Analyst Sees Near-Term Inflection Point For Aptose Biosciences, Upgrades Stock

Aptose Biosciences Inc (NASDAQ: APTO) is seeing a strong run in pre-market trading Thursday following H.C. Wainwright & Co's upgrade. The firm premised its opinion change on its belief that an inflection point may be drawing near.

As such, the firm upgraded shares of Aptose from Neutral to Buy and increased its price target from $1 to $4.

In pre-market trading, the shares of the company were up 8.45 percent at $1.54.

Analysts Joseph Pantginis and Pete Stavropoulos said the company has made progress in addressing the list they drew up in early June, which they felt was needed for reassessing the stock's valuation. The items listed at that time included:

• CG'806's preclinical status.
• Finalization of manufacturing process.
• Lack of visibility into the timing for APTO-253 re-entering the clinic.
• Lack of meaningful catalysts before the year's end.

Improved Visibility Into CG'806 Development

H.C. Wainwright & Co noted that the company has finalized the manufacturing process for CG'806, which it acquired in its development. Having solved the synthetic route, the company has now embarked on the process of scaling up the manufacturing of API, the firm added. The firm also noted that the company is set to initiate toxicology studies shortly.

"Getting to the manufacturing point was a major step for the company, and our underlying investment thesis as CG'806 has low aqueous solubility, similar to ibrutinib and the heavy lifting has now been done," the firm said.

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The firm now believes Aptose can finalize the timeline for getting the drug into clinical trials, with the Investigational New Drug approval filing scheduled for the first half of 2018 and the start of clinical trials soon after.

The IND, according to the firm, would include information to target both FLT3 mutated Acute Myeloid Leukemia, as well as all forms BTK in Chronic Lymphocytic Leukemia/Small Lymphocytic Lymphoma patients. The firm views this broader IND as promising, as it broadens the overall initial addressable population for the drug.

H.C. Wainwright & Co. reiterated its view that the likelihood of significant preclinical efficacy profile translating into early clinical response in these leukemia and lymphoma populations is high.

ASH Presentation Key Catalyst Before Year's End

The firm expects the American Society of Hematology presentations to improve visibility ahead of the planned start of the CG'806 clinical program in 2018. The firm sees the ASH conference in December as a busy period for the company, as it has seven abstracts lined up for presentation, five for CG'806 and two for APTO-253.

On the presentations, the firm said it expects the ‘806 presentations to strengthen the underlying profile for the drug as a potential first-in-class potent inhibitor of both FLT3 and BTK enzymes. The firm also thinks the presentations would provide significant information on APTO-253's underlying mechanism, even as investors await its return to the clinic.