the three-month and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 is presented below:

The net loss for the three-month period ended ~~September~~June 30, ~~2020 increased~~2021 decreased by ~~$6.4~~$2.3 million to ~~$13.2~~$13.5 million as compared with ~~$6.8~~$15.8 million for the comparable period in 2019, primarily as a result of an increase of $4.4 million in stock-based compensation in the current period, a combined increase in costs for our CG-806 development program and related labor costs of approximately $2.5 million and offset by lower costs of approximately $721 thousand on our APTO-253 program. There was also an increase in cash-based general and administrative expenses of $108 thousand and a decrease in net finance income of $138 thousand in the current period compared to the comparative period, mostly as a result of lower yields on investments held during the three-month period ended September 30, 2020.

The net loss for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2020~~2021 increased by ~~$22.0~~$2.4 million to ~~$40.5~~$29.7 million as compared with ~~$18.6~~$27.3 million for the comparable period in ~~2019, primarily as a result~~2020. Components of ~~an increase of $15.3 million in stock-based compensation in~~ the current period, a combined increase in program costs and related labor costs of approximately $7.1 million on our CG-806 development program and higher cash-based general and administrative expenses of approximately $492 thousand. These expenses were partially offset by lower costs of $836 thousand on our APTO-253 development programs.net loss are presented below:

The research and development expenses for the three-month and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

Research and development expenses increased by ~~$2.8~~$3.0 million to ~~$7.5~~$9.8 million for the three-month period ended ~~September~~June 30, ~~2020~~2021 as compared with ~~$4.8~~$6.9 million for the comparative period in ~~2019.~~2020. Changes to the components of our research and development expenses presented in the table above are primarily as a result of the following events:

Research and development expenses increased by ~~$8.7~~$5.3 million to ~~$20.3~~$18.1 million for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2020~~2021 as compared with ~~$11.6~~$12.8 million for the comparative period in ~~2019 for~~2020. Changes to the ~~same reasons~~components of our research and development expenses presented in the table above are primarily as ~~described above for~~a result of the ~~three-month period ended September 30, 2020.~~following events:

The general and administrative expenses for the three-month and ~~nine-month~~six-month periods ~~ending September~~ended June 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

General and administrative expenses for the three-month period ended ~~September~~June 30, ~~2020~~2021 were ~~$5.8~~$3.7 million as compared with ~~$2.3~~$9.0 million for the comparative period in ~~2019, an increase~~2020, a decrease of approximately ~~$3.5~~$5.4 million. The ~~increase~~decrease was primarily as a result of the following:

General and administrative expenses for the six-month period ended June 30, 2021 were $11.7 million as compared with $14.9 million for the comparative period, a decrease of approximately $3.2 million. The decrease was primarily a result of the following:

General and administrative expenses for the nine-month period ended September 30, 2020 were $20.7 million as compared with $7.4 million for the comparative period in 2019, an increase of approximately $13.3 million. The increase was primarily as a result of the following:

COVID-19 did not have a significant impact on our results of operations for the ~~quarter~~six-month period ended ~~September~~June 30, ~~2020.~~2021. We have not experienced and do not foresee material delays to the enrollment of patients or timelines for the ~~CG-806~~luxeptinib Phase 1a/b trial due to the variety of clinical sites that we have actively recruited for this trial. Similarly, we do not expect our enrollment of the ~~CG-806~~luxeptinib AML trial to be negatively impacted by COVID-19 as we plan to use a variety of clinical sites for this trial as well. APTO-253, which is administered intravenously, requires the need for hospital / clinical site resources to assist and monitor patients during each infusion and based on the current conditions caused by COVID-19, future enrollment of patients on this trial is likely to be negatively impacted. As of the date of this report, we have not experienced material delays in the manufacturing of ~~CG-806~~luxeptinib or APTO-253 related to COVID-19. Should our manufacturers be required to shut down their facilities due to COVID-19 for an extended period of time, our trials may be negatively impacted.

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 Company currently maintains its existing share option plan (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) 6,343,242, 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 10 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 will be administered by the Board of Directors, allows eligible employees of the Company with an opportunity to purchase common shares through accumulated payroll deductions up to a maximum 15% of eligible compensation. The ESPP will be implemented by 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 ESPP. 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 made available for sale under the ESPP will be 1,700,000 common shares.

