Exhibit 99.1
 ANNUAL INFORMATION FORM
Financial Year Ended November 30, 2010
 
 February 22, 2011




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FORWARD-LOOKING STATEMENTS
  
    
    our ability, and the ability of our commercial partners, to commercialize
EGRIFTA® in the United States and other territories;
    
    whether we will receive regulatory approvals for tesamorelin from regulatory agencies in
territories other than the United States in which we wish to expand the commercialization
of tesamorelin, and the timing and costs of obtaining such regulatory approvals;
    
    our recognition of milestones, royalties and other revenues from our commercial partners
related to future sales of EGRIFTA®;
    
    our plans to conduct a new clinical program for tesamorelin in muscle wasting in chronic
obstructive pulmonary disease, or COPD, including the timing and results of these clinical
programs;
    
    the continuation of our collaborations and other significant agreements with our
existing commercial partners and our ability to establish and maintain additional
development collaborations;
    
    our estimates of the size of the potential markets for EGRIFTA®, tesamorelin
and our other product candidates;
    
    the rate and degree of market acceptance of EGRIFTA® and our other product
candidates;
    
    our success in obtaining, and the timing and amount of, reimbursement for
EGRIFTA® and our other product candidates;
    
    the benefits of tesamorelin and our other product candidates as compared to others;
    
    the success and pricing of other competing drugs or therapies that are or may become
available;
    
    our ability to maintain and establish intellectual property rights in tesamorelin and
our other product candidates;
    
    the manufacturing capacity of third-party manufacturers, including the manufacturer of
tesamorelin in commercial quantities;
    
    our expectations regarding our financial performance, including revenues, expenses,
gross margins, liquidity, capital expenditures and income taxes; and
    
    our need for additional financing and our estimates regarding our capital requirements
and future revenues and profitability.




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
    
    tesamorelin for the reduction of excess abdominal fat in HIV-infected patients with
lipodystrophy will receive approval in territories other than the United States covered in
our commercialization agreements;
    
    no additional clinical studies will be required to obtain said regulatory approval of
tesamorelin;
    
    EGRIFTA® will be accepted by the marketplace in the United States and will
be on the list of reimbursed drugs by third-party payors;
    
    our relations with third-party suppliers of EGRIFTA® will be conflict-free
and that such third-party suppliers will have the capacity to manufacture and supply
EGRIFTA® to meet market demand and on a timely-basis;
    
    we will obtain positive results from our clinical program for the development of
tesamorelin for muscle wasting in COPD patients; and
    
    our business plan will not be substantially modified.
   BASIS OF PRESENTATION
  EGRIFTA ® EGRIFTA ®




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EGRIFTA ®




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TABLE OF CONTENTS
 ITEM 1 CORPORATE STRUCTURE
    
    
    61.1 NAME, ADDRESS AND INCORPORATION
    
    
    61.2 SUBSIDIARIES
    
    
    6ITEM 2 OUR BUSINESS
    
    
    72.1 OVERVIEW
    
    
    72.2 RECENT DEVELOPMENTS
    
    
    82.3 THREE YEAR HISTORY
    
    
    92.4 OUR STRATEGY
    
    
    112.5 OUR PRODUCT AND PRODUCT CANDIDATES
    
    
    122.6 INTELLECTUAL PROPERTY
    
    
    192.7 MANUFACTURING
    
    
    222.8 COMPETITION
    
    
    232.9 GOVERNMENT REGULATION
    
    
    232.10 PHARMACEUTICAL PRICING AND REIMBURSEMENT
    
    
    312.11 EMPLOYEES
    
    
    332.12 FACILITIES
    
    
    332.13 ENVIRONMENT
    
    
    34ITEM 3 RISK FACTORS
    
    
    353.1 RISKS RELATED TO THE COMMERCIALIZATION OF OUR PRODUCT AND PRODUCT CANDIDATES
    
    
    353.2 RISKS RELATED TO THE REGULATORY REVIEW PROCESS
    
    
    413.3 RISKS RELATED TO OUR INTELLECTUAL PROPERTY
    
    
    443.4 OTHER RISKS RELATED TO OUR BUSINESS
    
    
    463.5 RISKS RELATED TO OUR COMMON SHARES
    
    
    50ITEM 4 DIRECTORS AND EXECUTIVE OFFICERS
    
    
    534.1 DIRECTORS
    
    
    534.2 AUDIT COMMITTEE
    
    
    564.3 EXECUTIVE OFFICERS
    
    
    574.4 DECLARATION OF THE DIRECTORS AND OFFICERS ANTECEDENTS
    
    
    604.5 SECURITIES HELD BY THE DIRECTORS AND EXECUTIVE OFFICERS
    
    
    60ITEM 5 INTERESTS OF EXPERTS
    
    
    61ITEM 6 SECURITIES OF THE COMPANY
    
    
    626.1 AUTHORIZED SHARE CAPITAL
    
    
    626.2 DIVIDEND POLICY
    
    
    626.3 TRANSFER AGENT AND REGISTRAR
    
    
    62ITEM 7 MARKET FOR SECURITIES
    
    
    637.1 TRADING PRICE AND VOLUME
    
    
    637.2 PRIOR SALES
    
    
    63ITEM 8 LEGAL PROCEEDINGS
    
    
    64ITEM 9 MATERIAL CONTRACTS
    
    
    65ITEM 10 ADDITIONAL INFORMATION
    
    
    67APPENDIX A  AUDIT COMMITTEE CHARTER
    
    
    68




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ITEM 1 CORPORATE STRUCTURE
 
 1.1 NAME, ADDRESS AND INCORPORATION
 Companies Act Business Corporations Act
  
 1.2 SUBSIDIARIES
  
    
    Theratechnologies Intercontinental Inc., a company incorporated under Part 1A of the
Companies Act(Québec) and governed by the Business Corporations Act(Québec).
Theratechnologies Intercontinental Inc., formerly Theratechnologies ME Inc., controls the
worldwide rights to commercialize EGRIFTA® except in the United States, Europe,
Russia, South Korea, Taiwan, Thailand and certain central Asian countries, and Canada;
    
