10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2023

OR

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

For the Transition Period from to

Commission File Number: 1-32001

APTOSE BIOSCIENCES INC.

(Exact Name of Registrant as Specified in Its Charter)

Canada (State or other jurisdiction of incorporation or organization)	98-1136802 (I.R.S. Employer Identification No.)
251 Consumers Road, Suite 1105 Toronto, Ontario, Canada	M2J 4R3
(Address of principal executive offices)	(Zip Code)

647-479-9828

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	APTO	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 10, 2023, the registrant had 6,519,201 common shares outstanding.

1

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION		5
	Item 1 – Financial Statements	5
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3 – Qualitative and Quantitative Disclosures about Market Risk	30
	Item 4 – Controls and Procedures	30
PART II—OTHER INFORMATION		31
	Item 1 – Legal Proceedings	31
	Item 1A – Risk Factors
	Item 6 – Exhibits	32
	Signatures	33

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities law, which we collectively refer to as “forward-looking statements”. Such forward-looking statements reflect our current beliefs and are based on information currently available to us. In some cases, forward-looking statements can be identified by terminology such as “may,” “would,” “could,, “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “hope,” “foresee” or the negative of these terms or other similar expressions concerning matters that are not historical facts.

Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others:

•our lack of product revenues and net losses and a history of operating losses;

•our early stage of development, particularly the inherent risks and uncertainties associated with (i) developing new drug candidates generally, (ii) demonstrating the safety and efficacy of these drug candidates in clinical studies in humans, and (iii) obtaining regulatory approval to commercialize these drug candidates;

•our need to raise substantial additional capital in the future and our ability to raise such funds when needed and on acceptable terms;

•further equity financing, which may substantially dilute the interests of our existing shareholders;

•clinical studies and regulatory approvals of our drug candidates are subject to delays, and may not be completed or granted on expected timetables, if at all, and such delays may increase our costs and could substantially harm our business;

•our reliance on external contract research/manufacturing organizations for certain activities and if we are subject to quality, cost, or delivery issues with the preclinical and clinical grade materials supplied by contract manufacturers, our business operations could suffer significant harm;

•clinical studies are long, expensive and uncertain processes and the FDA, or other similar foreign regulatory agencies that we are required to report to, may ultimately not approve any of our product candidates;

•our ability to comply with applicable governmental regulations and standards;

•our inability to achieve our projected development goals in the time frames we announce and expect;

•difficulties in enrolling patients for clinical trials may lead to delays or cancellations of our clinical trials;

•our reliance on third parties to conduct and monitor our preclinical studies;

•our ability to attract and retain key personnel, including key executives and scientists;

•any misconduct or improper activities by our employees;

•our exposure to exchange rate risk;

•our ability to commercialize our business attributed to negative results from clinical trials;

•the marketplace may not accept our products or product candidates due to the intense competition and technological change in the biotechnical and pharmaceuticals, and we may not be able to compete successfully against other companies in our industries and achieve profitability;

•our ability to obtain and maintain patent protection;

•our ability to afford substantial costs incurred with defending our intellectual property;

•our ability to protect our intellectual property rights and not infringe on the intellectual property rights of others;

•our business is subject to potential product liability and other claims;

•potential exposure to legal actions and potential need to take action against other entities;

•commercialization limitations imposed by intellectual property rights owned or controlled by third parties;

•our ability to maintain adequate insurance at acceptable costs;

•our ability to find and enter into agreements with potential partners;

3

•extensive government regulation;

•data security incidents and privacy breaches could result in increased costs and reputational harm;

•our share price has been and is likely to continue to be volatile;

•future sales of our common shares by us or by our existing shareholders could cause our share price to drop;

•changing global market and financial conditions;

•changes in an active trading market in our common shares;

•difficulties by non-Canadian investors to obtain and enforce judgments against us because of our Canadian incorporation and presence;

•potential adverse U.S. federal tax consequences for U.S. shareholders because we are a “passive foreign investment company”;

•our “smaller reporting company” status;

•any failures to maintain an effective system of internal controls may result in material misstatements of our financial statements, or cause us to fail to meet our reporting obligations or fail to prevent fraud;

•our ability to issue and sell common shares under the 2022 ATM Facility (as defined below), the 2022 Base Shelf (as defined below), or the 2023 Equity Facility (as defined below);

•our broad discretion in how we use the proceeds of the sale of common shares; and

•our ability to expand our business through the acquisition of companies or businesses.

More detailed information about risk factors and their underlying assumptions are included in our Annual Report on Form 10-K for the year ended December 31, 2022, under Item 1A – Risk Factors. Except as required under applicable securities legislation, we undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

4

PART I—FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

 

Condensed Consolidated Interim Financial Statements

(Unaudited)

APTOSE BIOSCIENCES INC.

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

5

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of US dollars)

(unaudited)

	June 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	8,400		$	36,970
Investments		14,906			9,989
Prepaid expenses		1,736			2,303
Other current assets		217			257
Total current assets		25,259			49,519
Non-current assets:
Property and equipment		190			211
Right-of-use assets, operating leases		1,126			1,297
Total non-current assets		1,316			1,508
Total assets	$	26,575		$	51,027
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	3,501		$	6,326
Accrued liabilities		8,084			5,657
Current portion of lease liability, operating leases		387			301
Total current liabilities		11,972			12,284
Non-current liabilities:
Lease liability, operating leases		817			1,002
Total liabilities		12,789			13,286
Shareholders’ equity:
Share capital:
Common shares, no par value, unlimited authorized shares, 6,375,983    and 6,157,749 shares issued and outstanding as of June 30, 2023 and    December 31, 2022, respectively		439,100			437,520
Additional paid-in capital		71,136			68,869
Accumulated other comprehensive loss		(4,315	)		(4,318	)
Deficit		(492,135	)		(464,330	)
Total shareholders’ equity		13,786			37,741
Total liabilities and shareholders’ equity	$	26,575		$	51,027

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

Going concern, see Note 2.

Commitments, see Note 9.

Subsequent events, see Note 12.

6

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

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

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Revenue	$	-		$	-		$	-		$	-
Expenses:
Research and development		10,582			7,341			19,393			14,734
General and administrative		3,870			3,332			9,155			7,439
Operating expenses		14,452			10,673			28,548			22,173
Other income/(expense):
Interest income		326			111			748			133
Foreign exchange loss		(3	)		(3	)		(5	)		(6	)
Total other income		323			108			743			127
Net loss	$	(14,129	)	$	(10,565	)	$	(27,805	)	$	(22,046	)
Other comprehensive loss:
Unrealized (loss)/gain on available-for-sale securities		(1	)		(37	)		3			(37	)
Total comprehensive loss	$	(14,130	)	$	(10,602	)	$	(27,802	)	$	(22,083	)
Basic and diluted loss per common share	$	(2.27	)	$	(1.72	)	$	(4.47	)	$	(3.59	)
Weighted average number of common shares outstanding used in the calculation of  (in thousands)      Basic and diluted loss per common share		6,234			6,150			6,219			6,149

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

7

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

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

(unaudited)

	Common Shares				Additional			Accumulated other
	Shares (in thousands)		Amount		paid-in capital			comprehensive loss			Deficit			Total
Balance, December 31, 2022		6,158	$	437,520	$	68,869		$	(4,318	)	$	(464,330	)	$	37,741
Common shares issued in exchange for RSUs		38		376		(376	)	-			-			-
Common shares issued under the 2022 ATM    Facility		171		1,138		-			-			-			1,138
Common shares issued under the ESPP plan		1		16		-			-			-			16
Commitment Shares, 2023 Equity Facility		8		50		-			-			-			50
Stock-based compensation		-		-		2,643			-			-			2,643
Other comprehensive gain		-		-		-			3			-			3
Net loss	-		-		-			-				(27,805	)		(27,805	)
Balance, June 30, 2023		6,376	$	439,100	$	71,136		$	(4,315	)	$	(492,135	)	$	13,786
Balance, December 31, 2021		6,148	$	437,386	$	63,673		$	(4,316	)	$	(422,507	)	$	74,236
Common shares issued under the 2020 ATM    Facility		2		29		-			-			-			29
Common shares issued upon exercise of stock    options		1		26		(11	)		-		-				15
Stock-based compensation		-		-		3,293		-			-				3,293
Other comprehensive loss		-		-		-			(37	)	-				(37	)
Net loss	-		-		-			-				(22,046	)		(22,046	)
Balance, June 30, 2022		6,151	$	437,441	$	66,955		$	(4,353	)	$	(444,553	)	$	55,490

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

8

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of US dollars)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Cash flows used in operating activities:
Net loss for the period	$	(14,129	)	$	(10,565	)	$	(27,805	)	$	(22,046	)
Items not involving cash:
Stock-based compensation		769			779			2,643			3,293
Depreciation and amortization		22			30			50			62
Loss on disposal of property and equipment		-			-			-			4
Amortization of right-of-use assets		92			111			195			225
Interest on lease liabilities		25			6			50			13
Foreign exchange on cash		2			5			(2	)		3
Accrued interest on investments		(17	)		18			(12	)		7
Deferred financing expenses		50			-			50			-
Changes in non-cash operating assets and liabilities:
Prepaid expenses		311			599			567			813
Other current assets		(55	)		(20	)		40			12
Operating lease liabilities		(45	)		(134	)		(173	)		(277	)
Accounts payable		(2,018	)		1,249			(2,825	)		694
Accrued liabilities		1,490			875			2,427			505
Cash used in operating activities		(13,503	)		(7,047	)		(24,795	)		(16,692	)
Cash flows from financing activities:
Issuance of common shares under 2022 ATM Facility		1,109			-			1,143			-
Cost of offering		(5	)		-			(5	)		-
Issuance of common shares under 2020 ATM Facility		-			29			-			29
Issuance of common shares under ESPP plan		-			-			16			-
Issuance of common shares upon exercise of stock options		-			-			-			15
Cash from financing activities		1,104			29			1,154			44
Cash flows from/(used in) investing activities:
Maturity (acquisition) of investments, net		(1,931	)		10,090			(4,902	)		17,595
Purchase of property and equipment		(29	)		(24	)		(29	)		(24	)
Cash from/(used in) investing activities		(1,960	)		10,066			(4,931	)		17,571
Effect of exchange rate fluctuations on cash and cash equivalents		(3	)		(5	)		2			(3	)
Increase (decrease) in cash and cash equivalents	$	(14,362	)	$	3,043		$	(28,570	)	$	920
Cash and cash equivalents, beginning of period	$	22,762		$	36,991		$	36,970		$	39,114
Cash and cash equivalents, end of period	$	8,400		$	40,034		$	8,400		$	40,034

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

9

APTOSE BIOSCIENCES INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Three months and six months ended June 30, 2023 and 2022

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

1.Reporting entity:

Aptose Biosciences Inc. (“Aptose,” the “Company,” “we,” “us,” or “our”) is a science-driven, clinical-stage biotechnology company committed to the development and commercialization of precision medicines addressing unmet clinical needs in oncology, with an initial focus on hematology. The Company's small molecule cancer therapeutics pipeline includes products designed to provide single agent efficacy and to enhance the efficacy of other anti-cancer therapies and regimens without overlapping toxicities. The Company’s executive offices are located in San Diego, California, and our head office is located in Toronto, Canada.

We are advancing targeted agents to treat life-threatening hematologic cancers that, in most cases, are not elective for patients and require immediate treatment. We have two clinical-stage investigational products for hematological malignancies: tuspetinib, an oral, potent myeloid kinase inhibitor, and luxeptinib, an oral, dual lymphoid and myeloid kinase inhibitor.

Since our inception, we have financed our operations and technology acquisitions primarily from equity financing, proceeds from the exercise of warrants and stock options, and interest income on funds held for future investment. Our uses of cash for operating activities have primarily consisted of salaries and wages for our employees, facility and facility-related costs for our offices and laboratories, fees paid in connection with preclinical and clinical studies, licensing fees, drug manufacturing costs, laboratory supplies and materials, and professional fees.

Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We plan to raise additional funds to fund our business operations but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern, see Note 2(a). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our ability to raise additional funds could be affected by adverse market conditions, the status of our product pipeline, possible delays in enrollment in our trial, and various other factors and we may be unable to raise capital when needed, or on terms favorable to us. If necessary funds are not available, we may have to delay, reduce the scope of, or eliminate some of our development programs, potentially delaying the time to market for any of our product candidates.

We do not expect to generate positive cash flow from operations for the foreseeable future due to the early stage of our clinical trials. It is expected that negative cash flow will continue until such time, if ever, that we receive regulatory approval to commercialize any of our products under development and/or royalty or milestone revenue from any such products exceeds expenses.

Our cash needs for the next twelve months include estimates of the number of patients and rate of enrollment of our clinical trials, the amount of drug product that we will require to support our clinical trials, and our general corporate overhead costs to support our operations, and our reliance on our manufacturers. We have based these estimates on assumptions and plans which may change and which could impact the magnitude and/or timing of operating expenses and our cash runway, See Note 2(a).

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of June 30, 2023, the Company had an accumulated deficit of approximately $492.1 million (December 31, 2022, $464.3 million); cash and cash equivalents and investment balances of approximately $23.3 million (December 31, 2022, $47.0 million); and working capital of approximately $13.3 million (December 31, 2022, $37.2 million).

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

10

2.Significant accounting policies

a.Basis of presentation - Going concern

These unaudited consolidated condensed financial statements have been prepared in conformity with generally accepted accounting principles in the United States, or GAAP and the rules and regulations of the Securities and Exchange Commission, or SEC, related to quarterly reports filed on Form 10-Q, assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company's ability to continue as a going concern exists.

As of June 30, 2023, the Company had an accumulated deficit of approximately $492.1 million (December 31, 2022, $464.3 million); cash and cash equivalents and investment balances of approximately $23.3 million (December 31, 2022, $47.0 million); and working capital of approximately $13.3 million (December 31, 2022, $37.2 million). In order for the Company to meet its capital requirements, and continue to operate, additional financing will be necessary. The Company is evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, obtaining equity financing, debt financing, committed equity facilities or other financing instruments and restructuring of operations to decrease expenses. However, given the impact of the economic downturn on the U.S. and global financial markets, the Company may be unable to access further equity when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. The consolidated financial statements do not reflect any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. Such adjustments may be material.

b.Basis of consolidation:

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions, balances, revenue, and expenses are eliminated on consolidation.

c.Significant accounting policies, estimates and judgments:

During the six months ended June 30, 2023, there have been no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 24, 2023.

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.

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.

d.Recent Accounting Pronouncements

We have adopted no new accounting pronouncements during the six months ended June 30, 2023. There were various accounting standards and interpretations issued recently, none of which are expected to have a material impact on our financial position, operations or cash flows.

e.Foreign currency:

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

11

f.Concentration of risk:

The Company is subject to credit risk from the Company’s cash and cash equivalents and investments. The carrying amount of the financial assets represents the maximum credit exposure. The Company manages credit risk associated with its cash and cash equivalents and investments by maintaining minimum standards of R1‑low or A‑low investments and the Company invests only in highly rated corporations and treasury bills, which are capable of prompt liquidation.