The Company has not established a first offering period; there are no options outstanding under the ESPP as of June 30, 2021.

As ~~at September~~of June 30, ~~2020,~~2021, we were not party to any off-balance sheet arrangements.

We periodically review our financial reporting and disclosure practices and accounting policies to ensure that they provide accurate and transparent information relative to the current economic and business environment. As part of this process, we have reviewed our selection, application and communication of critical accounting policies and financial disclosures. Management has discussed the development and selection of the critical accounting policies with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the disclosure relating to critical accounting policies in this Management’s Discussion and Analysis.

A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For additional information, please see the discussion of our significant accounting policies in Note 2 to the Financial Statements included in our Annual Report for the fiscal year ended December 31, ~~2019~~2020 on Form 10-K filed with the ~~United States Securities Exchange Commission (the “SEC”)~~SEC on March ~~10, 2020.~~23, 2021. There were no material changes to our critical accounting policies and estimates during the ~~nine~~three and six months ended ~~September~~June 30, 2020 other than that we have determined that due to an increase in the amount and values of our research contracts, we now consider our estimates related to prepaid and accrued research and development (R&D) activities as significant estimates. Research and development (R&D) costs are expensed as incurred. R&D costs consist primarily of salaries and benefits, stock-based compensation, manufacturing, contract services, clinical trials, intangibles, and research related overhead. Non-refundable advance payments for goods and services that will be used in future research are recorded in prepaid and other assets and are expensed when the services are performed.2021.

We record expenses for research and development activities based on our estimates of services received and efforts expended pursuant to contracts with vendors that conduct research and development on our behalf. The financial terms vary from contract to contract and may result in uneven payment flows as compared with services performed or products delivered. As a result, we are required to estimate research and development expenses incurred during the period, which impacts the amount of accrued expenses and prepaid balances related to such costs as of each balance sheet date. We estimate the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the ~~services and the agreed-upon fee to be paid for such~~ services. We make significant judgments and estimates in determining the accrued balance in each reporting period. As actual costs become known, we adjust our accrued estimates.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.

Other important accounting policies and estimates made by management are the valuation of contingent liabilities, the valuation of tax accounts, and the assumptions used in determining the valuation of share-based compensation.

Management’s assessment of our ability to continue as a going concern involves making a judgment, at a particular point in time, about inherently uncertain future outcomes and events or conditions. Please see the “Liquidity and Capital Resources” section in this Quarterly Report on Form 10-Q for a discussion of the factors considered by management in arriving at its assessment.

As ~~at November 10, 2020,~~of August 3, 2021, we had ~~88,861,737~~88,948,744 common shares issued and outstanding. In addition, there were ~~11,996,011~~14,252,721 common shares issuable upon the exercise of outstanding stock options and upon the vesting of restricted share units.

~~Cautionary Note Regarding Forward-Looking Statements~~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” 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:

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, ~~2019,~~2020, under Item 1A – Risk ~~Factors, as they are updated and supplemented in this Report.~~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.

~~Item~~ITEM 3– ~~Qualitative and Quantitative Disclosures about Market Risk~~QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Under SEC rules and regulations, as a smaller reporting company, we are not required to provide this information.

As of the end of our fiscal quarter ended ~~September~~June 30, ~~2020, an~~2021, evaluation of the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the United States Exchange Act of 1934, as amended (the “Exchange Act”)), was carried out by our management, with the participation of our principal executive officer and principal financial officer. Based upon that evaluation, our principal executive officer and principal financial officer have concluded that as of the end of our fiscal quarter ended ~~September~~June 30, ~~2020,~~2021, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

It should be noted that while our principal executive officer and principal financial officer believe that our disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors or fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during our fiscal quarter ended ~~September~~June 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are not involved in any material active legal actions. However, from time to time, we may be subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of our business. Such matters are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time.