    Theratechnologies Europe Inc., a company incorporated under Part 1A of the Companies Act
(Québec) and governed by the Business Corporations Act(Québec). Theratechnologies Europe
Inc., formerly 9176-5057 Québec Inc., controls the rights to commercialize
EGRIFTA® in Europe, Russia, South Korea, Taiwan, Thailand and certain central
Asian countries; and
    
    Pharma-G Inc., a company incorporated under Part 1A of the Companies Act(Québec) and
governed by the Business Corporations Act(Québec). Pharma-G Inc. is no longer an active
subsidiary.
 EGRIFTA ®
 - 6 -




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ITEM 2 OUR BUSINESS
 
 2.1 OVERVIEW
 EGRIFTA ® EGRIFTA ®
   EGRIFTA ® EGRIFTA ®
 EGRIFTA ® EGRIFTA ®
 - 7 -




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EGRIFTA ® EGRIFTA ®
   
 2.2 RECENT DEVELOPMENTS
  
    
    COPD indication for EGRIFTA®. On February 22, 2011, we announced a new
clinical program in muscle wasting in COPD using tesamorelin. Tesamorelins anabolic
properties have led us to pursue the development of tesamorelin for muscle wasting in COPD
patients for its second indication. The program will be conducted in stable ambulatory COPD
patients with muscle wasting in the Global Initiative for Chronic Obstructive Lung Disease,
or GOLD, stage II and III severity experiencing decreased functionality in daily
activities.
    
    Execution of distribution and licensing agreement for EGRIFTA®for European
market.On February 3, 2011, we announced the execution, through Theratechnologies Europe
Inc., of a distribution and licensing agreement with Ferrer granting it the exclusive
commercialization rights of tesamorelin in Europe, Russia, South Korea, Taiwan, Thailand
and certain central Asian countries for the reduction of excess abdominal fat in
HIV-infected patients with lipodystrophy. For a description of this agreement, see Item
2.5.
    
    Execution of distribution and licensing agreement for EGRIFTA®for the Latin
American, African and Middle Eastern Markets.On December 6, 2010, we announced the
execution, through Theratechnologies Intercontinental Inc., of a distribution and licensing
agreement with sanofi-aventis S.A., granting one of its subsidiaries, Sanofi Winthrop
Industries, the exclusive distribution rights to EGRIFTA® in Latin America,
Africa and the Middle East for the reduction
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of excess abdominal fact in HIV-infected patients with lipodystrophy. For a description of
this agreement, see Item 2.5.
 
 2.3 THREE YEAR HISTORY
 2010
 
    
    FDA approval received for EGRIFTA®.On November 11, 2010, we announced that
the FDA approved EGRIFTA® as the first and only drug indicated for the reduction of excess
abdominal fat in HIV-infected patients with lipodystrophy (abdominal lipohypertrophy). The
FDA approval triggered a US$25 million milestone payment pursuant to our collaboration and
licensing agreement with EMD Serono.
    
    Appointment of new President and Chief Executive Officer. On September 1, 2010, we
announced the appointment of Mr. John-Michel T. Huss as President and Chief Executive
Officer of the Company, following the retirement of Mr. Yves Rosconi, effective November
30, 2010. Mr. Huss assumed his position on December 1, 2010.
    
    Execution of research collaboration agreement with UQAM, Gestion Valeo and Transfert
Plus.On November 16, 2010, we entered into a research collaboration agreement with the
Université du Québec à Montréal, or UQAM, Gestion Valeo, L.P., or Gestion Valeo, and
Transfert Plus, L.P, or Transfert Plus, with the goal of discovering short peptide mimics
of melanotransferrin with the hope of developing a novel cancer treatment. For a
description of this agreement, see Melanotransferrin peptides (Anti-cancer compounds) at
Item 2.5.
    
    Adoption of shareholder rights plan.On February 10, 2010, we announced that our board
of directors had adopted a shareholder rights plan, effective as of such date. The plan was
later ratified by our shareholders at our annual meeting held on March 23, 2010. The plan
is designed to provide adequate time for the board of directors and the shareholders to
assess an unsolicited takeover bid for Theratechnologies, to provide the board of directors
with sufficient time to explore and develop alternatives for maximizing shareholder value
if a takeover bid is made, and to provide shareholders with an equal opportunity to
participate in a takeover bid and receive full and fair value for their common shares. For
a description of the plan, see ITEM 9.
 2009
 
    
    Advisory Committee reviews NDA for tesamorelin.On November 5, 2009, we announced that
the Endocrinologic and Metabolic Drugs Advisory Committee of the FDA would be reviewing our
New Drug Application, or NDA, for tesamorelin in the reduction of excess abdominal fat in
HIV-infected patients with lipodystrophy.
    
