William Peters

Cancer drug developer Adherex Technologies Inc. crept closer to getting its drug candidates into the market during the third quarter, but also shifted more of its operations from Ottawa to Research Triangle Park, N.C.

The company reported a net loss for the March quarter of $3.2 million, or two cents a share, up from $2.5 million, or three cents a share, in the same period last year.

The greater loss stemmed from an increase of 55 per cent in research and development costs as the company accelerates its development efforts.

The potential of Adherex's drug candidates has elicited significant market interest in the company. In December Adherex completed a $23.5 million financing to fund its development efforts. Earlier this month, it completed a bought deal that raised another $12.4 million in gross proceeds.

"This was an important quarter for the company as we continued our evolution to an enterprise focusing on the development of important and innovative approaches to the treatment of cancer," chairman and CEO William Peters said in a statement. "...we have been able to devote even more energy to drug development."

However, the closer the company comes to commercial success, the smaller the role that Ottawa plays.

During the quarter, Adherex expanded its corporate operation in Research Triangle Park and "substantially" completed the relocation of its clinical development to the U.S. base. "The addition of highly qualified local staff, and a leased office and laboratory space have helped the company better adapt to its long-term needs," the company said in a statement.

Adherex said it expects to have fully relocated its operations to North Carolina by August.

One of the milestones of the quarter was the granting of orphan drug status to the company's STS drug by the U.S. Food and Drug Administration.

STS, originally developed to treat cyanide poisoning, has proven effective in counteracting the deafness in young cancer patients often caused by platinum-based chemotherapy treatments.

There is no other drug available on the market to treat so-called platinum-induced ototoxicity in children.

The orphan drug status gives Adherex a seven-year exclusivity on the market, which could generate annual revenues of $50 million to $150 million in the U.S. alone.

"Also, we believe the receipt of orphan drug designation in the U.S. will provide the launching pad for similar coverage in Europe and potentially for other important cancer indications," Peters added.

Revenues from STS would be used to fund further development and trial work on Adherex's flagship Exherin line of drug candidates.

Exherins kill cancer tumours by destroying the blood vessels that feed them without harming surrounding healthy tissue. Exherin targets cadherins, the molecules that bind together the cells that form the blood vessels within a cancer tumour.

Clinical trials for Exherin will begin in the U.S. next year. In February, Adherex began a Phase I clinical study of Exherin at the Ottawa Regional Cancer Centre.

"We believe that our drugs have real potential to reduce the burden of cancer. Rapid, clinical development is the highest priority for the company so that these potential benefits can be realized as soon as possible," Peters said.

Adherex finished the quarter with cash and cash equivalents of $18.9 million. That figure does not include the net proceeds of $11.7 million from the bought deal financing completed after the end of the quarter.