~~The following risk~~For information regarding factors ~~update~~that could affect Aptose’s results of operations, financial condition and ~~supplement~~liquidity, see the risk factors ~~included~~discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2019, and they should be read in conjunction with those~~2020, under Item 1A – Risk Factors. There have been no material changes to the risk ~~factors. Any~~factors disclosed under Item 1A – Risk Factors of the risks and uncertainties described below could significantly and negatively affect our business, prospects, financial condition, operating results, or credit ratings, which could cause the trading price of our common shares to decline. Additional risks and uncertainties not presently known to us, or risks that we currently consider immaterial, could also impair our business operations or financial condition. The following discussion of risk factors contains “forward-looking” statements, as discussed above.

~~We have an ongoing need~~On May 4, 2021, we announced that Dr. Jotin Marango was appointed as Chief Financial Officer, in addition to ~~raise additional capital. To obtain~~his Chief Business Officer role. Dr. Marango was also appointed to serve as the ~~necessary capital, we must rely~~Company’s Chief Accounting Officer on some or all of the following: additional share issues, debt issuances (including promissory notes), collaboration agreements or corporate partnerships and grants and tax credits to provide full or partial funding for our activities. Additional funding may not be available on terms that are acceptable to us or in amounts that will enable us to carry out our business plan. Although, as of the date of this report, we do not expect that COVID-19 will have a significant impact on our liquidity and capital resources, the extent to which COVID-19 impacts our business will depend on future developments, which are highly uncertain and cannot be predicted. As such, our ability to raise additional funds could be affected by adverse market conditions resultingMay 4, 2021, taking over those duties from the ~~COVID-19 outbreak and delays in enrollment in our trial related to COVID-19.~~

In addition, sales of a substantial number of our common shares in the public markets, or the perception that such sales could occur, could depress the market price of our common shares and impair our ability to raise capital through the sale of additional equity securities.

~~Our operations could be adversely affected by events outside of our control, such as natural disasters, wars or health crises such~~Company’s Chief Executive Officer, Dr. William Rice, who served as the ~~COVID-19 pandemic.~~

We may be impacted by business interruptions resulting from pandemics and public health emergencies, including those related to COVID-19, geopolitical actions, including war and terrorism or natural disasters including earthquakes, typhoons, floods and fires. An outbreak of infectious disease, a pandemic or a similar public health threat, such as the COVID 19 pandemic, or a fear of any of the foregoing, could adversely impact us by causing operating, manufacturing, supply chain, clinical trial and project development delays and disruptions, labour shortages, travel and shipping disruption and shutdowns (including as a result of government regulation and prevention measures). The extent to which COVID-19 will impact our business and our financial results will dependinterim Chief Accounting Officer following Gregory Chow’s departure on future developments, which are highly uncertain and cannot be predicted, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among other future developments. We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results and financial condition.

~~Risks Related to Development, Clinical Testing and Regulatory Approval of Our Product Candidates~~March 26, 2021.

Clinical trials are long, expensive and uncertain processes and the FDA or Health Canada may ultimately not approve any of our product candidates. We may never develop any commercial drugs or other products that generate revenues.ITEM 6 – EXHIBITS

In the past five years, none of our product candidates has received regulatory approval for commercial use and sale in North America. We cannot market a pharmaceutical product in any jurisdiction until it has completed thorough preclinical testing and clinical trials in addition to that jurisdiction’s extensive regulatory approval process. Approval in one country does not assure approval in another country. In general, significant research and development and clinical studies are required to demonstrate the safety and effectiveness of our product candidates before we can submit any applications for regulatory approval.

Clinical trials are long, expensive and uncertain processes. Clinical trials may not start or be on schedule and the FDA or Health Canada or any other regulatory body may not ultimately approve our product candidates for commercial sale in the relevant territory. Based on the current environment due to COVID-19 and the additional caution applied to the granting of new clinical trial initiations, there is no assurance that the FDA will grant allowance to initiate the planned CG-806 AML study while COVID-19-related restrictions are in place at the FDA. The clinical trials of any of our drug candidates could be unsuccessful, which would prevent us from advancing, commercializing or partnering the drug.

Even if the results of our preclinical studies or clinical trials are initially positive, it is possible that we will obtain different results in the later stages of drug development or that results seen in clinical trials will not continue with longer term treatment. Positive results in Phase 1 clinical trials may not necessarily repeat in larger Phase 2 or Phase 3 clinical trials.