3.Cash and cash equivalents:

Cash and cash equivalents as of June 30, 2023, consist of cash of $2.579 million (December 31, 2022 ‑ $596 thousand), deposits in high interest savings accounts, money market funds and accounts with maturities of less than 90 days totaling of $5.821 million (December 31, 2022 ‑ $36.374 million).

4.Prepaid expenses:

	June 30,		December 31,
	2023		2022
Prepaid research and development expenses	$	854	$	1,271
Prepaid insurance		405		893
Other prepaid expenses		477		139
Total	$	1,736	$	2,303

5.Right-of-use assets:

	June 30,			December 31,
	2023			2022
Right-of-use assets, beginning of period	$	3,100		$	1,860
Additions to right-of-use assets		24			1,240
Right-of-use assets, end of period		3,124			3,100
Accumulated amortization		(1,998	)		(1,803	)
Right-of use assets, NBV	$	1,126		$	1,297

6.Investments:

Investments consisted of the following as of June 30, 2023 and December 31, 2022:

	June 30, 2023
	Cost		Unrealized gain/(loss)		Market value
United States Treasury Bills	$	13,122	$	3	$	13,125
Commercial Notes		1,781		-		1,781
Total	$	14,903	$	3	$	14,906

	December 31, 2022
	Cost		Unrealized gain/(loss)			Market value
United States Treasury Bills	$	9,991	$	(2	)	$	9,989
Total	$	9,991	$	(2	)	$	9,989

12

7. Fair value measurements and financial instruments:

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value.

Level 1 ‑ inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 ‑ inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data or other means; and

Level 3 ‑ inputs are unobservable (supported by little or no market activity).

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

The following table presents the fair value of Company's assets that are measured at fair value on a recurring basis for the periods presented:

	June 30, 2023		Level 1		Level 2		Level 3
Assets
Money Market funds	$	3,220	$	-	$	3,220	$	-
High interest savings account		2,601		-		2,601		-
United States Treasury Bills, classified as short-term investments		13,125		-		13,125		-
Commercial Note, classified as short-term investments		1,781		-		1,781		-
Total	$	20,727	$	-	$	20,727	$	-

	December 31, 2022		Level 1		Level 2		Level 3
Assets
Money Market accounts	$	165	$	-	$	165	$	-
Money Market funds		22,343		-		22,343		-
High interest savings accounts		13,866		-		13,866		-
United States Treasury Bills		9,989		-		9,989		-
Total	$	46,363	$	-	$	46,363	$	-

8.Accrued liabilities:

Accrued liabilities as of June 30, 2023 and December 31, 2022 consisted of the following:

	June 30,		December 31,
	2023		2022
Accrued personnel related costs	$	1,645	$	2,302
Accrued research and development expenses		6,029		3,122
Other accrued expenses		410		233
Total	$	8,084	$	5,657

9.Lease liability

Aptose leases office space in San Diego, California and Toronto, Canada. On November 4, 2022, the lease for the San Diego office space was extended through May 31, 2026 (the "Third Amendment"). Management has determined that the Third Amendment represents a lease modification, as defined by ASC 842, Leases, does not meet the requirements for accounting as a separate contract and continues to meet the definition of an operating lease. The lease for the Toronto, Canada office space was extended for one year on February 23, 2023, with this extension expiring on June 30, 2024. The Company has not included any extension periods in calculating its right-to-use assets and lease liabilities. Aptose previously leased lab space in San Diego, which we exited prior to the expiration of the lease on February 28, 2023. The costs incurred in exiting this laboratory space were not material. The Company also enters into leases for small office equipment.

13

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

Years ending December 31,
2023	$	233
2024		459
2025		462
2026		197
Total	$	1,351

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

	June 30, 2023			December 31, 2022
Weighted-average remaining term – operating leases (years)		2.8			3.3
Weighted-average discount rate – operating leases		7.38	%		6.62	%
Lease liability, current portion	$	387		$	301
Lease liability, long-term portion		817			1,002
Total	$	1,204		$	1,303

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

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	117	$	117	$	245	$	238
Operating cash flows from operating leases	$	45	$	134	$	173	$	277

10.Share capital:

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

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

a.Equity issuances:

(i) 2023 Committed Equity Facility ("Keystone Purchase Agreement")

On May 25, 2023, the Company and Keystone Capital Partners, LLC ("Keystone") entered into a committed equity facility, (the "Keystone Purchase Agreement"), which provides that subject to the terms and conditions set forth therein, we may sell to Keystone up to the lesser of (i) $25.0 million of the Common Shares and (ii) a number of Common Shares equal to 19.99% of the Common Shares outstanding immediately prior to the execution of the Keystone Purchase Agreement (subject to certain exceptions provided in the Purchase Agreement) (the “Total Commitment”), from time to time during the 24-month term of the Keystone Purchase Agreement. Additionally, on May 25, 2023, we entered into a Registration Rights Agreement with Keystone, pursuant to which the Company agreed to file a registration statement with the SEC covering the resale of Common Shares that are issued to Keystone under the Keystone Purchase Agreement. This registration statement became effective on June 30, 2023, and we commenced the Keystone Facility on July 10, 2023 (the “Commencement Date”)

Upon entering into the Keystone Purchase Agreement, the Company agreed to issue to Keystone an aggregate of 25,156 Common Shares (the “Commitment Shares”) as consideration for Keystone’s commitment to purchase Common Shares upon the Company’s direction under the Keystone Purchase Agreement. The Company issued 7,547 Common Shares, or

14

30% of the Commitment Shares, on the date of the Purchase Agreement (the “Initial Commitment Shares”). An additional 7,547 Common Shares, or 30% of the Commitment Shares, shall be issued to Keystone 90 days following the Commencement Date (the “First Back-End Commitment Shares”). The remaining 10,062 Common Shares, or 40% of the Commitment Shares, shall be issued to Keystone 180 days following the Commencement Date (the “Second Back-End Commitment Shares”, together with the First Back-End Commitment Shares, the “Back-End Commitment Shares”).

In the six months ended June 30, 2023, the Company's issuance of shares to Keystone was limited to the Initial Commitment Shares.

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

On December 9, 2022, the Company entered into an equity distribution agreement with Jones Trading acting as the agent under which the Company may, from time to time, sell Common Shares having an aggregate offering value of up to $50 million through Jones Trading on Nasdaq (the "2022 ATM Facility"). During the year ended December 31, 2022, the Company issued 4,836 shares under this 2022 ATM Facility at an average price of $10.81 for gross proceeds of $52 thousand ($51 thousand net of share issuance costs). During the six months ended June 30, 2023, the Company issued 171,253 shares under this 2022 ATM Facility at an average price of $6.88 for gross proceeds of $1.2 million ($1.1 million net of share issuance costs). Costs associated with the proceeds consisted of 3% cash commission.

(iii) 2020 At-The-Market Facility

On May 5, 2020, the Company entered an “at-the-market” equity distribution agreement with Piper Sandler & Co. (“Piper Sandler”) and Canaccord Genuity LLC (“Canaccord Genuity”) acting as co-agents (the “2020 ATM Facility”). Under the terms of the 2020 ATM Facility, the Company could, from time to time, sell Common Shares having an aggregate offering value of up to $75 million through Piper Sandler and Canaccord Genuity on Nasdaq. During the six months ended June 30, 2022, the Company issued 1,869 shares under the 2020 ATM Facility at an average price of $15.90 for gross proceeds of $30 thousand ($29 thousand net of share issue costs). During the year ended December 31, 2022, the Company issued 3,646 shares under the 2020 ATM Facility at an average price of $14.25 for gross proceeds of $52 thousand ($50 thousand net of share issue costs). As of October 31, 2022, the date the Agreement was terminated, the Company had raised a total of $89 thousand gross proceeds ($86 thousand net of share issuance costs) under the 2020 ATM Facility. Costs associated with the proceeds consisted of a 3% cash commission.

b.Loss per share:

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

	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Net loss	$	(14,129	)	$	(10,565	)	$	(27,805	)	$	(22,046	)
Weighted-average common shares – basic and    diluted (in thousands)		6,234			6,150			6,219			6,149
Net loss per share – basic and diluted	$	(2.27	)	$	(1.72	)	$	(4.47	)	$	(3.59	)

The effects of any potential exercise of the Company’s stock options outstanding during the three-month and six-month periods ended June 30, 2023, and June 30, 2022 have been excluded from the calculation of diluted loss per common share, since such securities would be anti‑dilutive.

11.Stock‑based compensation:

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

a.Stock option plan and employee stock purchase plan

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

15

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 and 2015 Stock Incentive Plan (“2015 SIP”). Since June 1, 2021, no further grants have been made under the Share Option Plan or 2015 SIP, though existing grants under the Share Option Plan remain in effect in accordance with their terms.

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

Under both the Share Option Plan and the New Incentive Plan, the exercise price of each option equals the closing trading price of the Company’s stock on the day prior to the grant if the grant is made during the trading day or the closing trading price on the day of grant if the grant is issued after markets have closed. Vesting is provided for at the discretion of the Board of Directors and the expiration of options is to be no greater than ten years from the date of grant.

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

The ESPP allows eligible employees of the Company to purchase Common Shares through accumulated payroll deductions up to a maximum 15% of eligible compensation. The ESPP was 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 available for sale under the ESPP is 113,333 Common Shares. The first six-month offering period began on February 1, 2022, and ended on August 1, 2022. There were 724 Common Shares issued under the ESPP as of December 31, 2022. The second six-month period began on August 1, 2022, and ended on February 1, 2023. There were 1,438 Common Shares issued under the ESPP during the six months ended June 30, 2023 (six months ended June 30, 2022 - nil).

Stock option transactions for the six months ended June 30, 2023, and June 30, 2022, are summarized as follows:

				Six months ended June 30, 2023
	Options (in thousands)			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding, beginning of period		1,100		$	52.22
Granted		215		9.93
Exercised		—			—
Forfeited		(124	)		49.51
Outstanding, end of the period		1,191		$	45.06		7.3
Exercisable, end of the period		711			59.61		6.3
Vested and expected to vest, end of period		1,105		$	46.74		7.2

16

				Six months ended June 30, 2022
	Options (in thousands)			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding, beginning of period		1,007		$	68.30
Granted		375			18.50
Exercised		(1	)	16.25
Forfeited		(104	)	43
Outstanding, end of the period		1,277		$	56.24		6.5
Exercisable, end of the period		710			69.73		4.8
Vested and expected to vest, end of period		1,192		$	56.19		6.4

During the six months ended June 30, 2022, the option agreements of one Company officer were modified as part of a separation and release agreement. Vested options of 56,765, with exercise prices ranging from $20.10 to $103.65, were allowed to continue to be exercisable for an additional 12-month period, and also 31,810 options that would have expired unvested, were allowed to continue to vest for a 12-month period. As there was no service requirement, during the six months ended June 30, 2022, the Company recorded $67 thousand in additional compensation related to these modifications.

As of June 30, 2023, there was $2.17 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 1.53 years. As of June 30, 2023, total compensation cost not yet recognized related to grants under the ESPP was approximately $2 thousand, which is expected to be recognized over one month.

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

	Six months ended June 30, 2023			Six months ended June 30, 2022
Risk-free interest rate		3.41	%		2.07	%
Expected dividend yield		-			-
Expected volatility		80.3	%		82.9	%
Expected life of options	5 years			5 years
Grant date fair value	$	6.57		$	12.28

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:

	Six months ended June 30, 2023		Six months ended June 30, 2022
	Number of options (in thousands)		Number of options (in thousands)
3-year vesting (50%-25%-25%)		49		28
4-year vesting (50%-16 2/3%-16 2/3%-16 2/3%)		166		347
Total stock options granted in the period		215		375

17

The Company has a stock incentive plan (SIP) pursuant to which the Board may grant stock-based awards comprised of restricted stock units or dividend equivalents to employees, officers, consultants, independent contractors, advisors and non-employee directors of the Company. Each restricted unit is automatically redeemed for one common share of the Company upon vesting. During the six-month period ended June 30, 2023, the Company granted 38,000 restricted stock units ("RSUs") with immediate vesting and an exercise price of $9.90 (the "2023 RSU Grant"). On February 6, 2023, all of these RSUs were redeemed for 38,000 Common Shares. No RSUs were granted in the six months ended June 30, 2022. The following table presents the vesting and redemption of the RSUs granted in the three months and six months ended June 30, 2023 and June 30, 2022.

	Six months ended June 30, 2023						Six months ended June 30, 2022
	Number of options (in thousands)			Weighted average grant date fair value			Number of options (in thousands)		Weighted average grant date fair value
Outstanding, beginning of period		-		$	-			-	$	-
Granted		38			9.90			-		-
Vested and redeemed		(38	)		(9.90	)		-		-
Outstanding, ending of period		-		$	-			-	$	-

b.Share-based payment expense

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

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Research and development	$	271	$	537	$	923	$	1,483
General and administrative		498		242		1,720		1,810
	$	769	$	779	$	2,643	$	3,293

12.Subsequent events

On August 10, 2023, the Company entered into a binding term sheet with Hanmi Pharmaceuticals Co., Ltd. (“Hanmi”) whereby Hanmi agreed at their sole discretion to invest over a time period ending June 30, 2024, up to a maximum of $7 million in Aptose up to a total ownership of 19.99 percent of Aptose by Hanmi (Hanmi currently holds 215,703 shares of Aptose). The deal is subject to completion of definitive documentation and customary closing conditions. The Company shall use the proceeds from this investment solely for tuspetinib-related business operations purposes. The Company currently has a licensing agreement with Hanmi for tuspetinib which was entered into on November 4, 2021. In 2022 the Company and Hanmi also entered into a separate supply agreement for additional production of new drug substance ("API") and drug product to support further tuspetinib clinical development for which the Company pays Hanmi per batch of production. The tuspetinib licensing agreement with Hanmi requires the Company to make milestone payments based on progression of research as outlined in Note 13 to the annual financial statements. The Company anticipates that $3 million will be invested by the end of August 2023, subject to the satisfaction of customary closing conditions. The second investment of up to $4 million or a maximum of 19.99 percent ownership interest in the Company by Hanmi is contingent on Aptose meeting certain manufacturing and data milestones related to tuspetinib by June 30, 2024 and anticipated to be achieved by year-end.

Subsequent to June 30, 2023, the Company issued 127,344 shares under the 2022 ATM Facility at an average price of $4.39 for gross proceeds of $559 thousand ($542 thousand net of share issuance costs). On a cumulative basis to August 10, 2023, the Company has issued 303,433 shares under the 2022 ATM Facility at an average price of $5.90 for gross proceeds of $1.79 million ($1.74 million net of share issue costs). Costs associated with the proceeds consisted of 3% cash commission.

Subsequent to June 30, 2023, the Company sold 11,421 shares to Keystone under the Keystone Equity Facility for net proceeds of $50,000.

Subsequent to June 30, 2023, the Company issued 4,453 shares under the ESPP.

18

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

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created by those sections. For more information, see “Cautionary Note Regarding Forward-Looking Statements.” When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that impact our business. In particular, we encourage you to review the risks and uncertainties described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this report. These forward-looking statements are made as of the date of this management’s discussion and analysis, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law.