    Filing of NDA for tesamorelin. On June 1, 2009, we announced the filing of an NDA with
the FDA for tesamorelin, an analogue of the growth hormone-releasing factor, proposed for
the reduction of excess abdominal fat in HIV-infected patients with lipodystrophy.
 2008
 
    
    Closing of transaction with EMD Serono.On December 16, 2008, we announced that we
closed the transaction related to the collaboration and licensing agreement with EMD
Serono. As part of this transaction, we received an upfront payment of US$30 million which
includes a license fee of US$22 million from EMD Serono. In addition, Merck KGaA purchased
US$8 million of our common shares at a price of US$3.67 per share.
 - 9 -




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
    
    52-week confirmatory Phase 3 clinical trial results for tesamorelin.On December 15,
2008, we announced the 52-week results of our confirmatory Phase 3 clinical trial,
evaluating the long-term safety profile of tesamorelin in patients with HIV-associated
lipodystrophy. The results reported from both the 26-week confirmatory clinical study and
52-week confirmatory clinical study were consistent with the efficacy and safety profile
observed in the first Phase 3 clinical study. This announcement concluded the Phase 3
clinical studies for tesamorelin for the reduction of excess abdominal fat in HIV-infected
patients with lipodystrophy.
    
    Execution of collaboration and licensing agreement with EMD Serono for tesamorelin in
the United States.On October 29, 2008, we announced the execution of a collaboration and
licensing agreement with EMD Serono for the exclusive commercialization rights to
tesamorelin in the United States for the reduction of excess abdominal fat in HIV patients
with lipodystrophy. For a description of this collaboration and licensing agreement, see
Item 2.5.
    
    26-week confirmatory Phase 3 clinical trial results for tesamorelin.On June 18, 2008,
we announced our 26-week results of our confirmatory Phase 3 clinical trial, evaluating the
efficacy of tesamorelin in patients with HIV-associated lipodystrophy. The study was
powered to detect an 8% reduction in visceral adipose tissue versus placebo. The study met
its primary endpoint as well as important secondary endpoints confirming the positive
results obtained in our initial Phase 3 study.
    
    Execution of strategic agreement with Dr. Grinspoon.On May 15, 2008, we announced our
entering into an agreement with both the MGH and Dr. Grinspoon to explore the use of
tesamorelin in relative growth hormone deficient abdominally obese, or GHDAO, subjects.
MGH, under the direction of Dr. Grinspoon, is the sponsor and is conducting a Phase 2
clinical trial with tesamorelin in subjects who have excess visceral adipose tissue, or
VAT, with a moderate growth hormone deficiency and who are abdominally obese. We accepted
to provide tesamorelin for this study and the MGH will retain the rights to the results
generated by this study, and we obtained an exclusive worldwide license to commercialize
any results. Dr. Grinspoon completed subject enrolment in December 2010.
    
    Initiation of process to explore strategic options. On January 29, 2008, we announced
that our board of directors initiated a process to explore strategic options available to
the Company to further enhance shareholder value.
    
    US patent for tesamorelin issued. On January 8, 2008, we announced that the United
States Patent and Trademark Office, or USPTO, issued Patent Number 7,316,997 entitled GH
Secretagogues and Uses Thereof to Theratechnologies. This patent covers methods of
treatment of HIV-associated lipodystrophy using tesamorelin. The granting of this patent
extended the patent term protection of tesamorelin in HIV-associated lipodystrophy for
eight additional years, until 2023.
    
    Phase 3 first clinical trial results for tesamorelin.On December 5, 2007, we announced
that the results of our first Phase 3 clinical trial using tesamorelin were published in
the December 6, 2007 New England Journal of Medicine(www.nejm.org). The study, entitled
Metabolic Effects of a Growth Hormone-Releasing Factor in Patients with HIV, outlines, in
detail, the 26-week data of the trial. Top-line results of this Phase 3 trial were
initially disclosed in December 2006.
    
    Preclinical work for AKI.We conducted some preclinical work on a molecule known as
THG213.29 with the intent of pursuing a clinical program in AKI. Through our research and
development, we discovered a new bifunctional peptide that appears to have favourable
properties in the treatment of AKI in animal models of AKI. During our 2008 fiscal year, we
 - 10 -




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replaced THG213.29 with the new bifunctional peptide TH0673 in the event we decide to
develop a clinical program for AKI.
 
 2.4 OUR STRATEGY
  Maximize the global commercial potential of EGRIFTA ®
 EGRIFTA ® EGRIFTA ® EGRIFTA ®
 EGRIFTA ®
 Develop tesamorelin for muscle wasting in COPD
  Solidify our position as a leader in the field of novel GRF products
  Be actively involved in the commercialization of our products
 EGRIFTA ®
 Pursue external growth opportunities
  - 11 -




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2.5 OUR PRODUCT AND PRODUCT CANDIDATES
  
 EGRIFTA ®  Our Lead Product
 EGRIFTA ®
 EGRIFTA ® EGRIFTA ® EGRIFTA ®
 EGRIFTA ® EGRIFTA ® EGRIFTA ®
  
    
    to develop a single vial presentation of the existing formulation of
EGRIFTA®. We have developed a new presentation of EGRIFTA® which is
quicker and easier to use than its current presentation. In the new presentation,
EGRIFTA® will be available as a single unit dose (one vial containing 2 mg of
tesamorelin) of sterile, lyophilized powder to be reconstituted with sterile water for
injection. The FDA requires that this new presentation be available by
 - 12 -




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November 2013 and we expect it to be commercially available before that date. The
development of the new presentation is complete and the dossier is ready for regulatory
submission.
 
    
    to conduct a long-term observational safety study using EGRIFTA®. The
purpose of the long-term observational study required by the FDA is to evaluate the safety
of long-term administration of EGRIFTA®.
    
    to conduct a Phase 4 clinical trial using EGRIFTA®. The primary purpose of
the Phase 4 clinical trial is to assess whether EGRIFTA® increases the
incidence or progression of diabetic retinopathy in diabetic HIV-infected patients with
lipodystrophy and excess abdominal fat.
  Lipodystrophy
    Market Opportunity
  EGRIFTA ®
 - 13 -




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
    
    United States. The United States market represents the largest commercial opportunity
for EGRIFTA®. We estimate the prevalence of HIV/AIDS in the United States will
rise to 1.3 million people in 2012. Of this amount, approximately 650,000 people will be
treated for HIV/AIDS and, of those patients treated, approximately 190,000 will suffer from
excess abdominal fat. In addition, approximately 47,000 untreated patients will suffer from
excess abdominal fat.
    