Our preclinical studies and clinical trials may not generate positive results that will allow us to move towards the commercial use and sale of our product candidates. Furthermore, negative preclinical or clinical trial results may cause our business, financial condition, or results of operations to be materially adversely affected. For example, our Phase 1b clinical trial of APTO-253 in patients with R/R AML and high risk MDS was placed on clinical hold by the FDA in November 2015. Those shortcomings of the drug product were addressed and the clinical hold was lifted. However, there can be no assurance that the Company will have the resources, or that we will decide, to continue the development of APTO-253 after the current clinical trial. There is a long development path ahead that will take many years to complete the development and is prone to the risks of failure or delays inherent in drug development. Likewise, our CG-806 product candidate is currently being evaluated in two separate Phase 1a/b studies for patients having B-cell malignancies and R/R AML, respectively, and it is expected to undergo many years of testing and regulatory examinations prior to any potential regulatory approvals.

Preparing, submitting and advancing applications for regulatory approval of products is complex, expensive and time intensive and entails significant uncertainty. A commitment of substantial resources to conduct time-consuming research, preclinical studies and clinical trials is required if we are to complete development of our products.

Clinical trials of our products require that we identify and enroll a large number of patients with the illness under investigation. We may not be able to enroll a sufficient number of appropriate patients to complete our clinical trials in a timely manner, particularly in smaller indications and indications where there is significant competition for patients. If we experience difficulty in enrolling a sufficient number of patients to conduct our clinical trials, we may need to delay or terminate ongoing clinical trials and will not accomplish objectives material to our success. Delays in planned patient enrollment or lower than anticipated event rates in our current clinical trials or future clinical trials also may result in increased costs, program delays, or both.

In addition, unacceptable toxicities or adverse side effects may occur at any time in the course of preclinical studies or human clinical trials or, if any product candidates are successfully developed and approved for marketing, during commercial use of any approved products. The appearance of any unacceptable toxicities or adverse side effects could interrupt, limit, delay or abort the development of any of our product candidates or, if previously approved, necessitate their withdrawal from the market. Furthermore, disease resistance or other unforeseen factors may limit the effectiveness of our potential products.

Our failure to develop safe and commercially viable drugs would substantially impair our ability to generate revenues and sustain our operations and would materially harm our business and adversely affect our share price.

~~We may not achieve our projected development goals in the time frames we announce and expect.~~

We set goals for, and make public statements regarding, the expected timing of the accomplishment of objectives material to our success, such as the commencement and completion of clinical trials, the submission of a drug-regulatory application, and the expected costs to develop our product candidates. The actual timing and costs of these events can vary dramatically due to factors within and beyond our control, such as delays or failures in our IND submissions or clinical trials, issues related to the manufacturing of drug supply, uncertainties inherent in the regulatory approval process, market conditions and interest by partners in our product candidates among other things. Our clinical trials may not be completed, we may not make regulatory submissions or receive regulatory approvals as planned; or we may not secure partnerships for any of our product candidates. Any failure to achieve one or more of these milestones as planned would have a material adverse effect on our business, financial condition and results of operations.

Although, as of the date of this report, we do not foresee material delays to the enrollment of patients or timelines for our trials due to COVID-19, the extent to which COVID-19 will impact the projected development goals will depend on future developments, which are highly uncertain and cannot be predicted. In the beginning of April 2020 we learned that certain of our larger sites will not be able to enroll new patients on the fourth dose level of CG-806 due to the current environment caused by COVID-19 and we therefore expect a slowdown in enrollment at these sites . While it is difficult to estimate the duration and impact of COVID-19 on the larger clinical sites and regional cancer care sites, as of the date of this report, we have not experienced and do not foresee material delays to the enrollment of patients or timelines for the CG-806 Phase 1a/b B-cell malignancy trial due to the variety of clinical sites that we have actively recruited for this trial. While as of the date of this report we have not experienced any material delays in initiating our CG-806 Phase 1 clinical study in AML due to COVID 19, we are conducting site initiation visits remotely which could result in delays in site activations and negatively impact this trial. Additionally, COVID 19 could negatively impact patient enrolment if our clinical sites are unable to enroll patients due to either a lack of administrative resources at their sites or decisions made at the clinical sites to limit patient exposure to COVID 19.

