TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

At the end of December, Aptose Biosciences Inc. (Nasdaq: APTO) announced that the Food and Drug Administration (FDA) in the US had granted Orphan Drug Designation to its lead development asset.

The company ran up on the back of the news, climbing from in and around $1.77 a share to highs of $2.40 – a gain of more than 35% a – before settling to post-news dip lows in and around $2.08 a piece. During the first few sessions of 2018, markets have traded up slightly on Aptose shares and the company currently goes for $2.23 and commands a market capitalization of just shy of $59 million.

That's still a microcap, for all intents and purposes, but with the immediate reaction to the recent news now in the dust-settled phase, is there any value to be had ahead of the drug in question advancing along its development pathway in the US?

Let's take a look.

So, the drug in question is called CG‘806 and – as an initial target disease – it's going after acute myeloid leukemia (AML). The drug is part of a family of drugs called pan-FLT3/pan-BTK inhibitors. The mechanism of action on this one is pretty complicated but, in an attempt to simplify, AML patients often have mutations in what's called FLT3. These mutations kick-start the oncogenic pathways that lead to the development of cancer cells and, subsequent to this development, the proliferation and spread of the same sort of AML cells.

The idea is that by inhibiting these wild-type FLT3 mutations, CG‘806 can suppress the pathways that kick-start proliferation and – in turn – can halt progression (or, even better, can reverse the severity) of the disease in question.

It's a bit of a long shot as, while this class of drug exists, it's never been tested in humans before and the company is carrying it forward based on a relatively limited base of non-human data.

If it works, however, it's got real potential to be a major revenue driver for Aptose. AML is a very large unmet need in the US (and indeed, globally) right now. It's the most common type of acute leukemia among adults, with an annual incidence of approximately 21,000 patients and causing more than 10,000 deaths each year in the US alone.

If Aptose can bring a fresh treatment option to the table, then, and even as a second or third line therapy (standard of care in this space is radiotherapy since, with AML being a leukemia-type cancer, surgical resection isn’t an option), there's no reason the asset can't become a drug that generates $100 million plus in annual sales during the first few years' post-approval.

And with the Orphan Designation that's the focus of the latest development associated with this drug, the pathway to approval (and any subsequent marketing efforts) are made that little bit easier. The designation brings with it an extended marketing exclusivity post-approval and also helps Aptose to avoid a number of the fees and costs associated with trials, early to mid-stage.

So, to jump back to the initial question – is there any value in a position near term?

Well, a position would be a punt given that there's very little publicly available information as to how this drug performs, even in animal models, right now. With that said, the FDA requires some degree of promise ahead of Orphan Designation so there must be some suggestion of efficacy on the table. With this in mind, while it's a punt, it could make a nice small scale position as part of a balanced portfolio ahead of the drug's advance into the clinic.