The following discussion should be read in conjunction with our condensed consolidated financial statements and accompanying notes thereto contained in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, and with our audited consolidated financial statements and accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022.

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

OVERVIEW

Aptose Biosciences Inc. (“Aptose,” the “Company,” “we,” “us,” or “our”) is a science-driven clinical stage biotechnology company committed to the development and commercialization of precision medicines addressing unmet clinical needs in oncology, with an initial focus on hematology. The Company's small molecule cancer therapeutics pipeline includes products designed to provide single agent efficacy and to enhance the efficacy of other anti-cancer therapies and regimens without overlapping toxicities. The Company’s executive offices are located in San Diego, California, and our head office is located in Toronto, Canada.

Aptose Programs

Aptose is advancing oral targeted agents to treat life-threatening hematologic cancers that, in most cases, are not elective for patients and require immediate treatment. We have two clinical-stage investigational products under active development for the treatment of hematologic malignancies: tuspetinib (HM43239), an oral, potent myeloid kinase inhibitor, and luxeptinib (CG-806), an oral, dual lymphoid and myeloid kinase inhibitor.

Tuspetinib is an orally administered, highly potent myeloid kinome inhibitor that selectively targets a constellation of kinases operative in myeloid malignancies and known to be involved in tumor proliferation, resistance to therapy, and differentiation. This small molecule anticancer agent is currently being evaluated in an international Phase 1/2 clinical trial in patients with relapsed or refractory acute myeloid leukemia ("R/R AML").

Luxeptinib is an orally administered, highly potent dual lymphoid and myeloid kinome inhibitor that selectively targets defined clusters of kinases that are operative in hematologic malignancies. This 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 chronic lymphocytic leukemia ("CLL"), small lymphocytic leukemia ("SLL") and certain non-Hodgkins lymphomas ("NHLs") that are resistant/refractory/intolerant to other therapies, and in a Phase 1 a/b study for the treatment of patients with R/R AML and high risk myelodysplastic syndromes (HR MDS).

PROGRAM UPDATES

Tuspetinib

Indication and Clinical Trials:

Tuspetinib is an oral, highly potent, small molecule inhibitor of kinases operative in myeloid malignancies and known to be involved in tumor proliferation, resistance to therapy and differentiation. Preclinical in vitro and in vivo studies suggest that Tuspetinib may be an effective monotherapy and combination therapy in patients with hematologic malignancies including AML. An international Phase 1/2 clinical trial in patients with R/R AML is ongoing. The dose escalation and exploration portions of this study have been completed and evidence of robust clinical activity has been observed, including multiple complete responses in R/R AML patients with various disease genotypes, and a favorable safety profile.

19

The U.S. Food and Drug Administration ("FDA") granted orphan drug designation to tuspetinib for the treatment of patients with AML in October 2018. Orphan drug designation is granted by the FDA to encourage companies to develop therapies for the treatment of diseases that affect fewer than 200,000 individuals in the United States. Orphan drug status provides research and development tax credits, an opportunity to obtain grant funding, exemption from FDA application fees and other benefits. The orphan drug designation also provides us with seven additional years of marketing exclusivity in this indication. On May 3, 2022, the FDA granted Fast Track designation to tuspetinib for the treatment of patients with R/R AML with FLT3 mutation. Fast Track is a process designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need.

Manufacturing:

Following the tuspetinib licensing agreement between Aptose and Hanmi on November 4, 2021, Aptose received from Hanmi an existing inventory of drug product expected to support continuation of the current Phase 1/2 study. The Company and Hanmi also entered into a separate supply agreement in 2022 for additional production of new drug substance ("API") and drug product to support further clinical development. Additional batches of API and drug product have been manufactured during 2022 and 2023.

Program Updates at Recent Scientific Forums:

Concurrent with the European Hematology Association (EHA) Annual Congress held June 8-11, 2023, Aptose held an interim clinical update webcast on June 10, 2023, to present highlights from the ongoing clinical development of tuspetinib. Aptose reported completion of the tuspetinib dose escalation and dose exploration Phase 1/2 trial in 77 R/R AML patients, tuspetinib demonstrated a favorable safety profile, and tuspetinib delivered monotherapy responses across four dose levels with no dose-limiting toxicity in mutationally diverse and difficult to treat R/R AML populations, including patients with highly adverse mutations that typically do not respond to monotherapy or combination therapy: TP53-mutated patients with a CR/CRh = 20% and RAS-mutated patients with a CR/CRh = 22%. Aptose also reported completion of a successful End of Phase 1 (EOP1) Meeting with the US FDA for tuspetinib, that a monotherapy recommended phase 2 dose (RP2D) was selected as 80mg daily, and that all development paths remain open, including the single arm accelerated path. Following completion of the dose escalation and dose exploration phases of the Phase 1/2 clinical program, Aptose focused attention on the tuspetinib APTIVATE expansion trial. The APTIVATE trial is designed to identify patient populations sensitive to tuspetinib monotherapy (Tus) that may serve as development paths for single arm accelerated approval and to place tuspetinib in combination with venetoclax (Ven) as a (TusVen) doublet in R/R AML patients and identify patient populations of unmet need that are sensitive to the TusVen doublet and can serve as development paths for accelerated and full approvals. We reported that patient enrollment in the APTIVATE expansion trial has been brisk and preliminary CR activity had already been reported in patients receiving the TusVen doublet who previously failed therapy with venetoclax. During the interim clinical update webcast Aptose also reviewed clinical findings with the new G3 formulation of luxeptinib (Lux). Aptose disclosed that continuous dosing with 50mg of the G3 formulation achieves roughly an equivalent pharmacokinetic profile as 900mg original G1 formulation, and that dose escalation with the G3 formulation was anticipated.

On March 23, 2023, Aptose announced the APTIVATE Phase 1/2 expansion trial with tuspetinib had been initiated and already had treated several R/R AML patients in the monotherapy arm, and that patient enrollment had been initiated in the doublet combination treatment arm of the APTIVATE trial with tuspetinib and venetoclax (TusVen). Since then, patients have continued to enroll and receive tuspetinib on the monotherapy arm. Plus, enrollment and dosing of patients on the doublet arm (TusVen) have been brisk. Clinical investigator interest for tuspetinib is evident, and early signs of antileukemic activity during the APTIVATE trial have fueled the level of excitement for the trial.

Clinical responses to monotherapy with tuspetinib have been observed in a broad range of mutationally defined populations, including those with mutated forms of NPM1, MLL, TP53, DNMT3A, RUNX1, wild-type FLT3, ITD or TKD mutated FLT3, various splicing factors, and other genes. In the March 23, 2023, announcement, Aptose also highlighted an unexpected observation of a 29% CR/CRh response rate with tuspetinib monotherapy in R/R AML patients having mutations in the RAS gene or other genes in the RAS pathway. Responses in RAS-mutated patients are important because the RAS pathway is often mutated in response to therapy by other agents as the AML cells mutate toward resistance to those other agents. Collectively, these observations of broad clinical activity of tuspetinib, along with its favorable safety profile, position tuspetinib for potential accelerated development paths, as well as for doublet, triplet and maintenance therapy indications.

On January 30, 2023, Aptose announced dosing of patients in the APTIVATE Phase 1/2 clinical trial of tuspetinib, and that another clinical response has been achieved by a R/R AML patient receiving 40 mg tuspetinib once daily orally in the original dose exploration trial, the second response at the recently launched low-dose 40 mg cohort. In addition, Aptose elucidated a rationale for the superior safety profile of tuspetinib. While several kinase inhibitors require high exposures that exert near complete suppression of a single target to elicit responses, those agents often cause additional toxicity because they also cause extensive inhibition of that target in normal cells. In contrast, tuspetinib simultaneously suppresses a small suite of kinase-driven pathways critical for leukemogenesis. Consequently,

20

tuspetinib achieves clinical responses at lower exposures with less overall suppression of each pathway, thereby avoiding many of the toxicities observed with competing agents.

In December 2022, clinical data from an international Phase 1/2 study of tuspetinib in patients with R/R AML across clinical centers in the United States and South Korea were presented at the American Society of Hematology (ASH) Annual Meeting and presented during a Corporate Comprehensive Clinical Update Call held December 11, 2022. Data presented demonstrated that tuspetinib delivers single agent responses without prolonged myelosuppression or life-threatening toxicities in these very ill and heavily pretreated R/R AML patients. Responses were observed in a broad range of mutationally-defined populations, including those with mutated forms of NPM1, MLL, TP53, NRAS, KRAS, DNMT3A, RUNX1, wild-type FLT3, ITD or TKD mutated FLT3, various splicing factors, and other genes As of October 6, 2022, 60 heavily pretreated R/R AML patients were enrolled at multiple centers and treated at doses escalating from 20 mg to 200 mg, with further dose exploration at the 40 mg, 80 mg, 120 mg and 160 mg dose levels. Tuspetinib delivered multiple complete responses ("CRs") at 40 mg, 80 mg, 120 mg and 160 mg dose levels in which no dose-limiting toxicities ("DLT") were observed. Tuspetinib demonstrated clinically meaningful benefit in all responders, by either bridging successfully to hematopoietic stem cell transplant (HSCT) or leading to a durable response, as well as a favorable safety profile. In addition to 5 CRc and 1 PR reported at ASH 2021, 4 new CRc and 3 new PR had been generated during 2022. New responses during 2022 were achieved with 160 mg,120 mg, 80 mg, and 40 mg. Among efficacy evaluable patients treated with 80 mg, 120 mg, or 160mg, the following response rates ranging from 19% to 75% were achieved in specific genotypic subpopulations of r/r AML patients. Significant bone marrow leukemic blast reductions were observed broadly in FLT3+ and FLT3 wildtype patients across multiple dose levels, comparable to reported gilteritinib data, but in more heavily pre-treated relapsed and refractory AML patients. Vignettes of patient experiences highlight the potency and breadth of tuspetinib to deliver complete remissions among several mutationally-defined populations with a diversity of adverse mutations. Tuspetinib continued to show a favorable safety profile with only mild AEs and no DLTs up to 160 mg per day, and no drug discontinuations from drug related toxicity. No drug related SAE, drug related deaths, differentiation syndrome, AE of QT prolongation or DLT were observed through the 160 mg level. Tuspetinib avoids many of the typical toxicities observed with other tyrosine kinase inhibitors. Aptose identified a safe therapeutic range with a broad therapeutic window, spanning the dose levels of 40, 80, 120 and 160 milligrams. Aptose also announced that enrollment had been initiated in the APTIVATE expansion trial for monotherapy and drug combination therapy with tuspetinib. For the APTIVATE expansion trial, Aptose selected 120 mg as the initiating single agent expansion dose and 80 mg as the initiating dose selected for combination with venetoclax.

At the EHA Annual Congress 2022 held June 9-12, 2022, Aptose presented preclinical data from tuspetinib in a poster entitled “Myeloid Kinome Inhibitor HM43239 Overcomes Acquired Resistance in Acute Myeloid Leukemia Models.” Oral HM43239 potently inhibits kinases that drive AML, including SYK, diverse forms of the FLT3, JAK1 and JAK2, and mutant forms of the c-KIT kinases. The SYK and JAK1/2 intracellular kinases and the FLT3 (mutated and wildtype) and cKIT (mutated) receptor kinases mediate oncogenic signaling pathways in AML that can drive malignant proliferation and promote drug resistance to certain drugs. Tuspetinib was developed to overcome shortcomings of other drugs, such as simple SYK inhibitors and approved inhibitors of FLT3. These preclinical findings support the continued clinical development of tuspetinib for the treatment of multiple AML populations, particularly those who have failed by other therapies.

Major conclusions include

•Tuspetinib inhibits wild type and mutant forms of FLT3 at low nM concentrations

•Tuspetinib inhibits SYK, JAK1, JAK2 and mutant forms of c-KIT at low nM concentrations

•Tuspetinib inhibits phospho-FLT3, phospho-SYK, phospho-EKR1/2 and phospho-JAK/STAT5 that participate in signaling and rescue pathways

•Tuspetinib has potential to kill cells and tumors resistant to other FLT3 inhibitors

•Tuspetinib, at doses that are well tolerated, demonstrates in vivo efficacy on tumors resistant to other FLT3 inhibitors

Luxeptinib

Indication and Clinical Trials:

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).

Luxeptinib is a novel, oral, highly potent lymphoid and myeloid kinase inhibitor that selectively targets defined clusters of kinases operative in myeloid and lymphoid hematologic malignancies. This 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, SLL and certain NHLs that are resistant/refractory/intolerant to other therapies. Under a separate Investigational New Drug (“IND”), luxeptinib is being evaluated in a

21

Phase 1a/b study for the treatment of patients with R/R AML or high risk MDS. It is hoped luxeptinib can serve patients across lymphoid and myeloid malignancies and combine well with other agents to extend its application to multiple lines of therapy.

During the fourth quarter of 2022, we completed dosing of the first, second, third, fourth, fifth, and sixth dose levels (150 mg, 300 mg, 450 mg, 600 mg, 750 mg, and 900 mg BID, respectively) of the original (Generation 1, G1) formulation in the Phase 1 a/b trial in patients with B-cell leukemias and lymphomas. Among enrolled patients at that time with an array of B-cell malignancies, we had observed inhibition of phospho-BTK and “on-target” lymphocytosis in patients with classic CLL and modest tumor reductions in patients with different tumor types, indicating target engagement and pharmacologic activity of luxeptinib. During the ASH Annual Meeting in December 2022, we announced that a CR was achieved with a diffuse large B-cell lymphoma patient at the 900 mg dose level of the original G1 formulation, demonstrating luxeptinib is active in certain B-cell malignancies.

We also are advancing luxeptinib into myeloid malignancies, with an initial focus on AML and MDS, in a separate Phase 1a/b trial. Our strategy was to identify a starting dose of luxeptinib that we believe could be therapeutically active in critically ill patients with R/R AML. In our Phase 1a/b study in patients with CLL and other B-cell malignancies, 450 mg BID luxeptinib (original G1 formulations) delivered plasma levels that potently inhibited phospho-FLT3 in a plasma inhibitory activity reporter cell assay, suggesting that the 450 mg BID dose may be active in patients with AML. On June 29, 2020, we announced that we had received allowance from the FDA to proceed with a study in R/R AML with a starting dose of 450 mg BID, and subsequently on October 19, 2020, we announced that we had initiated dosing of the first patient with AML. As of the date of this report we have initiated multiple clinical sites for the Phase 1a/b trial, and we have completed all planned dose levels of the G1 formulation (450 mg, 600 mg, 750 mg and 900 mg BID. To date, we have reported blast reductions in patients carrying the FLT3-ITD mutation, and a durable MRD-negative CR in a patient carrying the FLT3-ITD mutation, demonstrating luxeptinib is active in certain AML patients.

As part of the ongoing dose escalation of the current formulation of luxeptinib in patients with B-cell malignancies and AML, Aptose has made significant progress in the development of a “third generation” (“G3”) formulation that could reduce total API administered, reduce pill burden, improve absorption, and increase exposure. Aptose began testing this new G3 formulation of luxeptinib as a single dose with 72-hour pharmacokinetics ("PK") analysis in the ongoing studies in patients with hematologic malignancies in the first half of fiscal 2022. On March 22, 2022, we announced that the preliminary PK findings with the G3 formulation were encouraging, and the exploration of the G3 formulation was ongoing.

