February
2, 2011
Ms.
Christine Allen
Staff
Accountant
United
States Securities and Exchange Commission
Division
of Corporation Finance
100 F
Street, N. E.
Washington,
D.C. 20549
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RE:
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Adherex
Technologies, Inc.
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|
10-K
for the Year Ended December 31, 2009
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Definitive
Proxy Statement on Schedule 14A
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Form
10Qs for Quarterly Periods Ended March 31, 2010, June
30, 2010 and September 30, 2010
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File
No. 001-32295
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Dear Ms.
Allen:
This
letter responds to the February 1, 2011 comments (the “Staff Letter”) of the
staff (“Staff”) of the United States Securities and Exchange Commission (the
“Commission”) to Adherex Technologies, Inc.’s (“the Company” or “us”) filings of
Form 10-K for Fiscal Year Ended December 31, 2009, Definitive Proxy Statement on
Schedule 14A, Forms 10-Q for Quarterly Periods Ended March 31, 2010, June 30,
2010 and September 30, 2010.
To
facilitate the Staff’s review, we have set forth below the comments contained in
the Staff Letter and, in italics set forth immediate following the comment, our
response thereto.
Form 10-K for the Year Ended
December 31, 2009
501
Eastowne Drive, Suite 140 • Chapel Hill, North Carolina • 27514
Tel:
(919) 636-4530 • Fax: (704) 625-3832 • www.adherex.com
Item 1.
Business
Corporate Relationships,
page 4
1. We
note your response to our prior comment one, specifically the fact that you may
be required to pay royalties to GSK. Please expand your proposed disclosure to
describe the potential range of royalty payments you may be required to make
(e.g. “low single digits”, “high-single-digits” or a range not to exceed ten
percent).
We
will amend our Form 10-K for the fiscal year ended December 31, 2009 to expand
our description described in our January 12, 2011 correspondence to include the
low-double digit potential range of royalties to GSK.
Item 9A. Controls
and Procedures
Management's Report on
Internal Control over Financial Reporting, page
29
2. In your response to our prior
comment two you state that management has concluded in its assessment of
internal control over financial reporting that your internal control procedures,
as of December 31, 2009 were effective. The material weaknesses
disclosed in your June 30, 2010 Form 10-Q appears to indicate that the same
material weaknesses may have existed at December 31, 2009 and March 31,
2010. Please explain to us how the lack of sufficient staff to
segregate accounting duties and the lack of sufficient personnel with an
appropriate level of technical accounting knowledge, experience, and training in
the application of U.S. GAAP that existed at June 30, 2010 were not present at
December 31, 2009 and March 31, 2010. Please tell us the
factors you considered and highlight for us those factors that support your
conclusion. Alternatively, in your amended 10-K disclose management’s
revised conclusion on the effectiveness of your internal control over financial
reporting, i.e. not effective as of the end of the fiscal year, and provide
disclosure of material weaknesses in internal control over financial reporting
that existed as of the end of the fiscal year.
In
our amended Form 10-K for the year ended December 31, 2009 we will disclose
management’s revised conclusion that our internal control over financial
reporting was not effective as of the end of the fiscal year as a result of the
existence at December 31, 2009 of the same material weaknesses previously
disclosed in our June 30, 2010 Form 10-Q.
Form 10-Q for the Quarterly
Period Ended June 30, 2010
Item 4. Controls and
Procedures, page 19
3.
Consistent with your response to prior comment nine disclose the remedial
actions taken to date, alert investors that additional funds are needed to
remedy the internal control weaknesses beyond the April 2010 private placement
and that you anticipate hiring additional personnel once you secure additional
financing.
We
will include disclosure in our amended Form 10-Q for the Quarterly Period Ended
June 30, 2010 consistent with our response to prior comment nine to the effect
that additional funds are needed to remedy the internal control weaknesses
beyond the April 2010 private placement and that we anticipate hiring additional
personnel once we secure additional financing. We will also include
this disclosure in our amended Form 10-Q for the Quarterly Period ended
September 30, 2010.
501
Eastowne Drive, Suite 140 • Chapel Hill, North Carolina • 27514
Tel:
(919) 636-4530 • Fax: (704) 625-3832 • www.adherex.com
4. In
your response to prior comment ten you state that management’s conclusions on
the effectiveness of our disclosure controls and procedures for the March 31,
2010 Form 10-Q was not impacted by the restatement during the quarter ended June
30, 2010. However, as previously noted in this letter, it appears that the same
weaknesses in internal control over financial reporting also existed at December
31, 2009 and March 31, 2010. Also, there appears to be additional
disclosure deficiencies that existed at March 31, 2010, such as the original
March 31, 2010 Form 10-Q contained financial statements that were not reviewed
by the independent auditors and the amendment filed to reflect that the Form
10-Q had been reviewed by the independent auditors continued to state in the
MD&A and in the notes to the financial statements that the Company’s
independent auditor has not performed a review of these financial statements.
Please tell us the factors you considered and highlight for us those factors
that support your conclusion that your disclosure controls and procedures were
effective at March 31, 2010. Alternatively, in your amended March 31,
2010 Form 10-Q disclose management’s revised conclusion on the effectiveness of
your disclosure controls and procedures, i.e., that they were not effective as
of the end of the fiscal quarter.
In
our amended Form 10-Q for the period ended March 31, 2010 we will include
management’s revised conclusion that our disclosure controls and procedures were
not effective as of the end of the fiscal quarter as a result of the
existence as of March 31, 2010 of the same material weaknesses
previously disclosed in our June 30, 2010 Form 10-Q.
The
Company acknowledges that:
•
The Company is responsible for the adequacy and accuracy of the disclosure in
the filing;
•
Staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing;
and
•
The Company may not assert Staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of
the United States.
501
Eastowne Drive, Suite 140 • Chapel Hill, North Carolina • 27514
Tel:
(919) 636-4530 • Fax: (704) 625-3832 • www.adherex.com
If you
have any questions, please call the undersigned at 919-636-5013.
Sincerely
/s/ Robert Andrade
Robert
Andrade
Chief
Financial Officer
501
Eastowne Drive, Suite 140 • Chapel Hill, North Carolina • 27514
Tel:
(919) 636-4530 • Fax: (704) 625-3832 • www.adherex.com