    Europe. We estimate the prevalence of HIV/AIDS in Europe will rise to 1.4 million people
in 2012. Of this amount, approximately 590,000 people will be treated for HIV/AIDS and, of
those patients treated, approximately 170,000 will suffer from excess abdominal fat. In
addition, approximately 42,000 untreated patients will suffer from excess abdominal fat.
    
    Latin America. We estimate the prevalence of HIV/AIDS in Latin America will rise to 2.2
million people in 2012. Of this amount, approximately 630,000 people will be treated for
HIV/AIDS and, of those patients treated, approximately 180,000 will suffer from excess
abdominal fat. This number is proportionately lower than the other territories due to a
lower percentage of diagnosed and treated patients. With approximately 60,000 treated
patients who will suffer from excess abdominal fat, Brazil offers the largest market in
Latin America for EGRIFTA®. In addition, approximately 28,000 untreated
patients will suffer from excess abdominal fat.
   EGRIFTA ® Commercialization Activities
 EGRIFTA ® EGRIFTA ®
 EMD Serono Agreement  United States
 EGRIFTA ®
 EGRIFTA ® EGRIFTA ® EGRIFTA ®
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EGRIFTA ® EGRIFTA ®
 EGRIFTA ® EGRIFTA ®
 EGRIFTA ®
 Sanofi Agreement  Latin America, Africa and the Middle East
 EGRIFTA ®
 EGRIFTA ® EGRIFTA ® EGRIFTA ® EGRIFTA ®
 Ferrer Agreement  Europe, Russia, South Korea, Taiwan, Thailand and certain central Asian
countries
 EGRIFTA ®
 EGRIFTA ® EGRIFTA ®
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EGRIFTA ® EGRIFTA ® EGRIFTA ® EGRIFTA ®
 Unpartnered Territories
 EGRIFTA ® EGRIFTA ®
 Tesamorelin  Our Lead Compound
 EGRIFTA ®
 Mechanism of action
   - 16 -




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Muscle Wasting in COPD  New Indication for Tesamorelin
   
    
    Respiratory symptoms, as assessed by St. Georges Respiratory Questionnaire;
    
    Leg discomfort, as assessed by the Borg Scale following an exercise endurance test; and
    
    Breathing discomfort, as assessed by the Borg Scale following an exercise endurance
test.
 COPD
   Market opportunity
   - 17 -




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Clinical development plan
  
    
    One Phase 2 study: This study will be a randomized, placebo controlled study in
approximately 200 COPD patients with muscle wasting. Patients will be randomized to receive
either one of two different dosages of tesamorelin or placebo each day for six months. We
intend to randomize our first patient in this Phase 2 clinical study in the second half of
2011. The Phase 2 study will evaluate the safety and efficacy of using tesamorelin in COPD
patients, GOLD stage II and III, with muscle wasting. The primary endpoint will be an
increase in lean body mass. Other efficacy endpoints will be measured, such as a six minute
walking distance test, exercise endurance time, and quality of life (daily activities).
Safety assessments will include monitoring of adverse events and laboratory evaluations.
    
    Two Phase 3 studies: If the Phase 2 study is successful, we anticipate there will be two
12-month Phase 3 studies (one pivotal and one confirmatory) to be conducted in parallel. We
expect a total of approximately 1,200 patients will be included in this program.
  Other Product Candidates
 Novel Growth Hormone-Releasing Factor Analogues
  Compounds for Acute Kidney Injury
   - 18 -




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Other Discovery Activities  Melanotransferrin Peptides (Anti-cancer compounds)
   
 2.6 INTELLECTUAL PROPERTY
 Our Current Patent Portfolio
  Tesamorelin
 
    
    In the United States, we own a patent covering the composition of matter (tesamorelin),
which is scheduled to expire in 2015. We have applied for a patent term extension
requesting an extension of five years to this patent term. If our request for patent term
extension for the entire five year term is granted, the patent protection for tesamorelin
in the United States would be extended until 2020. In addition, we own an issued United
States patent relating to the use of tesamorelin in the treatment of HIV-associated
lipodystrophy, which is scheduled to expire in 2023. Because tesamorelin qualifies as a new
chemical entity, we benefit from data protection for a five year period for
EGRIFTA® ending November 2015. See Regulatory Exclusivity.
    
    In Europe, tesamorelin is covered by granted patents scheduled to expire in 2016. In the
event of receipt of marketing approval from the European Medicines Agency, or EMA, we
intend to apply for supplementary protection certificates, or SPCs, in certain countries
which, if granted, could extend the patents covering tesamorelin in the countries where
SPCs are approved until 2021. We have also filed two patent applications relating to the
use of tesamorelin in the treatment of HIV-associated lipodystrophy where, if such patents
were granted, they would be scheduled to expire in 2023 and 2025, respectively. As
discussed below, the first time a new product is approved in Europe, the regulation
provides for a 10 year exclusivity period. Assuming approval in 2012, we would benefit from
protection until 2022. See Regulatory Exclusivity.
    
    We have obtained a patent covering the composition of matter (tesamorelin) in Brazil
that expires in 2019.
    
