Why Aptose Biosciences Plunged 45% Yesterday

Aptose Biosciences (TSX:APT)(NASDAQ:APTO) results for its leukemia drug were met with a poor reaction, sending shares down 45%.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published December 15, 2021 8:20 am EST

Aptose Biosciences (TSX:APT)(NASDAQ:APTO) shares crashed 45% on Tuesday after results from its leukemia trial were met with a less-than-ideal reaction.

What happened?

The biotechnology company focused on oncology reported its oral, once-daily myeloid kinome inhibitor (MKI) phase-one-of-two study. The company believes it showed “meaningful benefit in all responders” in the 34-patient study. It’s a difficult area of study, as acute myelogenous leukemia (ACL) relapses are incredibly difficult to treat.

Its current trial, named luxeptinib, aims at creating a “next generation” formula, to “reduce pill burden, improve absorption, and increase exposure.” The new formula aims to begin testing by the first half of 2022.

The news became public on Monday evening, sending shares in a downward spiral almost immediately. Shares reached a trough price, down 45% on Tuesday. Shares currently trade at $1.44 as of writing.

So what?

This new study continues the bad share news for Aptose, despite analysts continuing to recommend it as a strong buy. It seems that investors don’t want to wait for action and remain unconvinced for a while now. The last report back in June was also met with lukewarm results.

The problem is that it’s been far too much waiting for investors regarding Aptose. Everyone wants the next big thing after the COVID-19 vaccine. A treatment for cancer would certainly be a great place to look. However, Aptose continues to see more trials and small results.

Now what?

Analysts are of mixed minds when it comes to Aptose. On the one hand, it could be a good momentum buy if you’re watching it like a hawk. On the other hand, it’s not valuable at the moment. Its fundamentals are weak, with a -1.93 EV/EBITDA and price-to-book ratio of two. Further, it continues to operate at a loss, with its most recent earnings coming in at a loss of $55 million. And that loss has grown larger and larger as the quarters continue on.

If Aptose can’t convince investors that its next drug is worth the wait soon, it may be out of long-term luck. So, I wouldn’t look at this week’s collapse in share price as an opportunity. I’d definitely wait and see what happened in 2022 before buying even a share of Aptose.

Shares of Aptose are down 75% year to date.