Canadian start-up Aquinox Pharmaceuticals Inc. raised $14.5 million in its first major financing round to advance an early stage pipeline of small-molecule therapeutics in cancer and inflammatory disease.

Founded in 2004 as a spinout of the University of British Columbia and the BC Cancer Agency, the company builds on recent discoveries of highly selective drugs that target a SH2-containing inositol phosphatase, or SHIP, a biochemical enzyme that regulates the PI3 kinase pathway. That pathway is known for regulating cell growth and survival, so when the SHIP enzyme "is turned on, it down-regulates cell growth and division," said David Main, Aquinox's chairman, president and CEO.

Main established the Vancouver, British Columbia-based company along with the four scientific founders - Raymond Andersen, Gerald Krystal, Alice Mui and Christopher Ong. The name Aquinox is "loosely derived from two aspects" of the company's research: the initial identification of the enzyme in murine organisms representing the "aqua" part, and the use of genetic engineering to create the synthetic analogues used for drug development, he told BioWorld Today.

The advantage of targeting SHIP, Main said, is that the enzyme is expressed only in blood cells, so drugs can avoid any unwanted effects on other tissues. Aquinox's lead product, AQX-MN100, is in preclinical development for blood cancers, multiple myeloma, leukemia and lymphoma. The Series A funding will support upcoming investigational new drug application-enabling studies. "We hope to move into the clinic in 12 to 15 months," he said.

The company's second program is being designed to treat inflammatory disorders by down-regulating that same PI3 kinase pathway, which also activates immune cells. Aquinox owns all patents relating to its SHIP drug discovery platform, which could yield additional candidates against that enzyme and might prove useful in activating other enzymes to treat disease.

"Right now our priority is to gain clinical data," Main said. After that, the company would be in a better position to decide its next steps, such as which programs to pursue next and whether to partner or seek additional fund raising on its own.

The Series A round was led by Ventures West Capital, a Canadian investment group, and included new investors New Brunswick, N.J.-based Johnson & Johnson Development Corp. and New York-based Baker Brothers Investments and existing investor Vancouver-based BC Advantage Funds, managed by Lions Capital Corp. Main said "cross-borders financing" sets a "new precedent" for young firms in the Vancouver region, an area he said boasts a number of established biotechs, such as Angiotech Pharmaceuticals Inc., QLT Inc., but few start-ups.

Aquinox, which has two employees and supports eight others affiliated with the university, anticipates that funding will sustain operations for two to three years. Prior to the round, the company raised about $1 million in seed money.

Chris Laird, of Ventures West, and Asish Xavier, of JJDC, joined the company's board, which includes existing independent directors Kevin Leslie and Kenneth Galbraith.