Exploration of the PK properties of single dose administration of 10mg, 20mg, 50mg, 100mg, and 200mg dose levels with the G3 formulation have been completed. On September 12, 2022 we announced that initial PK modeling studies predict up to an 18-fold improvement in plasma steady-state exposure by the G3 formulation relative to the original formulation, and that Aptose plans to move forward with the development of the G3 formulation in AML patients under continuous dosing conditions to determine if G3 can deliver desired exposures and clinical responses while continuing to demonstrate a favorable safety profile.

On March 23, 2023, Aptose announced that during the fourth quarter of 2022, continuous dosing had been initiated with the new G3 formulation of luxeptinib in the ongoing Phase 1 a/b clinical trial in patients with R/R AML. Initial PK data from continuous dosing of the 50 mg G3 formulation show plasma exposure levels roughly equivalent to the 900mg dose (18-fold greater dose) of the original G1 formulation. Aptose will be reviewing all data with the data monitoring committee and will make the determination to escalate and at what dose.

Concurrent with the EHA Annual Congress held June 8-11, 2023, Aptose held an interim clinical update webcast on June 10, 2023. During the update, Aptose reviewed clinical findings with the new G3 formulation of luxeptinib. Aptose confirmed that continuous dosing with 50mg of the G3 formulation in multiple patients achieves roughly an equivalent pharmacokinetic profile as 900mg original G1 formulation, and that dose escalation with the G3 formulation was anticipated.

Research on luxeptinib continues, and a non-clinical article was published during the first quarter of 2023 in PLoS One, a highly respected online scientific publication. Titled, “Luxeptinib interferes with LYN-mediated activation of SYK and modulates BCR signaling in lymphoma,” the article helps elucidate the mechanism by which luxeptinib suppresses the B-cell receptor pathway in a manner distinct from the BTK inhibitor ibrutinib. Luxeptinib was more effective than ibrutinib at reducing both steady state and anti-IgM-induced phosphorylation of the LYN and SYK kinases upstream of BTK where ibrutinib has little or no effect, suggesting luxeptinib can play a role in B-cell malignancies and inflammatory diseases distinct from ibrutinib and other BTK inhibitors.

In a separate line of non-clinical research with luxeptinib, a group from the University of Texas MD Anderson Cancer Center led by Dr. Michael Andreeff published an article in June 2023 in the journal Haematologica. The article was entitled “Concomitant targeting of FLT3 and BTK overcomes FLT3 inhibitor resistance in acute myeloid leukemia through the inhibition of autophagy,” and the findings highlight the potential for co-targeting of FLT3/BTK/aurora kinases by luxeptinib to overcome resistance to certain FLT3 targeted therapies in AML, which is urgently needed.

22

Other corporate matters

On May 23, 2023, our shareholders voted to approve special resolutions providing for an amendment to our articles of incorporation to effect a reverse stock split (the “Reverse Stock Split”) of our outstanding common shares, no par value (the “Common Shares”) at a ratio in the range of 1-for-10 to 1-for-20. Our Board of Directors then approved a ratio of 1-for-15 on May 23, 2023. On May 24, 2023, we filed articles of amendment under the Canada Business Corporations Act to give effect to the reverse stock split (consolidation) of our Common Shares on the basis of one post-consolidation Common Share for each 15 pre-consolidation Common Shares. The Common Shares commenced trading on a post-Reverse Stock Split basis at market open on Tuesday, June 6, 2023. The Reverse Share Split was primarily intended to bring us into compliance with the minimum bid price requirement for maintaining the listing of the Common Shares on Nasdaq and to make the bid price more attractive to investors. On June 21, 2023, Nasdaq confirmed that we had regained compliance with the minimum bid price requirement. All references in this report to historical Common Share prices, numbers of Common Shares, and earnings per share calculations have been presented to reflect the effect of the Reverse Stock Split.

On May 25, 2023, we entered into a committed equity facility (the “2023 Equity Facility”) pursuant to a common share purchase agreement (the "Keystone Purchase Agreement") with Keystone Capital Partners, LLC ("Keystone"), which provides that subject to the terms and conditions set forth therein, we sell to Keystone up to the lesser of (i) $25.0 million of the Common Shares and (ii) a number of Common Shares equal to 19.99% of the Commons Shares outstanding immediately prior to the execution of the Keystone Purchase Agreement (subject to certain exceptions provided in the Purchase Agreement) (the “Total Commitment”), from time to time during the 24-month term of the Keystone Purchase Agreement. Additionally, on May 25, 2023, we entered into a Registration Rights Agreement with Keystone, pursuant to which the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering the resale of Common Shares that are issued to Keystone under the Keystone Purchase Agreement. This registration statement became effective on June 30, 2023, and we commenced the Keystone Facility on July 10, 2023 (the “Commencement Date”).

LIQUIDITY AND CAPITAL RESOURCES

Aptose is an early-stage development company, and we currently do not generate 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.

Sources of liquidity:

The following table presents our cash and cash equivalents, investments and working capital as of June 30, 2023 and December 31, 2022.

(in thousands)	Balances at June 30, 2023		Balances at December 31, 2022
Cash and cash equivalents	$	8,400	$	36,970
Investments		14,906		9,989
Total	$	23,306	$	46,959
Working capital	$	13,287	$	37,235

Working capital is a non-GAAP measure and represents primarily cash, cash equivalents, investments, prepaid expenses and other current assets less current liabilities. This financial measure provides a fuller understanding of the Company’s capital available to fund future operations.

Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We plan to raise additional funds in order to fund our business operations. We will seek access to financing but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our ability to raise additional funds could be affected by adverse market conditions, the status of our product pipeline, possible delays in enrollment in our trial, and various other factors and we may be unable to raise capital when needed, or on terms favorable to us. If necessary funds are not available, we may have to delay, reduce the scope of, or eliminate some of our development programs, potentially delaying the time to market for any of our product candidates.

23

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.

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.

All our cash is maintained at high-credit quality institutions. We minimize the cash levels above the insurance levels required by the Federal Deposit Insurance Corporation and the Canada Deposit Insurance Corporation, with excess cash invested in short-term investments with leading financial institutions.

Hanmi Equity Investment

On August 10, 2023, the Company entered into a binding term sheet with Hanmi Pharmaceuticals Co., Ltd. (“Hanmi”) whereby Hanmi agreed at their sole discretion to invest over a time period ending June 30, 2024, up to a maximum of $7 million in Aptose up to a total ownership of 19.99 percent of Aptose by Hanmi (Hanmi currently holds 215,703 shares of Aptose). The deal is subject to completion of definitive documentation and customary closing conditions. The Company shall use the proceeds from this investment solely for tuspetinib-related business operations purposes. The Company currently has a licensing agreement with Hanmi for tuspetinib which was entered into on November 4, 2021. In 2022 the Company and Hanmi also entered into a separate supply agreement for additional production of new drug substance ("API") and drug product to support further tuspetinib clinical development for which the Company pays Hanmi per batch of production. The tuspetinib licensing agreement with Hanmi requires the Company to make milestone payments based on progression of research as outlined in Note 13 to the annual financial statements. The Company anticipates that $3 million will be invested by the end of August 2023, subject to the satisfaction of customary closing conditions. The second investment of up to $4 million or a maximum of 19.99 percent ownership interest in the Company by Hanmi is contingent on Aptose meeting certain manufacturing and data milestones related to tuspetinib by June 30, 2024 and anticipated to be achieved by year-end.

2023 Equity Facility

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

On May 25, 2023, we entered into the 2023 Equity Facility, which provides that subject to the terms and conditions set forth therein, the Company has the right, but not the obligation, to sell to Keystone, and Keystone is obligated to purchase, up to the Total Commitment during the 24-month term of the Keystone Purchase Agreement and from and after the Commencement Date.

Upon entering into the Keystone Purchase Agreement, the Company agreed to issue to Keystone an aggregate of 25,156 Common Shares (the “Commitment Shares”) as consideration for Keystone’s commitment to purchase Common Shares upon the Company’s direction under the Purchase Agreement. The Company issued 7,547 Common Shares, or 30% of the Commitment Shares, on the date of the Purchase Agreement (the “Initial Commitment Shares”). An additional 7,547 Common Shares, or 30% of the Commitment Shares, shall be issued to Keystone 90 days following the Commencement Date. The remaining 10,062 Common Shares, or 40% of the Commitment Shares, shall be issued to Keystone 180 days following the Commencement Date.

In the six months ended June 30, 2023, the Company's issuance of Common Shares to Keystone was limited to the Initial Commitment Shares.

2022 Base Shelf

In October 2022, we filed a short form base shelf prospectus (the 2022 “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 on October 21, 2022 and expires on October 7, 2025.

At-The-Market Facilities

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

24

On December 9, 2022, the Company entered into an equity distribution agreement with Jones Trading acting as the agent under which the Company may, from time to time, sell Common Shares having an aggregate offering value of up to $50 million through Jones Trading on Nasdaq (the "2022 ATM Facility"). During the year ended December 31, 2022, the Company issued 4,836 shares under this 2022 ATM Facility at an average price of $10.81 for gross proceeds of $52 thousand ($51 thousand net of share issuance costs). During the six months ended June 30, 2023, the Company issued 171,253 shares under this 2022 ATM Facility at an average price of $6.88 for gross proceeds of $1.2 million ($1.1 million net of share issuance costs). On a cumulative basis to June 30, 2023, the Company has raised a total of $1.2 million gross proceeds ($1.1 million, net of share issue costs) under the 2022 ATM Facility. Costs associated with the proceeds consisted of 3% cash commission.

On May 5, 2020, the Company entered an “at-the-market” equity distribution agreement with Piper Sandler & Co. (“Piper Sandler”) and Canaccord Genuity LLC (“Canaccord Genuity”) acting as co-agents (the “2020 ATM Facility”). Under the terms of the 2020 ATM Facility, the Company could, from time to time, sell Common Shares having an aggregate offering value of up to $75 million through Piper Sandler and Canaccord Genuity on Nasdaq. During the six months ended June 30, 2022, the Company issued 1,869 shares under the 2020 ATM Facility at an average price of $15.90 for gross proceeds of $30 thousand ($29 thousand net of share issue costs). During the year ended December 31, 2022, the Company issued 3,646 shares under the 2020 ATM Facility at an average price of $14.25 for gross proceeds of $52 thousand ($50 thousand net of share issue costs). As of October 31, 2022, the date the Agreement was terminated, the Company had raised a total of $89 thousand gross proceeds ($86 thousand net of share issuance costs) under the 2020 ATM Facility. Costs associated with the proceeds consisted of a 3% cash commission.

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 clinical trials, 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.

Cash flows:

The following table presents a summary of our cash flows for the three-month and six-month periods ended June 30, 2023 and 2022:

(in thousands)	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Net cash provided by (used in):
Operating activities	$	(13,503	)	$	(7,047	)	$	(24,795	)	$	(16,692	)
Investing activities		(1,960	)		10,066			(4,931	)		17,571
Financing activities		1,104			29			1,154			44
Effect of exchange rates changes on cash and cash equivalents		(3	)		(5	)		2			(3	)
Net (decrease) increase in cash and cash equivalents	$	(14,362	)	$	3,043		$	(28,570	)	$	920

Cash used in operating activities:

Our cash used in operating activities for the three-month periods ended June 30, 2023 and 2022 was approximately $13.5 million and $7.0 million, respectively. Our cash used in operating activities for the six-month periods ended June 30, 2023 and 2022 was approximately $24.8 million and $16.7 million, respectively.

Net cash used in operating activities was higher in the three-month and six-month periods ended June 30, 2023, as compared to the three-month and six-month periods ended June 30, 2022, due primarily to higher operating expenses, as discussed further below (see “Results of Operations”). Our uses of cash for operating activities for both periods consisted primarily of salaries and wages for our employees, facility and facility-related costs for our offices and laboratories, fees and pass-through expenses 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 as we incur 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 flows 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.

25

Cash flow from (used in) investing activities:

Our cash used by investing activities for the three-month period ended June 30, 2023 was $2.0 million, and consisted of net acquisition of investments. Our cash provided by investing activities for the three-month period ended June 30, 2022 was $10.0 million, and consisted of net maturities of investments. Our cash used in investing activities for the six-month period ended June 30, 2023, was $4.9 million, and consisted of net acquisition of investments. Our cash provided by investing activities for the six-month period ended June 30, 2022 was $17.6 million, and consisted of net maturities of investments.

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 or 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 nature of the investments.

Cash flow from financing activities:

Our cash flow from financing activities for the three months ended June 30, 2023, was $1.1 million, resulting from shares issued from the 2022 ATM Facility. Our cash flow from financing activities for the three months ended June 30, 2022, was $29 thousand from shares issued from the 2020 ATM Facility. Our cash flow from financing activities for the six months ended June 30, 2023 was $1.2 million, and consisted of $1.1 million in proceeds from shares issued from the 2022 ATM Facility and $16 thousand in cash proceeds from the issuance of shares under our Employee Stock Purchase Plan. Our cash flow from financing activities for the six months ended June 30, 2022 was $29 thousand from shares issued from the 2020 ATM Facility and $15 thousand from the exercise of stock options.

CONTRACTUAL OBLIGATIONS and commitments described under Item 7

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, 2022, which can be found on EDGAR at www.sec.gov/edgar.shtml and on SEDAR+ at www.sedarplus.ca.

RESULTS OF OPERATIONS

A summary of the results of operations for the three-month and six-month periods ended June 30, 2023 and 2022 is presented below:

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2023			2022			2023			2022
Revenues	$	-		$	-		$	-		$	-
Research and development expenses		10,582			7,341			19,393			14,734
General and administrative expenses		3,870			3,332			9,155			7,439
Other income, net		323			108			743			127
Net loss	$	(14,129	)	$	(10,565	)	$	(27,805	)	$	(22,046	)
Other comprehensive income/(loss)		(1	)		(37	)		3			(37	)
Comprehensive loss	$	(14,130	)	$	(10,602	)	$	(27,802	)	$	(22,083	)
Basic and diluted loss per common share	$	(2.27	)	$	(1.72	)	$	(4.47	)	$	(3.59	)

Net loss for the three-month period ended June 30, 2023 increased by $3.6 million to $14.1 million, as compared to $10.6 million for the comparable period in 2022. Net loss for the six-month period ended June 30, 2023 increased by $5.7 million to $27.8 million, as compared to $22.0 million for the comparable period in 2022. Components of net loss are presented below:

26

Research and Development

Research and development expenses consist primarily of costs incurred related to the research and development of our product candidates and include:

•External research and development expenses incurred under agreements with third parties, such as contract research organizations, consultants, members of our scientific advisory boards, external labs and contract manufacturing organizations; and

•Employee-related expenses, including salaries, benefits, travel, and stock-based compensation for personnel directly supporting our clinical trials, manufacturing and development activities.

We have ongoing clinical trials for our product candidates tuspetinib and luxeptinib. Tuspetinib was licensed to Aptose in the fourth quarter of 2021, and we assumed sponsorship, and the related costs, of the tuspetinib study effective January 1, 2022. In the fourth quarter of 2021, we discontinued the APTO-253 program.