    We have filed patent applications for the therapeutic indication of muscle wasting in
COPD in several countries, including the United States, where, if such patents were
granted, they would be scheduled to expire in 2024, with the exception of a
recently-granted patent in the United States which benefits from a patent term adjustment
extending its term to 2027.
 - 19 -




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
    
    We have filed United States and international patent applications, for the new
formulation of tesamorelin where, if such patents were granted, they would be scheduled to
expire in 2028.
    
    We have filed United States and international Patent Cooperation Treaty applications,
relating to combination therapies of tesamorelin with certain drugs indicated for the
treatment of HIV which, if patents issued from these applications were granted, would be
scheduled to expire in 2030.Novel GRF Peptides
    
    We have recently filed a United States provisional patent application relating to new
GRF analogues. Patents claiming priority to this application may be pursued and, if such
patents were granted, they would be scheduled to expire in 2032.
 AKI
 
    
    We have filed patent applications in several countries, including the United States,
relating to our peptide TH0673 and related peptides, and their use in the treatment of AKI,
where, if such patents were granted, they would be scheduled to expire in 2028.
 Our Trademarks & Other Intellectual Property
 EGRIFTA ®
 EGRIFTA ®
  Our Policy on Intellectual Property
  
    
    perform surveillance of third party patents and patent applications in order to identify
any third party patent or third party patent application which, if granted, could be
infringed by our activities;
    
    where practicable, file patent applications for any new and patentable invention,
development or improvement in the United States and in other countries;
    
    prosecute all pending patent applications in conformity with applicable patent laws and
in a manner that efficiently covers our activities;
    
    file trademark applications in countries of interest for our trademarks;
 - 20 -




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
    
    register domain names in countries of interest; and
    
    maintain our intellectual property rights by paying government fees as may be necessary
to ensure such rights remain in force.
 Regulatory Exclusivity
  Data Protection
 Drug Price Competition and Patent Term Restoration Act of 1984 Hatch-Waxman Act Hatch-Waxman Act
  Patent Term Extension
 Hatch-Waxman Act
 Regulation 469/2009
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2.7 MANUFACTURING
  EGRIFTA ®
 Bachem
 EGRIFTA ®
 Draxis
 EGRIFTA ®
 EGRIFTA ®
 EGRIFTA ®
 Becton Dickinson
 EGRIFTA ®
 Hospira
 EGRIFTA ®
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ABAR
 EGRIFTA ®
 
 2.8 COMPETITION
 EGRIFTA ® EGRIFTA ®
  
 2.9 GOVERNMENT REGULATION
 Overview
  EGRIFTA ®
 EGRIFTA ®
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Food and Drugs Act EGRIFTA ®
 United States  FDA Process
       - 24 -




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- 25 -




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Hatch-Waxman Act Hatch-Waxman Act Hatch-Waxman Act
 Pediatric Research Equity Act
  - 26 -




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Food and Drug Administration Amendments Act of 2007
 Orphan Drug Designation
 Orphan Drug Act
  - 27 -




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Expedited Development and Review Programs
   Non-U.S. Regulation
   - 28 -




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Good Manufacturing Practices
   - 29 -




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Good Clinical Practices
  Good Laboratory Practices
  United States Sales and Marketing
 EGRIFTA ®
 EGRIFTA ®
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2.10 PHARMACEUTICAL PRICING AND REIMBURSEMENT
 EGRIFTA ® EGRIFTA ®
 EGRIFTA ® EGRIFTA ® EGRIFTA ®
 United States
 Patient Protection and Affordable Care Act Health Care Reform Law Health Care Reform Law
 - 31 -




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Health Care
Reform Law Health Care Reform Law
 Medicare Prescription Drug, Improvement, and Modernization Act of 2003
 EGRIFTA ®
    - 32 -




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Europe and other countries covered by our agreements
 EGRIFTA ®
      
 2.11 EMPLOYEES
  
 2.12 FACILITIES
   - 33 -




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2.13 ENVIRONMENT
  - 34 -




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ITEM 3 RISK FACTORS
  
 3.1 RISKS RELATED TO THE COMMERCIALIZATION OF OUR PRODUCT AND PRODUCT CANDIDATES
 Our commercial success depends largely on the commercialization of EGRIFTA ® ; the
failure of EGRIFTA ® to obtain commercial acceptance would have a material adverse
effect on us.
 EGRIFTA ® EGRIFTA ® EGRIFTA ®
 EGRIFTA ®
 
    
    receipt of regulatory approvals for EGRIFTA® from regulatory agencies in the
territories other than the United States in which we wish to expand the commercialization
of tesamorelin;
    
    market acceptance of EGRIFTA® by the medical community, patients and
third-party payors (such as governmental health administration authorities and private
health coverage insurers);
    
    the amount of resources devoted by our commercial partners to commercialize
EGRIFTA® in their respective territories;
    
    maintaining manufacturing and supply agreements to ensure the availability of commercial
quantities of EGRIFTA® through validated processes;
    
    the number of competitors in our market; and
    
    protecting and enforcing our intellectual property and avoiding patent infringement
claims.
 EGRIFTA ®
 - 35 -




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We are or will be dependent on a limited number of collaboration and licensing agreements for
the commercialization of EGRIFTA ® in the United States, Europe, Latin America, Africa
and the Middle East. These agreements place the commercialization of EGRIFTA ® in these
markets outside of our control.
 EGRIFTA ® EGRIFTA ®
 
    
    our limited control of the amount and timing of resources that our commercial partners
will be devoting to the commercialization, marketing and distribution of tesamorelin,
including obtaining patient reimbursement for EGRIFTA®, which could adversely
affect our ability to obtain or maximize our royalty payments;
    
    disputes or litigation that may arise between us and our commercial partners, which
could adversely affect the commercialization of tesamorelin, all of which would divert our
managements attention and our resources;
    
    our commercial partners not properly defending our intellectual property rights or using
them in such a way as to expose us to potential litigation, which could, in both cases,
adversely affect the value of our intellectual property rights; and
    
    corporate reorganizations or changes in business strategies of our commercial partners,
which could adversely affect a commercial partners willingness or ability to fulfill its
obligations under its respective agreement.
 EGRIFTA ® EGRIFTA ® EGRIFTA ® EGRIFTA ® EGRIFTA ®
 EGRIFTA ®
 We rely on third parties for the manufacture and supply of EGRIFTA ® and
tesamorelin and such reliance may adversely affect us if the third parties are unable or unwilling
to fulfill their obligations.
  - 36 -




