SecProbe.io

December 18, 2013

Via E -mail
David J. Main
President and Chief Executive Officer
Aquinox Pharmaceuticals Inc.
430-5600 Parkwood Way
Richmond, B.C., Canada V6V 2M2

Re: Aquinox  Pharmaceuticals (USA) Inc.
Draft Registration Statement on Form S -1
Submitted November 18, 2013
  CIK No. 0001404644

Dear Mr. Main :

We have reviewed your draft registration statement  and have the following comments.  In
some of our comments, we may ask you to provide us with information so we may better
understand your disclosure.

Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly filing your registration sta tement on
EDGAR.  If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing the information you provide in response to these  comments  and your
amended draft registration statement or filed registration statement,  we may have  additional
comments.

General

1. Please confirm  that the graphics included in your registration state ment are the only
graphics you will u se in your prospectus.  If those are not the only graphics, please
provide any additional graphics  prior to t heir use for our review.

2. Please supple mentally provide us with copies of all writt en communications,  as defined
in Rule 405 under the Securities A ct, that you, or anyone authorized to do so on your
behalf, present to potential inv estors in reliance on Section 5(d) of the Securities Act,
whether or not they retain copies of the communications. Si milarly, please
supple mentally provide us  with any resea rch reports about you that are published or
distributed in reli ance upon Section 2(a)( 3) of the Securities Act of 1933 added by
Section 105(a) of t he Jumpstart Our Business Startups Act by any broker or dealer that is
participating or will participate in y our offering.

David J. Main
Aquinox Pharmaceuticals, Inc.
December 18, 2013
Page 2

 Prospectus Summary
Our Pipeline, page 1

3. Please explain the terms “lipopolysaccharide (LPS) challenge” and “sputum neutrophils”
in this discussion.

4. Please explain what the p -values you cite in your discussion represent and what p -values
constitute a statistically significant result in your clinical trials.

Risks Associated to Our Business, page 3

5. In your first bullet point, please include your accumulated deficit to date.

Summary Combined Financial Data
Combined Balance Sheet Data, page 9

6. It appears that your pro forma total stockholders’ deficit at September 30, 2013 should be
a positive number and result in pro forma total stockholders’ equity.  Please revise.  This
comment also applies to your presentation in Selected Combined Fi nancial Data on page
55.
7. You disclose in footnote 3 that t he balance sheet pro forma as adjusted basis excludes any
impact of the term loan facility with Silicon Valley Bank (“SVB”) you entered into on
October 23, 2013 for up to  $4.0 million of which $2.5 million was received on October
30, 2013.   It appears that this debt is material and should be presented in the pro forma as
adjusted column.  Please revise or explain to us why this event is not material to
investors.  Please refer to Rule 11 -01(a)(8) of Regulation S -X.  This comment also
applies to your presentation in Capitalization on page 49 and Selected Combined
Financial Data on page 55.
Risk Factors
General

8. We note that your disclosure on page 84 and 86 of the registration statement that your
Phase  2 clinical trials for AQX -1125 in COPD and BPS/IC will be conducted in Northern
and Central Europe  and Canada, respectively.  Please revise your disclosure to include a
separate risk factor which highlights this disclosure and discusses any risks the Comp any
may face as a result of the conduct of clinical trials outside of the United States.  For
example, you should discuss the possibility that the FDA may not accept the results of
such trials and how such lack of acceptance could impact the regulatory app roval process.

Risks Related to Our Business and Industry
“Because the results of preclinical testing or earlier clinical trials are not necessarily predictive of
future results . . .,” page 15

9. Please explain in this risk factor how EXACT -PRO functions and clarify that the primary
endpoint in the clinical trial is the change in the severity, duration and reoccurrence of

David J. Main
Aquinox Pharmaceuticals, Inc.
December 18, 2013
Page 3

 exacerbations in patients as measured by EXACT -PRO.  Further, please note here, as you
have on page 85, that you are not aware of any in stance where EXACT scores have been
accepted as endpoints in a Phase 2 or Phase 3 trial.

10. Please specify how endpoints measured using EXACT -PRO differ from accepted clinical
COPD endpoints.

“SHIP1 has not been validated as a target,” page 16

11. Please bri efly ex plain  the ramifications of not yet having been validated as a target and
describe the process of target validation.