Future enrollment of patients on the APTO-253 trial is likely to be negatively impacted as a result of the current environment, as it is administered to patients intravenously, which requires the need for hospital / clinical site resources to assist and monitor patients during each infusion.

~~Delays in clinical testing could result in delays in commercializing our product candidates and our business may be substantially harmed.~~

We cannot predict whether any clinical trials will begin as planned, will need to be restructured or will be completed on schedule, if at all. Although, as of the date of this report, we do not foresee material delays to the enrollment of patients or timelines for our trials, the extent to which COVID-19 will impact the projected development goals will depend on future developments, which are highly uncertain and cannot be predicted. Our product development costs will increase if we experience delays in clinical testing. Significant clinical trial delays could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before us, which would impair our ability to successfully commercialize our product candidates and may harm our financial condition, results of operations and prospects. The recommencement and completion of clinical trials for our products, including the APTO-253 Phase 1b clinical trial, the Phase 1a/b clinical trial for CG-806 study for the treatment of patients having B-cell malignancies, and the Phase 1a/b study for the development of CG-806 for the treatment of patients with R/R AML may be delayed for a number of reasons, including delays related, but not limited, to:

Our product development costs will increase if we experience delays in testing or approval or if we need to perform more or larger clinical trials than planned. Additionally, changes in regulatory requirements and policies may occur, and we may need to amend study protocols to reflect these changes. Amendments may require us to resubmit our study protocols to regulatory authorities or IRBs or ethics committees or boards for re-examination, which may impact the cost, timing or successful completion of a trial. Delays or increased product development costs may have a material adverse effect on our business, financial condition and prospects.

We rely on contract manufacturers over whom we have limited control. 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.

We rely on contract manufacturing organizations (“CMOs”) to manufacture our product candidates for some preclinical studies and clinical trials. We rely on CMOs for manufacturing, filling, packaging, storing and shipping of drug product in compliance with cGMP regulations applicable to our products. The FDA and other regulatory agencies ensure the quality of drug products by carefully monitoring drug manufacturers’ compliance with cGMP regulations. The cGMP regulations for drugs contain minimum requirements for the methods, facilities and controls used in manufacturing, processing and packing of a drug product.

We contracted with multiple CMOs for the manufacture of APTO-253 and CG-806 to supply the active ingredient and then drug product for our clinical trials. The synthesis of CG-806 is challenging from a scale-up synthetic chemistry perspective. The formulation and manufacture of APTO-253 is a complex process with many variables involved. We pre-qualified CMOs to have the capacity, the systems and the experience to supply CG-806 and APTO-253 for our clinical trials. We have qualified the manufacturing facilities and the FDA has also performed site audits for our selected CMOs. In spite of the efforts to prequalify CMOs, delays and errors may occur, and any such manufacturing failures, delays or compliance issues could cause delays in the completion of our clinical trial programs.

There can be no assurances that CMOs will be able to meet our timetable and requirements. We have contracted with alternate suppliers in the event our current CMOs are unable to scale up production, or if our current CMOs otherwise experience any other significant problems in the manufacture of CG-806 and APTO-253. However, it is possible that all third-party manufacturing sources may experience failure or delays and may demand commercially unreasonable terms, which may lead to further delays in the development of our product candidates. Further, contract manufacturers must operate in compliance with cGMP and failure to do so could result in, among other things, the disruption of product supplies. Our dependence upon third parties for the manufacture of our products may adversely affect our profit margins and our ability to develop and deliver products on a timely and competitive basis.

Although, as of the date of this report, we have not experienced any material delays in the manufacturing of CG-806 and APTO-253 due to COVID-19, the extent to which it will impact the manufacturing of our products will depend on future developments, which are highly uncertain and cannot be predicted. Should our suppliers involved in the manufacture of CG-806 be required to shut down their facilities due to COVID-19 either due to lack of materials or personnel, our trials would be negatively impacted. We are mitigating this risk by continuing to manufacture drug supply, but there is no guarantee that we will have enough drug to supply the trial if any of our manufacturers have a sustained shut down in their operations. COVID-19 may also affect the timing and delivery of labeled and packaged drug product for APTO-253 since it is an intravenous formulation which, compared to orally administered therapies, involves a more complex process. Factors related to COVID-19 caused a delay in the labeling and packaging of the APTO-253 drug product; however, going forward we do not anticipate this to materially affect the patient accrual for the ongoing Phase 1b trial.

