ARC Pharmaceuticals Inc. is operating as a virtual company on seed money raised from private placements to develop its polymeric delivery systems that the company combines with drugs it in-licenses.

President Chris Springate said ARC, of Vancouver, British Columbia, has raised about US$540,000 in private placements and an additional US$275,000 in government grants that do not have to be repaid.

The company is focusing on surgical adhesion disease, cancer and inflammatory diseases.

Springate, who is one of the people who founded the company in 1999, said the advantage of in-licensing drugs is that ARC already will have seen some proof of efficacy.

"Sometimes the drugs have shown proof of principle in cancer cell lines," Springate said. "The advantage [of that approach] is that we skip through some of that drug discovery."

ARC expects to file an investigational new drug application in the next 18 months and be in the clinic in 21 to 24 months, Springate said.

"We're still completing some of the proof-of-principle studies, that is, how did the drugs work and did they seem safe," he said.

Privately held ARC, which has six full-time employees, has agreements with McGill University in Montreal and the University of British Columbia, both of which are conducting some of the animal studies for the company. With McGill, ARC has a research collaboration in melanoma.

In surgical adhesion disease, ARC has signed a term sheet with the University of British Columbia and is finalizing negotiations with it for anti-inflammatory therapy associated with that disease. Springate said that unlike gels and films that are available and prevent only adhesion, ARC's delivery system incorporates anti-inflammatory agents.

Although the company operates virtually, it has put together a seven-member scientific advisory board, which includes two additional ARC founders: Helen Burk, a professor in drug delivery in pharmaceutical sciences at the University of British Columbia; and Martin Gleave, the director of clinical research at that university's prostate center, as well as a professor of surgery. Springate said Gleave is "very well known throughout the world" in the area of prostate cancer.

ARC last week began working on another private seed round, with the intention of raising another $700,000, Springate said.

"Our burn rate is relatively low because we use a virtual model," he said.

Next year, Springate expects to be in the position of being able to approach venture capital firms.