---



##### 



EGRIFTA ®
 EGRIFTA ®
 
    
    becomes unavailable to us for any reason, including as a result of the failure to comply
with GMP regulations;
    
    experiences manufacturing problems or other operational failures, such as equipment
failures or unplanned facility shutdowns required to comply with GMP or damage from any
event, including fire, flood, earthquake, business restructuring or insolvency; or
    
    fails to perform its contractual obligations under our agreement, such as failing to
deliver the quantities requested on a timely basis.
 EGRIFTA ® EGRIFTA ® EGRIFTA ® EGRIFTA ®
  Even though we have received regulatory approval for EGRIFTA ® in the United
States, we still may not be able to successfully commercialize it if we do not gain market
acceptance and the revenue that we generate from its sales, if any, may be limited.
 EGRIFTA ®
 
    
    acceptance of the product by physicians and patients as safe and effective treatments
and addressing a significant unmet medical need;
 - 37 -




---



##### 




    
    product price;
    
    the effectiveness of our sales and marketing efforts (or those of our commercial
partners);
    
    storage requirements and ease of administration;
    
    dosing regimen;
    
    safety and efficacy;
    
    prevalence and severity of side effects;
    
    competitive products;
    
    the ability to obtain and maintain sufficient third-party coverage or reimbursement from
government health care programs, including Medicare and Medicaid, private health insurers
and other third-party payors; and
    
    the willingness and ability of patients to pay out-of-pocket in the absence of
third-party coverage.
 EGRIFTA ®
 We have no internal sales, marketing or distribution capabilities so we must rely on strategic
alliance agreements with third parties for the sale and marketing of EGRIFTA ® or any
future products.
 EGRIFTA ® EGRIFTA ®
 EGRIFTA ®
 We are substantially dependent on revenues from EGRIFTA ®
 EGRIFTA ®
 - 38 -




---



##### 



EGRIFTA ®
 Our levels of revenues are highly dependent on obtaining patient reimbursement for
EGRIFTA ® .
 EGRIFTA ®
 EGRIFTA ®
 EGRIFTA ® EGRIFTA ® EGRIFTA ®
 A variety of risks associated with our international business relationships could materially
adversely affect our business.
  
    
    differing regulatory requirements for drug approvals in foreign countries;
    
    potentially reduced protection for intellectual property rights;
    
    potential third-party patent rights in foreign countries;
    
    the potential for so-called parallel importing, which is what happens when a local
seller, faced with high or higher local prices, opts to import goods from a foreign market,
with low or lower prices, rather than buying them locally;
    
    unexpected changes in tariffs, trade barriers and regulatory requirements;
    
    economic weakness, including inflation, or political instability, particularly in
foreign economies and markets;
    
    compliance with tax, employment, immigration and labour laws for employees traveling
abroad;
 - 39 -




---



##### 




    
    foreign taxes;
    
    foreign exchange contracts and foreign currency fluctuations, which could result in
increased operating expenses and reduced revenue, and other obligations incident to doing
business in another country;
    
    workforce uncertainty in countries where labour unrest is more common than in the United
States and Canada;
    
    production shortages resulting from any events affecting raw material supply or
manufacturing capabilities abroad; and
    
    business interruptions resulting from geo-political actions, including war and
terrorism, or natural disasters, including earthquakes, volcanoes, typhoons, floods,
hurricanes and fires.
  Governments outside the United States tend to impose strict price controls, which may
adversely affect our revenues, if any.
 EGRIFTA ®
 We face competition and the development of new products by other companies could materially
adversely affect our business and products.
   - 40 -




---



##### 



If we fail to comply with government regulations regarding the import and export of products
and raw materials, we could be subject to fines, sanctions and penalties that could adversely
affect our ability to operate our business.
  
 3.2 RISKS RELATED TO THE REGULATORY REVIEW PROCESS
 Even after regulatory approval has been obtained regulatory agencies may impose limitations on
the indicated uses for which our products may be marketed, subsequently withdraw approval or take
other actions against us that would be adverse to our business.
 EGRIFTA ® EGRIFTA ® EGRIFTA ® EGRIFTA ® EGRIFTA ® EGRIFTA ®
 EGRIFTA ®
 
    
    restrictions on the use of the product, manufacturers or manufacturing processes;
    
    warning letters;
    
    civil or criminal penalties;
    
    fines;
    
    injunctions;
    
    product seizures or detentions;
 - 41 -




---



##### 




    
    import or export bans or restrictions;
    
    product recalls and related publicity requirements;
    
    suspension or withdrawal of regulatory approvals;
    
    total or partial suspension of production; and
    
    refusal to approve pending applications for marketing approval of new product candidates
or supplements to approved applications.
  To date, we do not have the required regulatory approvals to commercialize
EGRIFTA ® outside of the United States and cannot guarantee that we will obtain such
regulatory approvals or that any of our product candidates will be approved for commercialization
in any country, including the United States.
 EGRIFTA ®
 EGRIFTA ® EGRIFTA ®
  EGRIFTA ®
  - 42 -