Some components of our products are manufactured by third parties outside of the United States, and our business may be harmed by legal, regulatory, economic, political and public health risks associated with international trade and those markets.

We have third-party manufacturing partners in Germany and the United Kingdom; in addition, some materials used by our third-party manufacturers are supplied by companies located in other countries, including but not limited to India and China. Our reliance on suppliers and manufacturers in foreign markets creates risks inherent in doing business in foreign jurisdictions, including: (a) the burdens of complying with a variety of foreign laws and regulations, including laws relating to the importation and taxation of goods; (b) public health crises, such as pandemics and epidemics, in the countries where our suppliers and manufacturers are located; (c) transportation interruptions or increases in transportation costs; and (d) foreign intellectual property infringement risks. For example, the ongoing COVID-19 outbreak emanating at the beginning of 2020 from China, but now affecting most nations, has resulted in extended shutdown of certain businesses and markets in many regions causing reduced availability for certain pharmaceutical ingredients. This public health crisis or any further political developments or health concerns in markets in which our products are manufactured or from which we obtain necessary pharmaceutical ingredients could adversely affect the supply of our drug products and, in turn, our business, financial condition, and results of operations.

~~If we have difficulty enrolling patients in clinical trials, the completion of the trials may be delayed or cancelled.~~

As our product candidates advance from preclinical testing to clinical testing, and then through progressively larger and more complex clinical trials, we will need to enroll an increasing number of patients that meet our eligibility criteria. There is significant competition for recruiting cancer patients in clinical trials, and we may be unable to enroll the patients we need to complete clinical trials for cancer indications on a timely basis or at all. Certain factors that affect enrollment of patients in our clinical trials are impacted by external forces that may be beyond our control. Such factors include, but are not limited to, the following:

As a result of intense competition and technological change in the biotechnical and pharmaceutical industries, the marketplace may not accept our products or product candidates, and we may not be able to compete successfully against other companies in our industry and achieve profitability.

Consequently, our competitors may obtain FDA, Health Canada and other regulatory approvals for product candidates sooner and may be more successful in manufacturing and marketing their products than we or our collaborators are.

Our competitors’ existing and future products, therapies and technological approaches will compete directly with the products we seek to develop. Current and prospective competing products may be more effective than our existing and future products insofar as they may provide greater therapeutic benefits for a specific problem or may offer easier delivery or comparable performance at a lower cost.

For CG-806 and APTO-253 in AML, examples of potential competitors include companies that have developed approved or are currently developing inhibitors that directly target the wild type include AbbVie (IMBRUVICA) and AstraZeneca (CALQUENCE) and Beigene Co., Ltd. (Zanubrutinib).

~~Others that are developing inhibitors that target the C481S-mutant BTK include Arqule, Inc. (ARQ 531), Roche, Sunesis Pharmaceuticals (SNS-062) and Eli Lilly among others.~~

For CG-806 and APTO-253 in AML, examples of potential competitors include companies that have developed approved or are currently developing non-targeted therapies include Jazz (VYXEOS), Pfizer (MYLOTARG) and Roche (VENCLEXTA), among others. Others that have developed or are developing highly targeted therapies such as FLT3 include Novartis (RYDAPT), Astellas (XOSAPTA), Daiichi Sankyo (QUIZARTINIB), Arog (CRENOLANIB), and IDH1 include Agios (TIBSOVO) and Celgene/BMS (IDHIFA) among others.

Any product candidate that we develop and that obtains regulatory approval must then compete for market acceptance and market share. Our products may not gain market acceptance among physicians, patients, healthcare payers, insurers, the medical community and other stakeholders. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

Further, any products we develop may become obsolete or face generic entry before we recover any expenses we incurred in connection with the development of these products. As a result, we may never achieve profitability.

Pursuant to the requirements of the Securities Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on the ~~10th~~3rd day of ~~November 2020.~~August 2021.