We expect our research and development expenses to be higher than current period expenses for the foreseeable future as we advance tuspetinib into larger clinical trials.

The research and development expenses for the three-month and six-month periods ended June 30, 2023, and 2022 were as follows:

	Three months ended				Six months ended
	June 30,				June 30,
(in thousands)	2023		2022		2023		2022
Program costs – Tuspetinib	$	8,070	$	2,343	$	12,845	$	3,521
Program costs – Luxeptinib		706		2,404		1,995		5,234
Program costs – APTO-253		19		188		26		279
Personnel-related expenses		1,506		1,860		3,584		4,194
Stock-based compensation		271		537		924		1,483
Depreciation of equipment		10		9		19		23
Total	$	10,582	$	7,341	$	19,393	$	14,734

Research and development expenses increased by $3.2 million to $10.6 million for the three-month period ended June 30, 2023, as compared to $7.3 million for the comparative period in 2022. Changes to the components of our research and development expenses presented in the table above are primarily as a result of the following events:

•Program costs for tuspetinib were $8.1 million for the three-month period ended June 30, 2023. The higher program costs for Tuspetinib in the current period represent the enrollment of patients in our APTIVATE clinical trial, our healthy volunteer trial, manufacturing activities to support clinical development, and related expenses.

•Program costs for luxeptinib decreased by approximately $1.7 million, primarily due to lower clinical trial costs and lower manufacturing costs as a result of the current formulation requiring less API than the prior formulation.

•Program costs for APTO-253 decreased by approximately $169 thousand, due to the Company’s decision on December 20, 2021 to discontinue further clinical development of APTO-253.

•Personnel-related expenses decreased by $354 thousand, related to fewer employees in the current three-month period, partially offset by salary increases.

•Stock-based compensation decreased by approximately $266 thousand in the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to stock options granted with lower grant date fair values, in the current period.

Research and development expenses increased by $4.7 million to $19.4 million for the six-month period ended June 30, 2023, as compared to $14.7 million for the comparative period in 2022. Changes to the components of our research and development expenses presented in the table above are primarily as a result of the following events:

•Program costs for tuspetinib were $12.8 million for the six-month period ended June 30, 2023, an increase of $9.3 million compared with $3.5 million in the corresponding period in 2022. The higher program costs for Tuspetinib in the current period represent the enrollment of patients in our APTIVATE clinical trial, our healthy volunteer trial, manufacturing activities to support clinical development, and related expenses.

27

•Program costs for luxeptinib decreased by approximately $3.2 million from $5.2 million in the six months ended June 30, 2022 to $2.0 million in the current period, primarily due to lower clinical trial costs and lower manufacturing costs as a result of the current formulation requiring less API than the prior formulation.

•Program costs for APTO-253 decreased by approximately $253 thousand, due to the Company’s decision on December 20, 2021 to discontinue further clinical development of APTO-253.

•Personnel-related expenses decreased by $610 thousand, related to fewer employees in the current six-month period and partially offset by salary increases.

•Stock-based compensation decreased by approximately $559 thousand in the six months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to stock options granted with lower grant date fair values, in the current period.

General and Administrative

General and administrative expenses consist primarily of salaries, benefits and travel, including stock-based compensation for our executive, finance, business development, human resources, and support functions. Other general and administrative expenses are professional fees for auditing and legal services, investor relations and other consultants, insurance and facility-related expenses.

We expect that our general and administrative expenses will increase for the foreseeable future as we incur additional costs to support the expansion of our pipeline of activities. We also expect our intellectual property related legal expenses to increase as our intellectual property portfolio expands.

The general and administrative expenses for the three-month and six-month periods ended June 30, 2023, and 2022 were as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2023		2022		2023		2022
General and administrative, excluding items below	$	3,360	$	3,069	$	7,404	$	5,590
Stock-based compensation		498		242		1,720		1,810
Depreciation of equipment		12		21		31		39
	$	3,870	$	3,332	$	9,155	$	7,439

General and administrative expenses for the three-month period ended June 30, 2023 were $3.9 million, as compared to $3.3 million for the comparative period in 2022, an increase of approximately $600 thousand. The increase was primarily due to the following:

•General and administrative expenses, other than stock-based compensation and depreciation of equipment, increased by approximately $291 thousand in the three months ended June 30, 2023, primarily as a result of higher salaries expenses and higher professional fees.

•Stock-based compensation increased by approximately $256 thousand in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, due to option forfeitures recorded in the three months ended June 30, 2022.

General and administrative expenses for the six-month period ended June 30, 2023 were $9.1 million, as compared to $7.4 million for the comparative period in 2022, an increase of approximately $1.7 million. The increase was primarily due to the following:

•General and administrative expenses, other than stock-based compensation and depreciation of equipment, increased by approximately $1.8 million in the six months ended June 30, 2023, primarily as a result of higher salaries expenses and higher professional fees.

•Stock-based compensation decreased by approximately $90 thousand in the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, mostly as a result of lower grant date fair values in the current period, partially offset by the 2023 grant of restricted stock units (RSUs).

CRITICAL ACCOUNTING POLICIES

Critical Accounting Policies and Estimates

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

28

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.

Significant Accounting Judgments and Estimates

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 on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 24, 2023. There were no material changes to our critical accounting policies and estimates during the three months ended June 30, 2023.

The Company records expenses for research and development activities based on management’s estimates of services received and efforts expended pursuant to contracts with vendors that conduct research and development on the Company’s behalf. The financial terms vary from contract to contract and may result in uneven payment flows as compared to services performed or products delivered. As a result, the Company is 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. Management estimates the amount of work completed through discussions with internal personnel and the contract research and contract manufacturing organizations as to the progress or stage of completion of the services. The Company’s estimates are based on a number of factors, including the Company’s knowledge of the status of each of the research and development project milestones, and contract terms together with related executed change orders. Management makes significant judgments and estimates in determining the accrued balance at the end of each reporting period.

Although management does not expect our estimates to be materially different from amounts actually incurred, if the estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in the Company reporting amounts that are too high or too low in any particular period. As of June 30, 2023, the Company has recorded $0.9 million in prepaid expenses and approximately $6.0 million in accrued liabilities related to its research and development activities. If the estimates are too high or too low by a factor of 10% this would mean that prepaid expenses would be over or understated by approximately $90 thousand, and accrued liabilities would be over or understated by approximately $600 thousand. On a combined basis, this could mean an increase or decrease in research and development expenses by approximately $690 thousand. To date, there have been no material differences between the 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, as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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.

Updated share information

As of August 10, 2023, we had 6,519,201 Common Shares issued and outstanding. In addition, there were 1,189,532 Common Shares issuable upon the exercise of outstanding stock options.

29

ITEM 3 – 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.

ITEM 4 – CONTROLS AND PROCEDURES

As of the end of our fiscal quarter ended June 30, 2023, 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 June 30, 2023, 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 the SEC 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.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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 June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

PART II—OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

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.

ITEM 1A – RISK FACTORS

FOR INFORMATION REGARDING FACTORS THAT COULD AFFECT APTOSE’S RESULTS OF OPERATIONS, FINANCIAL CONDITION AND LIQUIDITY, SEE THE RISK FACTORS DISCUSSED IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2022, UNDER ITEM 1A – RISK FACTORS. THERE HAVE BEEN NO MATERIAL CHANGES TO THE RISK FACTORS DISCLOSED UNDER ITEM 1A – RISK FACTORS OF THE ANNUAL REPORT.

31

ITEM 6 – EXHIBITS

Exhibit Number	Description of Document
3.1	Certificate of Amendment (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 5, 2023)
10.1	Common Share Purchase Agreement, dated as of May 25, 2023, by and between the Company and Keystone Capital Partners, LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 26, 2023)
10.2	Registration Rights Agreement, dated as of May 25, 2023, by and between the Company and Keystone Capital Partners, LLC (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 26, 2023)
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 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 June 30, 2023, formatted in Inline Extensible Business Reporting Language (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.
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (formatted as Inline XBRL 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.

32

SIGNATURES

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, on the 10th day of August, 2023.

APTOSE BIOSCIENCES INC.
By:	/s/ William G. Rice, Ph.D.
	William G. Rice, Ph.D. President and Chief Executive Officer

33

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William G. Rice, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Aptose Biosciences Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 10, 2023

/s/ William G. Rice

Name: William G. Rice, Ph.D.

Title: President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Fletcher Payne, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Aptose Biosciences Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

b)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 10, 2023

/s/ Fletcher Payne

Name: Fletcher Payne

Title: Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, William G. Rice, the President and Chief Executive Officer of Aptose Biosciences Inc. (the “Company”), hereby certify that, to my knowledge:

1.The Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2023

/s/ William G. Rice

Name: William G. Rice, Ph.D.

Title: President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Fletcher Payne, the Senior Vice President and Chief Financial Officer of Aptose Biosciences Inc. (the “Company”), hereby certify that, to my knowledge:

1.The Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company

Date: August 10, 2023

/s/ Fletcher Payne

Name: Fletcher Payne

Title: Senior Vice President and Chief Financial Officer

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Aug. 10, 2023
Document Information [Line Items]
Entity Central Index Key	0000882361
Entity Registrant Name	APTOSE BIOSCIENCES INC.
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Securities Act File Number	1-32001
Entity Incorporation, State or Country Code	Z4
Entity Tax Identification Number	98-1136802
Entity Address, Address Line One	251 Consumers Road, Suite 1105
Entity Address, City or Town	Toronto
Entity Address, State or Province	ON
Entity Address, Postal Zip Code	M2J 4R3
City Area Code	647
Local Phone Number	479-9828
Title of 12(b) Security	Common Shares, no par value
Trading Symbol	APTO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,519,201

XML

Condensed Consolidated Interim Statements of Financial Position (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 8,400	$ 36,970
Investments	14,906	9,989
Prepaid expenses	1,736	2,303
Other current assets	217	257
Total current assets	25,259	49,519
Non-current assets:
Property and equipment	190	211
Right-of-use assets, operating leases	1,126	1,297
Total non-current assets	1,316	1,508
Total assets	26,575	51,027
Current liabilities:
Accounts payable	3,501	6,326
Accrued liabilities	8,084	5,657
Current portion of lease liability, operating leases	387	301
Total current liabilities	11,972	12,284
Non-current liabilities:
Lease liability, operating leases	817	1,002
Total liabilities	12,789	13,286
Shareholders' equity:
Common shares, no par value, unlimited authorized shares, 6,375,983 and 6,157,749 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	439,100	437,520
Additional paid-in capital	71,136	68,869
Accumulated other comprehensive loss	(4,315)	(4,318)
Deficit	(492,135)	(464,330)
Total shareholders’ equity	13,786	37,741
Total liabilities and shareholders’ equity	$ 26,575	$ 51,027

XML

Condensed Consolidated Interim Statements of Financial Position (Current Period Unaudited) (Parentheticals) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Common Stock, No Par Value	$ 0	$ 0
Common stock, Shares authorized	Unlimited	Unlimited
Common Stock, Share issued	6,375,983	6,157,749
Common Stock, Shares Outstanding	6,375,983	6,157,749

XML

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue	$ 0	$ 0	$ 0	$ 0
Expenses:
Research and development	10,582	7,341	19,393	14,734
General and administrative	3,870	3,332	9,155	7,439
Operating expenses	14,452	10,673	28,548	22,173
Other income/(expense):
Interest income	326	111	748	133
Foreign exchange loss	(3)	(3)	(5)	(6)
Total other income	323	108	743	127
Net loss	(14,129)	(10,565)	(27,805)	(22,046)
Other comprehensive loss:
Unrealized (loss) gain on available-for-sale securities	(1)	(37)	3	(37)
Total comprehensive loss	$ (14,130)	$ (10,602)	$ (27,802)	$ (22,083)
Basic loss per common share (in dollars per share)	$ (2.27)	$ (1.72)	$ (4.47)	$ (3.59)
Diluted loss per common share (in dollars per share)	$ (2.27)	$ (1.72)	$ (4.47)	$ (3.59)
Weighted average number of common shares outstanding (in thousands) used in the calculation of basic loss per common share (in shares)	6,234	6,150	6,219	6,149
Weighted average number of common shares outstanding used in the calculation of diluted loss per common share ( in shares)	6,234	6,150	6,219	6,149

XML

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	The 2020 ATM Offering [Member] Common Stock [Member]	The 2022 ATM Offering [Member]	The 2022 ATM Offering [Member] Common Stock [Member]
Balance (in shares) at Dec. 31, 2021		6,148,000
Balance at Dec. 31, 2021	$ 74,236	$ 437,386	$ 63,673	$ (4,316)	$ (422,507)
Common shares issued under the ATM Facility (in shares)						2,000
Common shares issued under the ATM Facility	$ 29					$ 29
Common shares issued under the ESPP plan (in shares)	0
Common shares issued upon exercise of stock options (in shares)	1,000	1,000
Common shares issued upon exercise of stock options	$ 15	$ 26	(11)
Stock-based compensation	3,293		3,293	0	0
Other comprehensive gain (loss)	(37)			(37)	0
Net loss	(22,046)	$ 0	0	0	(22,046)
Balance (in shares) at Jun. 30, 2022		6,151,000
Balance at Jun. 30, 2022	55,490	$ 437,441	66,955	(4,353)	(444,553)
Balance (in shares) at Dec. 31, 2021		6,148,000
Balance at Dec. 31, 2021	$ 74,236	$ 437,386	63,673	(4,316)	(422,507)
Common shares issued under the ATM Facility (in shares)							4,836
Common shares issued under the ESPP plan (in shares)	724
Balance (in shares) at Dec. 31, 2022		6,158,000
Balance at Dec. 31, 2022	$ 37,741	$ 437,520	68,869	(4,318)	(464,330)
Common shares issued in exchange for RSUs (in shares)		38,000
Common shares issued in exchange for RSUs		$ 376	(376)
Common shares issued under the ATM Facility (in shares)							171,253	171,000
Common shares issued under the ATM Facility	$ 1,138							$ 1,138
Common shares issued under the ESPP plan (in shares)	1,438	1,000
Common shares issued under the ESPP plan	$ 16	$ 16
Common shares issued upon exercise of stock options (in shares)	0
Commitment Shares, 2023 Equity Facility (in shares)		8,000
Commitment Shares, 2023 Equity Facility	$ 50	$ 50
Stock-based compensation	2,643		2,643
Other comprehensive gain (loss)	3			3
Net loss	(27,805)				(27,805)
Balance (in shares) at Jun. 30, 2023		6,376,000
Balance at Jun. 30, 2023	$ 13,786	$ 439,100	$ 71,136	$ (4,315)	$ (492,135)

XML

Condensed Consolidated Interim Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Cash flows used in operating activities:
Net loss	$ (14,129)	$ (10,565)	$ (27,805)	$ (22,046)
Items not involving cash:
Stock-based compensation	769	779	2,643	3,293
Depreciation and amortization	22	30	50	62
Loss on disposal of property and equipment		0		4
Amortization of right-of-use assets	92	111	195	225
Interest on lease liabilities	25	6	50	13
Foreign exchange on cash	2	5	(2)	3
Accrued interest on investments	(17)	18	(12)	7
Deferred financing expenses	50		50
Changes in non-cash operating assets and liabilities:
Prepaid expenses	311	599	567	813
Other current assets	(55)	(20)	40	12
Operating lease liabilities	(45)	(134)	(173)	(277)
Accounts payable	(2,018)	1,249	(2,825)	694
Accrued liabilities	1,490	875	2,427	505
Cash used in operating activities	(13,503)	(7,047)	(24,795)	(16,692)
Cash flows from financing activities:
Cost of offering	(5)		(5)
Issuance of common shares under ESPP plan	0	0	16	0
Issuance of common shares upon exercise of stock options	0	0	0	15
Cash from financing activities	1,104	29	1,154	44
Cash flows from/(used in) investing activities:
Maturity (acquisition) of investments, net	(1,931)	10,090	(4,902)	17,595
Purchase of property and equipment	(29)	(24)	(29)	(24)
Cash from/(used in) investing activities	(1,960)	10,066	(4,931)	17,571
Effect of exchange rate fluctuations on cash and cash equivalents	(3)	(5)	2	(3)
Increase (decrease) in cash and cash equivalents	(14,362)	3,043	(28,570)	920
Cash and cash equivalents, beginning of period	22,762	36,991	36,970	39,114	$ 39,114
Cash and cash equivalents, end of period	8,400	40,034	8,400	40,034	36,970
The 2022 ATM Offering [Member]
Cash flows from financing activities:
Issuance of common shares	1,109	0	1,143	0	$ 51
The 2020 ATM Offering [Member]
Cash flows from financing activities:
Issuance of common shares	$ 0	$ 29	$ 0	$ 29

XML

Note 1 - Reporting Entity

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Reporting entity

1.Reporting entity:

Aptose Biosciences Inc. (“Aptose,” the “Company,” “we,” “us,” or “our”) is a science-driven, clinical-stage biotechnology company committed to the development and commercialization of precision medicines addressing unmet clinical needs in oncology, with an initial focus on hematology. The Company's small molecule cancer therapeutics pipeline includes products designed to provide single agent efficacy and to enhance the efficacy of other anti-cancer therapies and regimens without overlapping toxicities. The Company’s executive offices are located in San Diego, California, and our head office is located in Toronto, Canada.

