Tuesday, November 8, 2016

Aptose Remains In Limbo

In a market that has turned unfriendly toward biotechs, Aptose Biosciences' (NASDAQ:APTO) ongoing execution issues and cash drain have become serious issues. It has taken over a year (and counting) to resolve a clinical hold on APTO-253, and that's an execution shortfall that the company can ill-afford given the progress other companies are making with clinical candidates for hematological cancers and the need for real clinical data to support further capital raises.

The good news is that the company appears to be close to a resolution of the clinical hold with APTO-253 and the resumption of Phase I testing. The other good news is that the company has added another interesting preclinical asset for its hematology pipeline. The bad news is that this is all about "potential" and potential is the one asset small biotechs never seem to lack. What's more, the company is going to need to raise capital and the share price weakness is going to increase the dilution.

It's hard to stay bullish on a biotech that has needed more than a year to reformulate a drug and resolve its clinical hold (when that is really the only value-driving asset the company has), and that's particularly true given the risk that Aptose may have to raise money with little-to-no human clinical data. There's still upside here; if APTO-253 and CG-806 work, they can redeem a lot of these issues down the road. But make no mistake - this is a highly speculative pick that is not so far removed from gambling.

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Aptose Remains In Limbo

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