		Page

PART I—FINANCIAL INFORMATION		14

	Item 1 – Financial Statements	14

	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	1518

	Item 3 – Qualitative and Quantitative Disclosures about Market Risk	2834

	Item 4 – Controls and Procedures	2834

PART II—OTHER INFORMATION		2935

	Item 1 – Legal Proceedings	2935

	Item 1A – Risk Factors	2935

	Item 5 – Other Information	35

	Item 6 – Exhibits	35

	Signatures	36

Option numbers are in (000’s)
			Nine months ended September 30, 2019
	Options			Weighted average exercise price	Weighted average remaining contractual life (years)

Outstanding, beginning of period	4,489		$	3.11
Granted	2,018			1.97
Exercised	(34	)		1.11
Forfeited	(322	)		2.36
Expired	(47	)		4.33
Outstanding, end of the period	6,104			2.81	7.8
Exercisable, end of the period	3,340			3.34	6.8
Vested and expected to vest, end of period	5,689			2.86	7.7

Option numbers are in (000’s)
				Six months ended June 30, 2021
	Options			Weighted average exercise price		Weighted average remaining contractual life (years)

Outstanding, beginning of period		11,942		$	4.97
Granted		3,156			4.55
Exercised		(67	)		2.39
Forfeited		(800	)		5.67
Outstanding, end of the period		14,231			4.88		6.9
Exercisable, end of the period		8,001			4.60		5.7
Vested and expected to vest, end of period		13,296			4.85		6.8

		Nine months ended September 30, 2020			Nine months ended September 30, 2019		Six months ended June 30, 2021			Six months ended June 30, 2020

Risk-free interest rate		1.27	%		2.21	%		0.43	%		1.28	%
Expected dividend yield		-			-			0			0
Expected volatility		85.9	%		83.9	%		80.8	%		85.9	%
Expected life of options (in years)		5			5
Expected life of options (years)							5			5
Grant date fair value	$	4.59		$	1.32		$	2.91		$	4.61

Option numbers are in (000’s)	Nine months ended September 30, 2020	Nine months ended September 30, 2019
	Number of options	Number of options
Option numbers are in (000’s)			Six months ended June 30, 2021		Six months ended June 30, 2020
			Number of options		Number of options
Cliff vesting after one year anniversary	300	335		0		300
3 year vesting (50%-25%-25%)	862	160		430		862
4 year vesting (50%-16 2/3%-16 2/3%-16 2/3%)	5,190	1,523		2,726		5,110
Total stock options granted in the period	6,352	2,018		3,156		6,272

								Accumulated
	Common Shares				Additional			other
	Shares				paid-in			comprehensive
	(thousands)		Amount		capital			loss			Deficit			Total
Balance, December 31, 2019	76,108		365,490		34,649			(4,298	)		(301,915	)		93,926
Common shares issued pursuant to the public offering	11,854		58,234		-			-			-			58,234
Common shares issued upon exercise of stock options	215		932		(401	)		-			-			531
Stock-based compensation	-		-		17,007			-			-			17,007
Common shares issued upon redemption of restricted share units	685		4,801		(4,801	)		-			-			-
Other comprehensive loss	-		-		-			(17	)		-			(17	)
Net loss	-		-		-			-			(40,525	)		(40,525	)
Balance, September 30, 2020	88,862	$	429,457	$	46,454		$	(4,315	)	$	(342,440	)	$	129,156

Balance, December 31, 2018	38,162		261,072		32,963			(4,316	)		(275,638	)		14,081
Common shares issued pursuant to the public offering	11,500		19,594		-			-			-			19,594
Common shares issued pursuant to 2019 share purchase agreement	171		360		-			-			-			360
Common shares issued under the 2018 ATM	77		178		-			-			-			178
Common shares issued pursuant to 2018 share purchase agreement	5,502		10,000		-			-			-			10,000
Common shares issued upon exercise of stock options	34		60		(24	)		-			-			36
Common shares issued upon redemption of restricted share units	40		80		(80	)		-			-			-
Stock-based compensation	-		-		1,734			-			-			1,734
Other comprehensive gain	-		-		-			13			-			13
Net loss	-		-		-			-			(18,568	)		(18,568	)
Balance, September 30, 2019	55,486	$	291,344	$	34,593		$	(4,303	)	$	(294,206	)	$	27,428