We are advancing targeted agents to treat life-threatening hematologic cancers that, in most cases, are not elective for patients and require immediate treatment. We have two clinical-stage investigational products for hematological malignancies: tuspetinib, an oral, potent myeloid kinase inhibitor, and luxeptinib, an oral, dual lymphoid and myeloid kinase inhibitor.

Since our inception, we have financed our operations and technology acquisitions primarily from equity financing, proceeds from the exercise of warrants and stock options, and interest income on funds held for future investment. Our uses of cash for operating activities have primarily consisted of salaries and wages for our employees, facility and facility-related costs for our offices and laboratories, fees paid in connection with preclinical and clinical studies, licensing fees, drug manufacturing costs, laboratory supplies and materials, and professional fees.

Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We plan to raise additional funds to fund our business operations but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern, see Note 2(a). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our ability to raise additional funds could be affected by adverse market conditions, the status of our product pipeline, possible delays in enrollment in our trial, and various other factors and we may be unable to raise capital when needed, or on terms favorable to us. If necessary funds are not available, we may have to delay, reduce the scope of, or eliminate some of our development programs, potentially delaying the time to market for any of our product candidates.

We do not expect to generate positive cash flow from operations for the foreseeable future due to the early stage of our clinical trials. It is expected that negative cash flow will continue until such time, if ever, that we receive regulatory approval to commercialize any of our products under development and/or royalty or milestone revenue from any such products exceeds expenses.

Our cash needs for the next twelve months include estimates of the number of patients and rate of enrollment of our clinical trials, the amount of drug product that we will require to support our clinical trials, and our general corporate overhead costs to support our operations, and our reliance on our manufacturers. We have based these estimates on assumptions and plans which may change and which could impact the magnitude and/or timing of operating expenses and our cash runway, See Note 2(a).

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of June 30, 2023, the Company had an accumulated deficit of approximately $492.1 million (December 31, 2022, $464.3 million); cash and cash equivalents and investment balances of approximately $23.3 million (December 31, 2022, $47.0 million); and working capital of approximately $13.3 million (December 31, 2022, $37.2 million).

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

XML

Note 2 - Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Significant accounting policies

2.Significant accounting policies

a.Basis of presentation - Going concern

These unaudited consolidated condensed financial statements have been prepared in conformity with generally accepted accounting principles in the United States, or GAAP and the rules and regulations of the Securities and Exchange Commission, or SEC, related to quarterly reports filed on Form 10-Q, assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company's ability to continue as a going concern exists.

As of June 30, 2023, the Company had an accumulated deficit of approximately $492.1 million (December 31, 2022, $464.3 million); cash and cash equivalents and investment balances of approximately $23.3 million (December 31, 2022, $47.0 million); and working capital of approximately $13.3 million (December 31, 2022, $37.2 million). In order for the Company to meet its capital requirements, and continue to operate, additional financing will be necessary. The Company is evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, obtaining equity financing, debt financing, committed equity facilities or other financing instruments and restructuring of operations to decrease expenses. However, given the impact of the economic downturn on the U.S. and global financial markets, the Company may be unable to access further equity when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. The consolidated financial statements do not reflect any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. Such adjustments may be material.

b.Basis of consolidation:

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions, balances, revenue, and expenses are eliminated on consolidation.

c.Significant accounting policies, estimates and judgments:

During the six months ended June 30, 2023, there have been no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 24, 2023.

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.

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.

d.Recent Accounting Pronouncements

We have adopted no new accounting pronouncements during the six months ended June 30, 2023. There were various accounting standards and interpretations issued recently, none of which are expected to have a material impact on our financial position, operations or cash flows.

e.Foreign currency:

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

f.Concentration of risk:

The Company is subject to credit risk from the Company’s cash and cash equivalents and investments. The carrying amount of the financial assets represents the maximum credit exposure. The Company manages credit risk associated with its cash and cash equivalents and investments by maintaining minimum standards of R1‑low or A‑low investments and the Company invests only in highly rated corporations and treasury bills, which are capable of prompt liquidation.

XML

Note 3 - Cash and Cash Equivalents

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Cash and cash equivalents

3.Cash and cash equivalents:

Cash and cash equivalents as of June 30, 2023, consist of cash of $2.579 million (December 31, 2022 ‑ $596 thousand), deposits in high interest savings accounts, money market funds and accounts with maturities of less than 90 days totaling of $5.821 million (December 31, 2022 ‑ $36.374 million).

XML

Note 4 - Prepaid Expenses

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Prepaid expenses

4.Prepaid expenses:

	June 30,		December 31,
	2023		2022
Prepaid research and development expenses	$	854	$	1,271
Prepaid insurance		405		893
Other prepaid expenses		477		139
Total	$	1,736	$	2,303

XML

Note 5 - Right-of-use Assets

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Right-of-use assets

5.Right-of-use assets:

	June 30,			December 31,
	2023			2022
Right-of-use assets, beginning of period	$	3,100		$	1,860
Additions to right-of-use assets		24			1,240
Right-of-use assets, end of period		3,124			3,100
Accumulated amortization		(1,998	)		(1,803	)
Right-of use assets, NBV	$	1,126		$	1,297

XML

Note 6 - Investments

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Investments

6.Investments:

Investments consisted of the following as of June 30, 2023 and December 31, 2022:

	June 30, 2023
	Cost		Unrealized gain/(loss)		Market value
United States Treasury Bills	$	13,122	$	3	$	13,125
Commercial Notes		1,781		-		1,781
Total	$	14,903	$	3	$	14,906

	December 31, 2022
	Cost		Unrealized gain/(loss)			Market value
United States Treasury Bills	$	9,991	$	(2	)	$	9,989
Total	$	9,991	$	(2	)	$	9,989

XML

Note 7 - Fair Value Measurements and Financial Instruments

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Fair value measurements and financial instruments

7. Fair value measurements and financial instruments:

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value.

Level 1 ‑ inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 ‑ inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data or other means; and

Level 3 ‑ inputs are unobservable (supported by little or no market activity).

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

The following table presents the fair value of Company's assets that are measured at fair value on a recurring basis for the periods presented:

	June 30, 2023		Level 1		Level 2		Level 3
Assets
Money Market funds	$	3,220	$	-	$	3,220	$	-
High interest savings account		2,601		-		2,601		-
United States Treasury Bills, classified as short-term investments		13,125		-		13,125		-
Commercial Note, classified as short-term investments		1,781		-		1,781		-
Total	$	20,727	$	-	$	20,727	$	-

	December 31, 2022		Level 1		Level 2		Level 3
Assets
Money Market accounts	$	165	$	-	$	165	$	-
Money Market funds		22,343		-		22,343		-
High interest savings accounts		13,866		-		13,866		-
United States Treasury Bills		9,989		-		9,989		-
Total	$	46,363	$	-	$	46,363	$	-

XML

Note 8 - Accrued Liabilities

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Accrued liabilities

8.Accrued liabilities:

Accrued liabilities as of June 30, 2023 and December 31, 2022 consisted of the following:

	June 30,		December 31,
	2023		2022
Accrued personnel related costs	$	1,645	$	2,302
Accrued research and development expenses		6,029		3,122
Other accrued expenses		410		233
Total	$	8,084	$	5,657

XML

Note 9 - Lease Liability

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Lease liability

9.Lease liability

Aptose leases office space in San Diego, California and Toronto, Canada. On November 4, 2022, the lease for the San Diego office space was extended through May 31, 2026 (the "Third Amendment"). Management has determined that the Third Amendment represents a lease modification, as defined by ASC 842, Leases, does not meet the requirements for accounting as a separate contract and continues to meet the definition of an operating lease. The lease for the Toronto, Canada office space was extended for one year on February 23, 2023, with this extension expiring on June 30, 2024. The Company has not included any extension periods in calculating its right-to-use assets and lease liabilities. Aptose previously leased lab space in San Diego, which we exited prior to the expiration of the lease on February 28, 2023. The costs incurred in exiting this laboratory space were not material. The Company also enters into leases for small office equipment.

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

Years ending December 31,
2023	$	233
2024		459
2025		462
2026		197
Total	$	1,351

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

	June 30, 2023			December 31, 2022
Weighted-average remaining term – operating leases (years)		2.8			3.3
Weighted-average discount rate – operating leases		7.38	%		6.62	%
Lease liability, current portion	$	387		$	301
Lease liability, long-term portion		817			1,002
Total	$	1,204		$	1,303

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

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	117	$	117	$	245	$	238
Operating cash flows from operating leases	$	45	$	134	$	173	$	277

XML

Note 10 - Share Capital

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Share capital

10.Share capital:

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

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

a.Equity issuances:

(i) 2023 Committed Equity Facility ("Keystone Purchase Agreement")

On May 25, 2023, the Company and Keystone Capital Partners, LLC ("Keystone") entered into a committed equity facility, (the "Keystone Purchase Agreement"), which provides that subject to the terms and conditions set forth therein, we may sell to Keystone up to the lesser of (i) $25.0 million of the Common Shares and (ii) a number of Common Shares equal to 19.99% of the Common Shares outstanding immediately prior to the execution of the Keystone Purchase Agreement (subject to certain exceptions provided in the Purchase Agreement) (the “Total Commitment”), from time to time during the 24-month term of the Keystone Purchase Agreement. Additionally, on May 25, 2023, we entered into a Registration Rights Agreement with Keystone, pursuant to which the Company agreed to file a registration statement with the SEC covering the resale of Common Shares that are issued to Keystone under the Keystone Purchase Agreement. This registration statement became effective on June 30, 2023, and we commenced the Keystone Facility on July 10, 2023 (the “Commencement Date”)

Upon entering into the Keystone Purchase Agreement, the Company agreed to issue to Keystone an aggregate of 25,156 Common Shares (the “Commitment Shares”) as consideration for Keystone’s commitment to purchase Common Shares upon the Company’s direction under the Keystone Purchase Agreement. The Company issued 7,547 Common Shares, or

30% of the Commitment Shares, on the date of the Purchase Agreement (the “Initial Commitment Shares”). An additional 7,547 Common Shares, or 30% of the Commitment Shares, shall be issued to Keystone 90 days following the Commencement Date (the “First Back-End Commitment Shares”). The remaining 10,062 Common Shares, or 40% of the Commitment Shares, shall be issued to Keystone 180 days following the Commencement Date (the “Second Back-End Commitment Shares”, together with the First Back-End Commitment Shares, the “Back-End Commitment Shares”).

In the six months ended June 30, 2023, the Company's issuance of shares to Keystone was limited to the Initial Commitment Shares.

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

On December 9, 2022, the Company entered into an equity distribution agreement with Jones Trading acting as the agent under which the Company may, from time to time, sell Common Shares having an aggregate offering value of up to $50 million through Jones Trading on Nasdaq (the "2022 ATM Facility"). During the year ended December 31, 2022, the Company issued 4,836 shares under this 2022 ATM Facility at an average price of $10.81 for gross proceeds of $52 thousand ($51 thousand net of share issuance costs). During the six months ended June 30, 2023, the Company issued 171,253 shares under this 2022 ATM Facility at an average price of $6.88 for gross proceeds of $1.2 million ($1.1 million net of share issuance costs). Costs associated with the proceeds consisted of 3% cash commission.

(iii) 2020 At-The-Market Facility

On May 5, 2020, the Company entered an “at-the-market” equity distribution agreement with Piper Sandler & Co. (“Piper Sandler”) and Canaccord Genuity LLC (“Canaccord Genuity”) acting as co-agents (the “2020 ATM Facility”). Under the terms of the 2020 ATM Facility, the Company could, from time to time, sell Common Shares having an aggregate offering value of up to $75 million through Piper Sandler and Canaccord Genuity on Nasdaq. During the six months ended June 30, 2022, the Company issued 1,869 shares under the 2020 ATM Facility at an average price of $15.90 for gross proceeds of $30 thousand ($29 thousand net of share issue costs). During the year ended December 31, 2022, the Company issued 3,646 shares under the 2020 ATM Facility at an average price of $14.25 for gross proceeds of $52 thousand ($50 thousand net of share issue costs). As of October 31, 2022, the date the Agreement was terminated, the Company had raised a total of $89 thousand gross proceeds ($86 thousand net of share issuance costs) under the 2020 ATM Facility. Costs associated with the proceeds consisted of a 3% cash commission.

b.Loss per share:

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

	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Net loss	$	(14,129	)	$	(10,565	)	$	(27,805	)	$	(22,046	)
Weighted-average common shares – basic and    diluted (in thousands)		6,234			6,150			6,219			6,149
Net loss per share – basic and diluted	$	(2.27	)	$	(1.72	)	$	(4.47	)	$	(3.59	)

The effects of any potential exercise of the Company’s stock options outstanding during the three-month and six-month periods ended June 30, 2023, and June 30, 2022 have been excluded from the calculation of diluted loss per common share, since such securities would be anti‑dilutive.