“Our future success depends on our ability to attract, retain and motivate qualified personnel,”
page 30

12. Please include in this risk factor the name(s) of the member(s) of your management team,
or any other personnel, whose departure you believe would have the potential of creating
a material adverse effect.

Risks Related to Our Dependence on Third Parties
“We have no experience manufacturing our product candidates on a large clinical or commercial
scale and have no manufacturing facility . . .,” page 32

13. Here, and in your Manufacturing discussion on pages 92 -93, please identify your single
source CMOs for t he manufacture of AQX -1125’s active pharmaceutical ingredient and
for the final product formulation.

Special Note Regarding Forward -Looking Statements and Industry Data, page 44

14. We note your statements that “we have not independently verified market an d industry
data from third -party sources” and that your internal company research or market
definitions have not been validated by any independent source.  Please amend your
registration statement to remove these statements as it is not appropriate to dire ctly or
indirectly disclaim liability for information in your filing.

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Policies and Significant Judgments and Estimates
Stock -Based Compensation, page 68

15. Please expand your disclosure to d isclose the intrinsic value of outstanding vested and
unvested options based on the estimated IPO price and the options outstanding as of the
most recent balance -sheet date presented.  Also include a  discussion of each significant
factor contributing to the difference between the fair value as of the date of each gr ant
and the estimated IPO price.

David J. Main
Aquinox Pharmaceuticals, Inc.
December 18, 2013
Page 4

 Fair Value Estimates, page 69

16. You disclose that you are required to estimate the fair value of the common stock
underl ying their stock -based awards when performing the fair value calculations using
the intrinsic value method at each reporting date .  Based on your disclosure in the
subsequent paragraphs it appears that you can reasonably estimate the fair values as of
each grant date and the use of the intrinsic value method is not appropriate.  Please revise
your disclosure to remove any reference to the use of the intrinsic value method or
explain to us why the intrinsic value method is appropriate.  Please refer to ASC 718-10-
30-21.

Business
AQX -1125, page 78

17. In your discussion of AQX -1125’s desirable pharmaceutical properties, please define the
terms “linear elimination,” “consistent half -life,” and “dose proportional exposure.”

18. In your description of AQX -1125’s preclinical inflammatory studies, please explain what
neutrophils, eosinophils and macrophages are.

Choice of Forum, page 126

19. We note your disclosure entitled Choice of Forum on page 126.  Several lawsuits are
currentl y challenging the validity of choice of forum provisions in certificates of
incorporation.  Please disclose that although you will provide a choice of forum clause in
your restated certification of incorporation, it is possible that a court could rule that  such
provision is inapplicable or unenforceable.

Combined F inancial Statements
Combined Balance Sheets, page F -7

20. Your pro forma deficit accumulated in the development stage  line item here does not
agree with the amount disclosed on page F -6.  Please revise to eliminate all
inconsistencies.

Item 16. Exhibits a nd Financial Statement Schedule, page II -3

21. Please file the agreement underlying your term loan facility with Silicon Valley Bank as
an exhibit to the registration statement.

If you intend to resp ond to these comments with an amended draft registration statement ,
please submit it and any associated correspondence in accordance with the guidance we provide
in the Division’s October 11, 2012 announcement on the SEC website at
http://www.sec.gov/divis ions/corpfin/cfannouncements/drsfilingprocedures101512.htm .

David J. Main
Aquinox Pharmaceuticals, Inc.
December 18, 2013
Page 5

 Please keep in mind that we may publicly post filing review correspondence in
accordance with our December 1, 2011 policy
(http://www.sec.gov/divisions/corpfin/cfannouncements/edgarcorrespondence.htm ).  If you
intend to use Rule 83 (17 CFR 200.83) to request confidential treatment of information in the
correspondence you submit on EDGAR, please properly mark that information i n each of your
confidential submissions to us so we do not repeat or refer to that information in our comment
letters to you.

You may c ontact Donald Abbott  at (202) 551 -3608  or Lisa Vanjoske  at (202) 551 -3614  if
you have questions regarding comments on the financial statements and related matters.  Please
contact Scot Foley at (202) 551 -3383, Bryan Pitko at (202) 551 -3203  or me at  (202) 551 -3715
with any other questions.

Sincerely,

 /s/ Bryan J. Pitko for

Jeffrey P. Riedler
Assistant Director

cc: Michael E. Tenta
 Gordon H. Empey
 Cooley LLP
1700 Seventh Avenue, Suite 1900
Seattle, WA 98101