	December 31, 2019
		Cost	Unrealized gain	Market value

Guaranteed investment certificates, issued by a Canadian financial institution	$	12,008	18	12,026
Commercial notes		3,736	-	3,736
Canadian provincial promissory note		1,996	-	1,996
	$	17,740	18	17,758

		September 30,		December 31,
		2020		2019

Accrued personnel related costs	$	1,674	$	1,739
Accrued research and development costs		1,526		1,062
Other accrued costs		178		257
	$	3,378	$	3,058

		Nine months ended September 30, 2020		Nine months ended September 30, 2019

Right-of-use assets recorded upon adoption of Topic 842, beginning of period	$	-	$		$1,570
Right-of-use assets obtained in exchange for new operating lease liabilities in the period	$	10	$		$267

	Three months ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019

Operating lease cost	$	132	$	142	$	399	$	431
Operating cash flows - operating leases	$	136	$	126	$	401	$	345

	Nine months ended, September 30, 2020					Nine months ended, September 30, 2019					Six months ended, June 30, 2021				Six months ended, June 30, 2020
		Number (in thousands)			Weighted average grant date fair value		Number (in thousands)			Weighted average grant date fair value	Number (in thousands)		Weighted average grant date fair value		Number (in thousands)		Weighted average grant date fair value
Outstanding, beginning of period		40		$	2.00		-		$	-		0	$	0		40	$	2.00
Granted		645			7.32		80			2.0		0		0		645		7.32
Vested		(685	)		7.01		(40	)		2.0
Outstanding, end of period		-		$	-		40		$	2.0		0	$	0		685	$	7.01

(in thousands)	Balances at September 30, 2020		Balances at December 31, 2019		Balances at June 30, 2021		Balances at December 31, 2020
Cash and cash equivalents	$	99,727	$	79,842	$	83,343	$	117,393
Investments		32,997		17,758		19,999		5,000
Total	$	132,724	$	97,600	$	103,342	$	122,393

Working capital	$	128,501	$	93,227	$	97,600	$	118,264

	Three months ended,						Nine months ended,
(in thousands)	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019

Net cash provided by (used in):
Operating activities	$	(8,270	)	$	(5,184	)	$	(23,540	)	$	(15,327	)
Investing activities		(4,398	)		(1,042	)		(15,331	)		(9,092	)
Financing activities		58,283			17			58,765			29,808
Effect of exchange rates changes on cash and cash equivalents		-			(3	)		(9	)		(2	)
Net (decrease)/increase in cash and cash equivalents	$	45,615		$	(6,212	)	$	19,885		$	5,387

	· ●	~~events outside of our control, such as natural disasters, wars or health crises such as the COVID-19 pandemic, which result in uncertainty and adverse effects on our business;~~
	·	our lack of product revenues and net losses and a history of operating losses;

Exhibit Number	Description of Document

~~10.1~~10.1+	~~Underwriting~~Consulting Agreement dated ~~July 15, 2020,~~March 26, 2021 between Aptose Biosciences Inc. and ~~Piper Sandler & Co.~~Gregory K. Chow (incorporated ~~herein~~ by reference to Exhibit ~~1.1~~10.1 to ~~the Company’s Current~~Aptose Biosciences Inc.’s Quarterly Report ~~filed~~ on Form ~~8-K on July 16, 2020)~~10-Q for the quarter ended March 31, 2021).
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to ~~18 U.S.C. Section 1350, as Adopted Pursuant to~~ Section 906 of the Sarbanes-Oxley Act of 2002.

101**	The following consolidated financial statements from the Aptose Biosciences Inc. Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2020,~~2021, formatted in ~~Extensible Business Reporting Language (XBRL):~~Inline XBRL: (i) statements of operations and comprehensive loss, (ii) balance sheets, (iii) statements of changes of shareholders’ equity, (iv) statements of cash flows, and (v) the notes to the financial ~~statements.~~statements, tagged as blocks of text and including detailed tags.
* 104*	~~Filed herewith.~~ Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).
*	Filed herewith.
**	In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.
+	Management contract or compensatory plan or arrangement.

	APTOSE BIOSCIENCES INC.

	By:	/s/ ~~Gregory K. Chow~~Jotin Marango
		~~Gregory K. Chow~~Jotin Marango
		~~Executive~~Senior Vice President,
		Chief Financial Officer
		and Duly Authorized Officer