Shares in Calgary-based Oncolytics Biotech Inc. soared Friday after the U.S. Food and Drug Administration approved human trials for its potential cancer treatment.

Oncolytics shares closed up 53 cents — or 17 per cent — to $3.71 on the Toronto Stock Exchange. They traded as high as $4.10 during the day, their highest intraday price in more than three years.

Using a human virus to fight cancer holds the promise of more targeted and less painful treatments.

The company announced it has received approval for a trial of its treatment for head and neck cancers using its Reolysin drug in combination with chemotherapy.

The biotech company has spent 10 years developing a process which uses a virus that occurs naturally in the human body —a reovirus— and has been shown to attack and kill cancer cells.

It is one of a large number of therapies under development that hold the promise of fewer of the side-effects that come with existing drugs and radiation, especially when combined with personal genetic information.

Oncolytics' 3-month chart

CEO Brad Thompson told CBC News the approval is for "supercharged Phase 3," which covers two steps in one. The FDA has pre-reviewed the application so that if it's satisfied that the study has been run properly, it will also accept the data as the foundation for an application for product approval.

The advance comes as many Canadian biotech companies have been struggling over the last two years to attract capital.

The industry association — BIOTECanada — said in a release in July that a survey of its members suggested 70 per cent of Canadian biotech companies would be "out of cash and unable to continue their current research operations within a year."

Industry faces 7,000 job cuts

It estimated the recession has led to the layoff of 2,500 researchers and scientists and the number would rise to over 7,000 permanent cuts within a year without easier access to short-term financing.

Thompson — who is also chairman of the association — said it's less of a problem for companies like his that are near the end of the development process.

"It's really choking off that earlier-stage pipeline, so that the real effects of that are going to be felt three, four, five years from now — when there's this big gap in the flow of new drugs coming out into the market — and that's the real shame," he said.

Thompson said what's needed is an easier process of product approval, something "which is way more complicated in Canada than it is pretty much anywhere else," and incentives to invest in the industry.

Ottawa and the provinces have been listening, he said, but the question is whether any changes will come in time to save companies now in early-stage development.

Results next year

The trial will have two stages. The first aims to enrol 80 patients and the second between 100 and 400. The first results are expected late next year.

Ten years is common for drug development, but Thompson said using a live virus to treat cancer in people had never been done before Oncolytics started.

"There was no approved product in the area. Everything you do is brand new."

There was no regulatory path already taken by a competitor and no foreknowledge of other similar products to guide them.

"Going into it, if we'd had any idea what you had to do, we probably wouldn't do it," Thompson said.