---



##### 



We have only obtained FDA approval for EGRIFTA ® and we must complete several
preclinical studies and clinical trials for our other product candidates which may not yield
positive results and, consequently, could prevent us from obtaining regulatory approval.
   Recently enacted and future legislation may increase the difficulty and cost for us to obtain
marketing approval of and commercialize our product candidates and affect the prices we may obtain.
 EGRIFTA ®
   - 43 -




---



##### 



EGRIFTA ®
 Health Care Reform Law Health Care Reform Law Health Care Reform Law Health Care Reform Law
 
 3.3 RISKS RELATED TO OUR INTELLECTUAL PROPERTY
 Our failure to protect our intellectual property may have a material adverse effect on our
ability to develop and commercialize our products.
    - 44 -




---



##### 



Our commercial success depends, in part, on our ability not to infringe on third party patents
and other intellectual property rights.
  - 45 -




---



##### 



3.4 OTHER RISKS RELATED TO OUR BUSINESS
 We have a history of net losses and we may never achieve high profitability.
  - 46 -




---



##### 



EGRIFTA ® EGRIFTA ®
 We rely on third-party service providers to conduct our preclinical studies and clinical
trials and the failure by any of these third parties to comply with their obligations may delay the
studies which could have an adverse effect on our development programs.
    The conduct of clinical trials requires the enrolment of patients and difficulties in
enrolling patients could delay the conduct of our clinical trials or result in their
non-completion.
  - 47 -




---



##### 



We may require additional funding and may not be able to raise the capital necessary to fund
all or part of our capital requirements, including to continue and complete the research and
development of our product candidates and their commercialization.
  If product liability lawsuits are brought against us, they could result in costly and
time-consuming litigation and significant liabilities.
 EGRIFTA ®
  - 48 -




---



##### 



The development and commercialization of our drugs could expose us to liability claims which
could exceed our insurance coverage.
  We depend on our key personnel to research, develop and bring new products to the market and
the loss of key personnel or the inability to attract highly qualified individuals could have a
material adverse effect on our business and growth potential.
  We may be unable to identify and complete in-licensing or acquisitions. In-licensing or
acquisitions could divert managements attention and financial resources, may negatively affect our
operating results and could cause significant dilution to our shareholders.
  
    
    diversion of managements attention;
    
    disruption to our ongoing business;
    
    failure to retain key acquired personnel;
    
    difficulties in integrating acquired operations, technologies, products or personnel;
    
    unanticipated expenses, events or circumstances;
    
    assumption of disclosed and undisclosed liabilities;
    
    inappropriate valuation of the acquired in-process research and development, or the
entire acquired business; and
    
    difficulties in maintaining customer relations.
  - 49 -




---



##### 



We may not achieve our publicly announced milestones on time.
  The outcome of scientific research is uncertain and our failure to discover new compounds
could slow down the growth of our portfolio of products.
  
 3.5 RISKS RELATED TO OUR COMMON SHARES
 Our share price has been volatile, and an investment in our common shares could suffer a
decline in value.
   Our quarterly operating results may fluctuate significantly.
  
    
    variations in the level of revenues and royalties received related to
EGRIFTA®;
 - 50 -




---



##### 




    
    variations in the level of expenses related to our development programs;
    
    addition or termination of clinical trials;
    
    any intellectual property infringement lawsuit in which we may become involved;
    
    regulatory developments affecting our product candidates;
    
    our execution of any collaborative, licensing or similar arrangements, and the timing of
payments we may make or receive under these arrangements; and
    
    the achievement and timing of milestone payments under our existing strategic
partnership agreements.
  We do not intend to pay dividends on our common shares and, consequently, your ability to
achieve a return on your investment will depend on appreciation in the price of our common shares.
  Our revenues and expenses may fluctuate significantly and any failure to meet financial
expectations may disappoint securities analysts or investors and result in a decline in the price
of our common shares.
  
    
    the inability to complete product development in a timely manner that results in a
failure or delay in receiving the required regulatory approvals or allowances to
commercialize product candidates;
    
    the timing of regulatory submissions and approvals;
    
    the timing and willingness of any current or future collaborators to invest the
resources necessary to commercialize the product candidates;
    
    the outcome of any litigation; changes in foreign currency fluctuations;
    
    the timing of achievement and the receipt of milestone payments from current or future
third parties;
 - 51 -




---



##### 




    
    failure to enter into new or the expiration or termination of current agreements with
third parties; and
    
    failure to introduce the product candidates to the market in a manner that generates
anticipated revenues.
 We may be adversely affected by currency fluctuations.
  Our shareholder rights plan and certain Canadian laws could delay or deter a change of
control.
  Investment Canada Act
  - 52 -




---



##### 



ITEM 4 DIRECTORS AND EXECUTIVE OFFICERS
 
 4.1 DIRECTORS
  - 53 -




---



##### 



DIRECTORS
 Number of
    
    Number ofName and Place of
    
    Principal
    
    Director
    
    Common
    
    DeferredResidence
    
    Occupation
    
    Since
    
    Shares
    
    Share UnitsPaul Pommier(1) (2) (3) (4) (5) Québec, Canada
    
    Chairman of the Board
    
    
    1997
    
    
    
    190,100
    
    
    
    20,998John-Michel T. Huss(4)Québec, Canada
    
    President and Chief 
Executive Officer of the Company
    
    
    2010
    
    
    
    
    
    
    
    44,248Gilles Cloutier(3) (5) North Carolina,United States
    
    Corporate Director
    
    
    2003
    
    
    
    71,000
    
    
    
    3,000A. Jean de Grandpré(2) (3) (4) (5) Québec, Canada
    
    Corporate Director
    
    
    1993
    
    
    