XML

Note 11 - Stock-based Compensation

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Stock-based compensation

11.Stock‑based compensation:

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

a.Stock option plan and employee stock purchase plan

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

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

The Company currently maintains its existing Share Option Plan and 2015 Stock Incentive Plan (“2015 SIP”). Since June 1, 2021, no further grants have been made under the Share Option Plan or 2015 SIP, though existing grants under the Share Option Plan remain in effect in accordance with their terms.

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

Under both the Share Option Plan and the New Incentive Plan, the exercise price of each option equals the closing trading price of the Company’s stock on the day prior to the grant if the grant is made during the trading day or the closing trading price on the day of grant if the grant is issued after markets have closed. Vesting is provided for at the discretion of the Board of Directors and the expiration of options is to be no greater than ten years from the date of grant.

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

The ESPP allows eligible employees of the Company to purchase Common Shares through accumulated payroll deductions up to a maximum 15% of eligible compensation. The ESPP was 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 available for sale under the ESPP is 113,333 Common Shares. The first six-month offering period began on February 1, 2022, and ended on August 1, 2022. There were 724 Common Shares issued under the ESPP as of December 31, 2022. The second six-month period began on August 1, 2022, and ended on February 1, 2023. There were 1,438 Common Shares issued under the ESPP during the six months ended June 30, 2023 (six months ended June 30, 2022 - nil).

Stock option transactions for the six months ended June 30, 2023, and June 30, 2022, are summarized as follows:

				Six months ended June 30, 2023
	Options (in thousands)			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding, beginning of period		1,100		$	52.22
Granted		215		9.93
Exercised		—			—
Forfeited		(124	)		49.51
Outstanding, end of the period		1,191		$	45.06		7.3
Exercisable, end of the period		711			59.61		6.3
Vested and expected to vest, end of period		1,105		$	46.74		7.2

				Six months ended June 30, 2022
	Options (in thousands)			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding, beginning of period		1,007		$	68.30
Granted		375			18.50
Exercised		(1	)	16.25
Forfeited		(104	)	43
Outstanding, end of the period		1,277		$	56.24		6.5
Exercisable, end of the period		710			69.73		4.8
Vested and expected to vest, end of period		1,192		$	56.19		6.4

During the six months ended June 30, 2022, the option agreements of one Company officer were modified as part of a separation and release agreement. Vested options of 56,765, with exercise prices ranging from $20.10 to $103.65, were allowed to continue to be exercisable for an additional 12-month period, and also 31,810 options that would have expired unvested, were allowed to continue to vest for a 12-month period. As there was no service requirement, during the six months ended June 30, 2022, the Company recorded $67 thousand in additional compensation related to these modifications.

As of June 30, 2023, there was $2.17 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 1.53 years. As of June 30, 2023, total compensation cost not yet recognized related to grants under the ESPP was approximately $2 thousand, which is expected to be recognized over one month.

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

	Six months ended June 30, 2023			Six months ended June 30, 2022
Risk-free interest rate		3.41	%		2.07	%
Expected dividend yield		-			-
Expected volatility		80.3	%		82.9	%
Expected life of options	5 years			5 years
Grant date fair value	$	6.57		$	12.28

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:

	Six months ended June 30, 2023		Six months ended June 30, 2022
	Number of options (in thousands)		Number of options (in thousands)
3-year vesting (50%-25%-25%)		49		28
4-year vesting (50%-16 2/3%-16 2/3%-16 2/3%)		166		347
Total stock options granted in the period		215		375

The Company has a stock incentive plan (SIP) pursuant to which the Board may grant stock-based awards comprised of restricted stock units or dividend equivalents to employees, officers, consultants, independent contractors, advisors and non-employee directors of the Company. Each restricted unit is automatically redeemed for one common share of the Company upon vesting. During the six-month period ended June 30, 2023, the Company granted 38,000 restricted stock units ("RSUs") with immediate vesting and an exercise price of $9.90 (the "2023 RSU Grant"). On February 6, 2023, all of these RSUs were redeemed for 38,000 Common Shares. No RSUs were granted in the six months ended June 30, 2022. The following table presents the vesting and redemption of the RSUs granted in the three months and six months ended June 30, 2023 and June 30, 2022.

	Six months ended June 30, 2023						Six months ended June 30, 2022
	Number of options (in thousands)			Weighted average grant date fair value			Number of options (in thousands)		Weighted average grant date fair value
Outstanding, beginning of period		-		$	-			-	$	-
Granted		38			9.90			-		-
Vested and redeemed		(38	)		(9.90	)		-		-
Outstanding, ending of period		-		$	-			-	$	-

b.Share-based payment expense

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

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Research and development	$	271	$	537	$	923	$	1,483
General and administrative		498		242		1,720		1,810
	$	769	$	779	$	2,643	$	3,293

XML

Note 12 - Subsequent Event

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Subsequent events

12.Subsequent events

On August 10, 2023, the Company entered into a binding term sheet with Hanmi Pharmaceuticals Co., Ltd. (“Hanmi”) whereby Hanmi agreed at their sole discretion to invest over a time period ending June 30, 2024, up to a maximum of $7 million in Aptose up to a total ownership of 19.99 percent of Aptose by Hanmi (Hanmi currently holds 215,703 shares of Aptose). The deal is subject to completion of definitive documentation and customary closing conditions. The Company shall use the proceeds from this investment solely for tuspetinib-related business operations purposes. The Company currently has a licensing agreement with Hanmi for tuspetinib which was entered into on November 4, 2021. In 2022 the Company and Hanmi also entered into a separate supply agreement for additional production of new drug substance ("API") and drug product to support further tuspetinib clinical development for which the Company pays Hanmi per batch of production. The tuspetinib licensing agreement with Hanmi requires the Company to make milestone payments based on progression of research as outlined in Note 13 to the annual financial statements. The Company anticipates that $3 million will be invested by the end of August 2023, subject to the satisfaction of customary closing conditions. The second investment of up to $4 million or a maximum of 19.99 percent ownership interest in the Company by Hanmi is contingent on Aptose meeting certain manufacturing and data milestones related to tuspetinib by June 30, 2024 and anticipated to be achieved by year-end.

Subsequent to June 30, 2023, the Company issued 127,344 shares under the 2022 ATM Facility at an average price of $4.39 for gross proceeds of $559 thousand ($542 thousand net of share issuance costs). On a cumulative basis to August 10, 2023, the Company has issued 303,433 shares under the 2022 ATM Facility at an average price of $5.90 for gross proceeds of $1.79 million ($1.74 million net of share issue costs). Costs associated with the proceeds consisted of 3% cash commission.

Subsequent to June 30, 2023, the Company sold 11,421 shares to Keystone under the Keystone Equity Facility for net proceeds of $50,000.

Subsequent to June 30, 2023, the Company issued 4,453 shares under the ESPP.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of presentation - Going concern

a.Basis of presentation - Going concern

These unaudited consolidated condensed financial statements have been prepared in conformity with generally accepted accounting principles in the United States, or GAAP and the rules and regulations of the Securities and Exchange Commission, or SEC, related to quarterly reports filed on Form 10-Q, assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company's ability to continue as a going concern exists.

As of June 30, 2023, the Company had an accumulated deficit of approximately $492.1 million (December 31, 2022, $464.3 million); cash and cash equivalents and investment balances of approximately $23.3 million (December 31, 2022, $47.0 million); and working capital of approximately $13.3 million (December 31, 2022, $37.2 million). In order for the Company to meet its capital requirements, and continue to operate, additional financing will be necessary. The Company is evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, obtaining equity financing, debt financing, committed equity facilities or other financing instruments and restructuring of operations to decrease expenses. However, given the impact of the economic downturn on the U.S. and global financial markets, the Company may be unable to access further equity when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. The consolidated financial statements do not reflect any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. Such adjustments may be material.

Basis of consolidation

b.Basis of consolidation:

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions, balances, revenue, and expenses are eliminated on consolidation.

Significant accounting policies, estimates and judgments

c.Significant accounting policies, estimates and judgments:

During the six months ended June 30, 2023, there have been no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 24, 2023.

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.

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.

Recent Accounting Pronouncements

d.Recent Accounting Pronouncements

We have adopted no new accounting pronouncements during the six months ended June 30, 2023. There were various accounting standards and interpretations issued recently, none of which are expected to have a material impact on our financial position, operations or cash flows.

Foreign currency

e.Foreign currency:

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

Concentration of risk

f.Concentration of risk:

The Company is subject to credit risk from the Company’s cash and cash equivalents and investments. The carrying amount of the financial assets represents the maximum credit exposure. The Company manages credit risk associated with its cash and cash equivalents and investments by maintaining minimum standards of R1‑low or A‑low investments and the Company invests only in highly rated corporations and treasury bills, which are capable of prompt liquidation.

XML

Note 4 - Prepaid Expenses (Tables)

6 Months Ended

Jun. 30, 2023

Prepaid Expense and Other Assets [Abstract]

Summary of Prepaid Expenses and Other Assets

	June 30,		December 31,
	2023		2022
Prepaid research and development expenses	$	854	$	1,271
Prepaid insurance		405		893
Other prepaid expenses		477		139
Total	$	1,736	$	2,303

XML

Note 5 - Right-of-use Assets (Tables)

6 Months Ended

Jun. 30, 2023

Assets and Liabilities, Lessee [Abstract]

Schedule of Right-of-use Assets

	June 30,			December 31,
	2023			2022
Right-of-use assets, beginning of period	$	3,100		$	1,860
Additions to right-of-use assets		24			1,240
Right-of-use assets, end of period		3,124			3,100
Accumulated amortization		(1,998	)		(1,803	)
Right-of use assets, NBV	$	1,126		$	1,297

XML

Note 6 - Investments (Tables)

6 Months Ended

Jun. 30, 2023

Investments [Abstract]

Summary of Investments

	June 30, 2023
	Cost		Unrealized gain/(loss)		Market value
United States Treasury Bills	$	13,122	$	3	$	13,125
Commercial Notes		1,781		-		1,781
Total	$	14,903	$	3	$	14,906

	December 31, 2022
	Cost		Unrealized gain/(loss)			Market value
United States Treasury Bills	$	9,991	$	(2	)	$	9,989
Total	$	9,991	$	(2	)	$	9,989

XML

Note 7 - Fair Value Measurements and Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Assets Measured on a Recurring Basis

The following table presents the fair value of Company's assets that are measured at fair value on a recurring basis for the periods presented:

	June 30, 2023		Level 1		Level 2		Level 3
Assets
Money Market funds	$	3,220	$	-	$	3,220	$	-
High interest savings account		2,601		-		2,601		-
United States Treasury Bills, classified as short-term investments		13,125		-		13,125		-
Commercial Note, classified as short-term investments		1,781		-		1,781		-
Total	$	20,727	$	-	$	20,727	$	-

	December 31, 2022		Level 1		Level 2		Level 3
Assets
Money Market accounts	$	165	$	-	$	165	$	-
Money Market funds		22,343		-		22,343		-
High interest savings accounts		13,866		-		13,866		-
United States Treasury Bills		9,989		-		9,989		-
Total	$	46,363	$	-	$	46,363	$	-

XML

Note 8 - Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Accrued Liabilities, Current [Abstract]

Schedule of Accrued liabilities

Accrued liabilities as of June 30, 2023 and December 31, 2022 consisted of the following:

	June 30,		December 31,
	2023		2022
Accrued personnel related costs	$	1,645	$	2,302
Accrued research and development expenses		6,029		3,122
Other accrued expenses		410		233
Total	$	8,084	$	5,657

XML

Note 9 - Lease Liability (Tables)

6 Months Ended

Jun. 30, 2023

Lessee Disclosure [Abstract]

Summary of Minimum Payments, Undiscounted, Under Operating Leases

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

Years ending December 31,
2023	$	233
2024		459
2025		462
2026		197
Total	$	1,351

Summary of Weighted Average Remaining Term of Leases and Weighted Average Discount Rate

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

	June 30, 2023			December 31, 2022
Weighted-average remaining term – operating leases (years)		2.8			3.3
Weighted-average discount rate – operating leases		7.38	%		6.62	%
Lease liability, current portion	$	387		$	301
Lease liability, long-term portion		817			1,002
Total	$	1,204		$	1,303

Summary of Operating Lease Costs and Operating Cash Flows from Operating Leases

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

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	117	$	117	$	245	$	238
Operating cash flows from operating leases	$	45	$	134	$	173	$	277

XML

Note 10 - Share Capital (Tables)

6 Months Ended

Jun. 30, 2023

Notes To Financial Statements [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

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

	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Net loss	$	(14,129	)	$	(10,565	)	$	(27,805	)	$	(22,046	)
Weighted-average common shares – basic and    diluted (in thousands)		6,234			6,150			6,219			6,149
Net loss per share – basic and diluted	$	(2.27	)	$	(1.72	)	$	(4.47	)	$	(3.59	)

XML

Note 11 - Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Notes To Financial Statements [Abstract]

Share-based Payment Arrangement, Option, Activity

Stock option transactions for the six months ended June 30, 2023, and June 30, 2022, are summarized as follows:

				Six months ended June 30, 2023
	Options (in thousands)			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding, beginning of period		1,100		$	52.22
Granted		215		9.93
Exercised		—			—
Forfeited		(124	)		49.51
Outstanding, end of the period		1,191		$	45.06		7.3
Exercisable, end of the period		711			59.61		6.3
Vested and expected to vest, end of period		1,105		$	46.74		7.2

				Six months ended June 30, 2022
	Options (in thousands)			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding, beginning of period		1,007		$	68.30
Granted		375			18.50
Exercised		(1	)	16.25
Forfeited		(104	)	43
Outstanding, end of the period		1,277		$	56.24		6.5
Exercisable, end of the period		710			69.73		4.8
Vested and expected to vest, end of period		1,192		$	56.19		6.4

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

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

	Six months ended June 30, 2023			Six months ended June 30, 2022
Risk-free interest rate		3.41	%		2.07	%
Expected dividend yield		-			-
Expected volatility		80.3	%		82.9	%
Expected life of options	5 years			5 years
Grant date fair value	$	6.57		$	12.28

Schedule of Share-based Payment Award, Options, Grants in Period

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

	Six months ended June 30, 2023		Six months ended June 30, 2022
	Number of options (in thousands)		Number of options (in thousands)
3-year vesting (50%-25%-25%)		49		28
4-year vesting (50%-16 2/3%-16 2/3%-16 2/3%)		166		347
Total stock options granted in the period		215		375

Share-based Payment Arrangement, Vesting and Redemption of the RSUs Granted

No RSUs were granted in the six months ended June 30, 2022. The following table presents the vesting and redemption of the RSUs granted in the three months and six months ended June 30, 2023 and June 30, 2022.

