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November
30, 2010
Ms.
Christine Allen
Staff
Accountant
United
States Securities and Exchange Commission
Division
of Corporation Finance
100 F
Street, N. E.
Washington,
D.C. 20549
RE: Adherex
Technologies, Inc.
Item
4.02 Form 8-K
Filed
November 2, 2010
File
No. 001-32295
Dear Ms.
Allen:
This
letter responds to the 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”) Form 8-K filed with the
Commission on November 2, 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.
1. You
filed a Form 8-K on August 16, 2010 announcing financial results from operations
for the quarter ended June 30, 2010. You also filed a Form NT-10
announcing your Form 10-Q for the quarter ended June 30, 2010 would not be filed
on time. Please explain why your Form 10-Q for the quarter ended June 30, 2010
was not filed by the time allowed by the Form NT-10Q.
Our
interim financial statements were not reviewed by an independent public
accountant for each of the three quarters in 2009, for the three months ended
March 31, 2010 and the three and six months ended June 30, 2010. In August 2010,
we engaged our independent registered chartered accountants, Deloitte &
Touche LLP (“D&T”), to perform all of the necessary interim
reviews. We are a company with limited financial and
human resource and therefore we required additional time to provide the
necessary information to D&T so that D&T could complete the required
interim reviews for the above noted periods. During the course of the
review for the period ended June 30, 2010 the potential need to restate
financial information contained in the August 16, 2010 Form 8-K and described in
our November 2, 2010 Form 8-K was identified. The determination
by management as to whether a restatement was required involved an analysis and
review of complex accounting issues. As indicated in the
November 2, 2010 Form 8-K, the restatement occurred under ASC 815-40 for the
financial treatment of the derivative liability as well as the Company’s
determination under FASB that the options approved by shareholders' on June 24,
2010 were to be considered with service inception in the quarter ended June 30,
2010 and expensed although they were not granted until August 18,
2010. An additional adjustment was made to accrue for
professional fees. The analysis of the applicability of ASC
815-40 and treatment of the options under FASB was undertaken by the identified
limited personnel of the Company. Therefore, management
required additional time than allowed by the Form NT-10Q to reach a final
determination as to whether the restatement was required and to present its
recommendations to the Audit Committee and the Board of
Directors. We note that the Company has contracted additional
resources in order to assist management in its financial accounting and
reporting functions.
2. You
state "On November 1, 2010, the Audit Committee and the Board of Directors, in
consultation with the Company's auditors, concluded that the previously issued
financial statement for the three and six month periods ending June 30, 2010
should be restated." Based on this statement it appears the Audit Committee,
Board of Directors and/or the Company's auditors individually or collectively
had some prior discussions in order for all parties to arrive at this consensus
on November 1, 2010 and provide restated financial information on November 2,
2010. Please tell us when discussions began that the financial information, as
released in your August 16, 2010 Form 8-K, may need to be restated and/or could
not be relied upon, which party discovered the error and initiated the
discussions.
Discussions
with respect to the potential restatement of the financial information, as
released in our August 16, 2010 Form 8-K, began during the week of October 18,
2010. As part of the quarterly interim review process for the
three and six months ended June 30, 2010, management, in consultation with
D&T, identified a potential need to restate the June 30, 2010 financial
information as further discussed on our response to comment 1 above. On
November 1, 2010, the Audit Committee and the Board of Directors concluded
that the previously issued financial information should be
restated.
3.
It is not clear if the three transactions cited for which adjustments are needed
in order to fairly present your financial statements, were never recorded or
improperly recorded. Please revise your 8-K to clarify how each transaction
cited was previously recorded and the adjustments necessary to appropriately
present each transaction.
The
transactions cited for which adjustments are needed were not recorded in the
August 16, 2010 Form 8-K announcing financial results from operations for the
quarter ended June 30, 2010. Exhibit 99.1 to the November 2,
2010 Form 8-K contains a table presenting the impact of the restatement on our
previously reported financial results for the three and six months ended June
30, 2010. We respectfully submit that a further amendment to either
the August 16, 2010 Form 8-K or the November 2, 2010 Form 8-K is
unnecessary because the table included in Exhibit 99.1 to
the November 2, 2010 Form 8-K describes the amounts previously reported,
adjustments thereto and the restated amounts.
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.
If you
have any questions, please call the undersigned at 919-636-5013.
Sincerely
ss/
Robert Andrade
Robert
Andrade
Chief
Financial Officer