	Six months ended June 30, 2023						Six months ended June 30, 2022
	Number of options (in thousands)			Weighted average grant date fair value			Number of options (in thousands)		Weighted average grant date fair value
Outstanding, beginning of period		-		$	-			-	$	-
Granted		38			9.90			-		-
Vested and redeemed		(38	)		(9.90	)		-		-
Outstanding, ending of period		-		$	-			-	$	-

Share-based Payment Arrangement, Expensed and Capitalized, Amount

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

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Research and development	$	271	$	537	$	923	$	1,483
General and administrative		498		242		1,720		1,810
	$	769	$	779	$	2,643	$	3,293

XML

Note 1 - Reporting entity (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Notes To Financial Statements [Abstract]
Accumulated deficit	$ (492,135)	$ (464,330)
Cash and investment	23,300	47,000
Working capital	$ 13,300	$ 37,200

XML

Note 2 - Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Accumulated deficit	$ (492,135)	$ (464,330)
Cash and investment	23,300	47,000
Working capital	$ 13,300	$ 37,200

XML

Note 3 - Cash and Cash Equivalents (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Cash and Cash Equivalents [Abstract]
Cash	$ 2,579	$ 596
Cash and cash equivalents	$ 5,821	$ 36,374

XML

Note 4 - Prepaid Expenses - Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Prepaid Expense and Other Assets [Abstract]
Prepaid research and development expenses	$ 854	$ 1,271
Prepaid insurance	405	893
Other prepaid expenses	477	139
Total	$ 1,736	$ 2,303

XML

Note 5 - Right-of-use Assets - Schedule of Right-of-use Assets (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Assets and Liabilities, Lessee [Abstract]
Right-of-use assets, beginning of period	$ 3,100	$ 1,860
Additions to right-of-use assets	24	1,240
Right-of-use assets, end of period	3,124	3,100
Accumulated amortization	(1,998)	(1,803)
Right-of use assets, NBV	$ 1,126	$ 1,297

XML

Note 6 - Investments - Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule of Investments [Line Items]
Investment, Cost	$ 14,903	$ 9,991
Investment, Unrealized gain/(loss)	3	(2)
Investment, Market value	14,906	9,989
United States Treasury Bills [Member]
Schedule of Investments [Line Items]
Investment, Cost	13,122	9,991
Investment, Unrealized gain/(loss)	3	(2)
Investment, Market value	13,125	$ 9,989
Commercial Notes [Member]
Schedule of Investments [Line Items]
Investment, Cost	1,781
Investment, Unrealized gain/(loss)	0
Investment, Market value	$ 1,781

XML

Note 7 - Fair Value Measurements and Financial Instruments - Assets Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets, Fair Value Disclosure	$ 20,727	$ 46,363
Level 1 [Member]
Assets, Fair Value Disclosure	0	0
Level 2 [Member]
Assets, Fair Value Disclosure	20,727	46,363
Level 3 [Member]
Assets, Fair Value Disclosure	0	0
Money Market Accounts [Member]
Assets, Fair Value Disclosure		165
Money Market Accounts [Member] | Level 1 [Member]
Assets, Fair Value Disclosure		0
Money Market Accounts [Member] | Level 2 [Member]
Assets, Fair Value Disclosure		165
Money Market Accounts [Member] | Level 3 [Member]
Assets, Fair Value Disclosure		0
Money Market Funds [Member]
Assets, Fair Value Disclosure	3,220	22,343
Money Market Funds [Member] | Level 1 [Member]
Assets, Fair Value Disclosure	0	0
Money Market Funds [Member] | Level 2 [Member]
Assets, Fair Value Disclosure	3,220	22,343
Money Market Funds [Member] | Level 3 [Member]
Assets, Fair Value Disclosure	0	0
High Interest Savings Account [Member]
Assets, Fair Value Disclosure	2,601	13,866
High Interest Savings Account [Member] | Level 1 [Member]
Assets, Fair Value Disclosure	0	0
High Interest Savings Account [Member] | Level 2 [Member]
Assets, Fair Value Disclosure	2,601	13,866
High Interest Savings Account [Member] | Level 3 [Member]
Assets, Fair Value Disclosure	0	0
United States Treasury Bills [Member]
Assets, Fair Value Disclosure		9,989
Short term investments	13,125
United States Treasury Bills [Member] | Level 1 [Member]
Assets, Fair Value Disclosure		0
Short term investments	0
United States Treasury Bills [Member] | Level 2 [Member]
Assets, Fair Value Disclosure		9,989
Short term investments	13,125
United States Treasury Bills [Member] | Level 3 [Member]
Assets, Fair Value Disclosure		$ 0
Short term investments	0
Commercial Note [Member]
Short term investments	1,781
Commercial Note [Member] | Level 1 [Member]
Short term investments	0
Commercial Note [Member] | Level 2 [Member]
Short term investments	1,781
Commercial Note [Member] | Level 3 [Member]
Short term investments	$ 0

XML

Note 8 - Accrued Liabilities - Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accrued Liabilities, Current [Abstract]
Accrued personnel related costs	$ 1,645	$ 2,302
Accrued research and development expenses	6,029	3,122
Other accrued expenses	410	233
Total	$ 8,084	$ 5,657

XML

Note 9 - Lease Liability (Details Textual)	Jun. 30, 2023
Office Space [Member] | Toronto Canada [Member]
Lessee, Operating Lease, Renewal Term	1 year

XML

Note 9- Lease Liability - Schedule of Minimum Payments Under Operating Leases (Details) $ in Thousands	Jun. 30, 2023 USD ($)
2023	$ 233
2024	459
2025	462
2026	197
Total	$ 1,351

XML

Note 9 - Lease Liability - Lease Liability (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Weighted-average remaining term - operating leases (years)	2 years 9 months 18 days	3 years 3 months 18 days
Weighted-average discount rate - operating leases	7.38%	6.62%
Lease liability, current portion	$ 387	$ 301
Lease liability, long term portion	817	1,002
Total	$ 1,204	$ 1,303

XML

Note 9 - Lease Liability - Operating Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Operating lease cost	$ 117	$ 117	$ 245	$ 238
Operating cash flows from operating leases	$ 45	$ 134	$ 173	$ 277

XML

Note 10 - Share Capital (Details Textual) - USD ($)			1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 10, 2023	May 25, 2023	Oct. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 09, 2022	May 05, 2020
2023 Committed Equity Facility [Member]
Stock issuance program authorized shares		25,156
Stock Issuance Program, Authorized Amount		$ 25,000,000
Percentage of common shares outstanding.		19.99%
2023 Committed Equity Facility [Member] | Initial Commitment Shares [Member]
Common shares issued under the ATM Facility (in shares)		7,547
Stock Issuance, Percent of Cash Commission to Broker		30.00%
2023 Committed Equity Facility [Member] | First Back-End Commitment Shares [Member]
Common shares issued under the ATM Facility (in shares)		7,547
Stock Issuance, Percent of Cash Commission to Broker		30.00%
2023 Committed Equity Facility [Member] | Second Back-End Commitment Shares [Member]
Common shares issued under the ATM Facility (in shares)		10,062
Stock Issuance, Percent of Cash Commission to Broker		40.00%
The 2022 ATM Offering [Member]
Stock Issuance Program, Authorized Amount									$ 50,000,000
Common shares issued under the ATM Facility (in shares)	303,433					171,253		4,836
Shares Issued, Price Per Share (in dollars per share)	$ 5.90			$ 6.88		$ 6.88		$ 10.81
Proceeds from Issuance of Common Stock, Gross	$ 1,790,000					$ 1,200,000		$ 52,000
Proceeds from Issuance of Common Stock	$ 1,740,000			$ 1,109,000	$ 0	$ 1,143,000	$ 0	$ 51,000
Stock Issuance, Percent of Cash Commission to Broker				3.00%		3.00%
The 2020 ATM Offering [Member]
Stock Issuance Program, Authorized Amount										$ 75,000,000
Common shares issued under the ATM Facility (in shares)							1,869	3,646
Shares Issued, Price Per Share (in dollars per share)					$ 15.9		$ 15.9	$ 14.25
Proceeds from Issuance of Common Stock, Gross			$ 89,000				$ 30,000	$ 52,000
Proceeds from Issuance of Common Stock			$ 86,000				$ 29,000	$ 50,000
Stock Issuance, Percent of Cash Commission to Broker			3.00%

XML

Note 10 - Share Capital - Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net loss	$ (14,129)	$ (10,565)	$ (27,805)	$ (22,046)
Weighted-average common shares - basic	6,234	6,150	6,219	6,149
Weighted-average common shares - diluted	6,234	6,150	6,219	6,149
Net loss per share - basic	$ (2.27)	$ (1.72)	$ (4.47)	$ (3.59)
Net loss per share - diluted	$ (2.27)	$ (1.72)	$ (4.47)	$ (3.59)

XML

Note 11 - Stock-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Feb. 06, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Jun. 01, 2021
Common Stock, No Par Value		$ 0		$ 0		$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)		113,333		113,333
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)				10 years
Employee Stock Purchase Plan, Maximum Payroll Deduction, Percent		15.00%		15.00%
Employee Stock Purchase Plan, Stock Purchase Price, Percent		85.00%		85.00%
Common shares issued under the ESPP plan (Shares)				1,438	0	724
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount		$ 2,170		$ 2,170
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)				1 year 6 months 10 days
Share-Based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount		$ 2		$ 2
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Number		711,000	710,000	711,000	710,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price (in dollars per share)		$ 59.61	$ 69.73	$ 59.61	$ 69.73
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term				6 years 3 months 18 days	4 years 9 months 18 days
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term				7 years 2 months 12 days	6 years 4 months 24 days
Share-based Payment Arrangement, Expense		$ 769	$ 779	$ 2,643	$ 3,293
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)				215,000	375,000
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price				$ 9.93	$ 18.5
Weighted average grant date fair value, exercise price				$ 9.9
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)				38,000	0
Common shares issued upon redemption of restricted share units, shares	38,000
Officer [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Number			56,765		56,765
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term					12 months
Officer [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price (in dollars per share)			$ 103.65		$ 103.65
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term					12 months
Officer [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price (in dollars per share)			$ 20.1		$ 20.1
Officer [Member] | Vested Options [Member]
Share-based Payment Arrangement, Expense					$ 67
Officer [Member] | Continuing Vesting Options with No Service Requirement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Accelerated Vesting, Number (in shares)					31,810
New Incentive Plan [Member]
Common Stock, No Par Value							$ 0
New Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)							691,400

XML

Note 11 - Stock-based Compensation - Stock Option Transactions (Details) - $ / shares shares in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Outstanding, options (in shares)	1,100	1,007
Outstanding, weighted average exercise price (in dollars per share)	$ 52.22	$ 68.3
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)	215	375
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 9.93	$ 18.5
Exercised, options (in shares)	0	(1)
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price	$ 0	$ 16.25
Forfeited, options (in shares)	(124)	(104)
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ 49.51	$ 43
Outstanding, options (in shares)	1,191	1,277
Outstanding, weighted average exercise price (in dollars per share)	$ 45.06	$ 56.24
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	7 years 3 months 18 days	6 years 6 months
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Number	711	710
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 59.61	$ 69.73
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	6 years 3 months 18 days	4 years 9 months 18 days
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	1,105	1,192
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 46.74	$ 56.19
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	7 years 2 months 12 days	6 years 4 months 24 days

XML

Note 11 - Stock-based Compensation - Weighted Average Assumptions (Details) - $ / shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Risk-free interest rate	3.41%	2.07%
Expected dividend yield	0.00%	0.00%
Expected volatility	80.30%	82.90%
Expected life of options (years)	5 years	5 years
Grant date fair value	$ 6.57	$ 12.28

XML

Note 11 - Stock-based Compensation - Vesting Terms of Options Granted (Details) - shares shares in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Stock options granted in the period (in shares)	215	375
Options with Three Year Vesting [Member]
Stock options granted in the period (in shares)	49	28
Options with Four Year Vesting [Member]
Stock options granted in the period (in shares)	166	347

XML

Note 11 - Stock-based Compensation - Vesting Terms of Options Granted (Details) (Parentheticals)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Options with Three Year Vesting [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage	50.00%	50.00%
Options with Three Year Vesting [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage	25.00%	25.00%
Options with Three Year Vesting [Member] | Share-Based Payment Arrangement, Tranche Three [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage	25.00%	25.00%
Options with Four Year Vesting [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage	50.00%	50.00%
Options with Four Year Vesting [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage	16.67%	16.67%
Options with Four Year Vesting [Member] | Share-Based Payment Arrangement, Tranche Three [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage	16.67%	16.67%
Options with Four Year Vesting [Member] | Share-based Payment Arrangement, Tranche Four [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage	16.67%	16.67%

XML

Note 11 - Stock-based Compensation - Vesting and Redemption of the RSUs Granted (Details) - $ / shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Number of options, Granted	38,000	0
Number of options, Vested and redeemed	(38,000)
Weighted average grant date fair value, Granted	$ 9.9
Restricted Stock Units (RSUs) [Member]
Number of options, Beginning Balance	0	0
Number of options, Granted		0
Number of options, Vested and redeemed		0
Number of options, Ending Balance	0	0
Weighted average grant date fair value, Beginning Balance	$ 0	$ 0
Weighted average grant date fair value, Granted	9.9	0
Weighted average grant date fair value, Vested and redeemed	(9.9)	0
Weighted average grant date fair value, Ending Balance	$ 0	$ 0

XML

Note 11 - Stock-based Compensation - Share-based Payment Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-based Payment Arrangement, Expense	$ 769	$ 779	$ 2,643	$ 3,293
Research and Development Expense [Member]
Share-based Payment Arrangement, Expense	271	537	923	1,483
General and Administrative Expense [Member]
Share-based Payment Arrangement, Expense	$ 498	$ 242	$ 1,720	$ 1,810

XML

Note 12 - Subsequent Event (Details Textual) - USD ($)			3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 10, 2023	Jul. 01, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Shares issued under ESPP					1,438	0	724
The 2022 Atm Offering [Member]
Common shares issued under the 2022 ATM Facility (in shares)	303,433				171,253		4,836
Shares Issued, Price Per Share (in dollars per share)	$ 5.90		$ 6.88		$ 6.88		$ 10.81
Proceeds from Issuance of Common Stock, Gross	$ 1,790,000				$ 1,200,000		$ 52,000
Proceeds from Issuance of Common Stock	$ 1,740,000		$ 1,109,000	$ 0	$ 1,143,000	$ 0	$ 51,000
Stock Issuance, Percent of Cash Commission to Broker			3.00%		3.00%
Subsequent Event [Member]
Shares issued under ESPP		4,453
Subsequent Event [Member] | Hanmi Pharmaceuticals Co., Ltd. [Member]
Number of shares hold	215,703
Subsequent Event [Member] | Hanmi Pharmaceuticals Co., Ltd. [Member] | First Tranche [Member]
Investment for ownership interest	$ 3,000,000
Subsequent Event [Member] | Maximum [Member] | Hanmi Pharmaceuticals Co., Ltd. [Member]
Percentage of investment	19.99%
Investment for ownership interest	$ 7,000,000
Subsequent Event [Member] | Maximum [Member] | Hanmi Pharmaceuticals Co., Ltd. [Member] | Second Tranche [Member]
Investment for ownership interest	4,000,000
Subsequent Event [Member] | Keystone [Member]
Net proceeds	$ 50,000
Number of shares sold	11,421
Subsequent Event [Member] | The 2022 Atm Offering [Member]
Common shares issued under the 2022 ATM Facility (in shares)		127,344
Shares Issued, Price Per Share (in dollars per share)		$ 4.39
Proceeds from Issuance of Common Stock, Gross		$ 559,000
Proceeds from Issuance of Common Stock		$ 542,000
Stock Issuance, Percent of Cash Commission to Broker	3.00%