    200,000
    
    
    
    5,250Robert G. Goyer(3) Québec, Canada
    
    Emeritus Professor Faculty of Pharmacy Université de Montreal
    
    
    2005
    
    
    
    10,000
    
    
    
    5,250Gérald A. Lacoste(1) (3) (5) Québec, Canada
    
    Corporate Director
    
    
    2006
    
    
    
    11,000
    
    
    
    5,250Bernard Reculeau(2)Paris, France
    
    Corporate Director
    
    
    2005
    
    
    
    18,100
    
    
    
    3,000Jean-Denis Talon(1) (2) (4) Québec, Canada
    
    Chairman of the Board AXA Canada (Insurance Company)
    
    
    2001
    
    
    
    60,000
    
    
    
    3,000Luc Tanguay(4) Québec, Canada
    
    Senior Executive Vice President and Chief Financial Officer of the Company
    
    
    1993
    
    
    
    83,000
    
    
    
    27,572
 
 (1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Nominating and Corporate Governance Committee(4)
    
    Member of the Finance Committee(5)
    
    Member of the Strategic Review Committee - 54 -




---



##### 



Biographical Notes of the Directors Paul Pommier, MBA. Chairman o the Board
 John-Michel T. Huss, MBA. President & Chief Executive Officer.
 Gilles Cloutier, Ph.D. Corporate Director
 A. Jean de Grandpré, C.C., Q.C. Corporate Director .
 Robert G. Goyer, Ph.D. Emeritus professor, Faculty of Pharmacy of the Université de Montréal
 Gérald A. Lacoste, Q.C. Corporate Director. Autorité des marchés financiers
 - 55 -




---



##### 



Bernard Reculeau. Corporate Director
 Jean-Denis Talon. Chairman of the Board, AXA Canada.
 Luc Tanguay, M.Sc., CFA. Senior Executive Vice President and Chief Financial Officer of the
Company.
 
 4.2 AUDIT COMMITTEE
   Paul Pommier.
 Jean-Denis Talon.
 Gérald A. Lacoste.
  - 56 -




---



##### 



External Auditors Service Fees
 Financial Year Ended
    
    Financial Year EndedNovember 30, 2010
    
    November 30, 2009Audit Fees
    
    $
    122,000
    
    
    $
    80,000Audit-Related Fees (1)
    
    $
    158,025
    
    
    $
    17,500Tax Fees (2)
    
    $
    56,600
    
    
    $
    39,626All Other Fees
    
    
    
    
    
    
    
 
 (1)
    
    Audit-related fees relate principally to services rendered in connection with
our annual financial statements and, for the financial year ended November 30, 2010, audit
fees paid to KPMG also included fees related to services rendered in connection with the audit
of IFRS adjustments and the translation of the financial statements to IFRS standards.(2)
    
    Tax fees relate to services rendered in connection with the preparation of corporate
tax returns and general tax advice. 
 4.3 EXECUTIVE OFFICERS
  - 57 -




---



##### 



EXECUTIVE OFFICERS
 Number ofCommon Sharesof the Companyover whichControl or
    
    Number ofName and Place of
    
    
    
    Direction is
    
    DeferredResidence
    
    Office
    
    Exercised
    
    Share UnitsPaul Pommier Québec, Canada
    
    Chairman of the Board
    
    
    190,100
    
    
    
    20,998John-Michel T. Huss Québec, Canada
    
    President and Chief Executive Officer
    
    
    
    
    
    
    44,248Luc Tanguay Québec, Canada
    
    Senior Executive Vice President and Chief Financial Officer
    
    
    83,000
    
    
    
    27,572Marie-Noël Colussi Québec, Canada
    
    Vice President, Finance
    
    
    10,075
    
    
    
    3,182Chantal Desrochers Québec, Canada
    
    Vice President, Business Development and Commercialization
    
    
    16,300
    
    
    
    Andrea Gilpin Québec, Canada
    
    Vice President, Investor Relations and Communications
    
    
    6,000
    
    
    
    2,005Jocelyn Lafond Québec, Canada
    
    Vice President, Legal Affairs, and Corporate Secretary
    
    
    
    
    
    
    5,000Christian Marsolais Québec, Canada
    
    Vice President, Clinical Research and Medical Affairs
    
    
    8,597
    
    
    
    6,312Martine Ortega Québec, Canada
    
    Vice President, Compliance and Regulatory Affairs
    
    
    3,000
    
    
    
    7,532Pierre Perazzelli Québec, Canada
    
    Vice President, Pharmaceutical Development
    
    
    1,800
    
    
    
    4,061Krishna Peri Québec, Canada
    
    Vice President, Research
    
    
    35,000
    
    
    
    
 Biographical Notes of the Executive Officers
  Marie-Noël Colussi, CA. Vice President, Finance Université du Québec à Montréal
 Chantal Desrochers, B.Ph., MBA. Vice President, Business Development and Commercialization Université de Montréal
 - 58 -




---



##### 



Andrea Gilpin, Ph.D., MBA. Vice President, Investor Relations and Communications.
 Jocelyn Lafond, LL.B., LL.M. Vice President, Legal Affairs, and Corporate Secretary Université Laval
 Christian Marsolais, Ph.D. Vice President, Clinical Research and Medical Affairs Université de Montréal
 Martine Ortega, Pharm. D. Vice President, Compliance and Regulatory Affairs Université dAix-Marseille
 Pierre Perazzelli, B. Sc. Vice President, Pharmaceutical Development Université Laval
 Krishna Peri, Ph.D. Vice President, Research
 - 59 -




---



##### 



4.4 DECLARATION OF THE DIRECTORS AND OFFICERS ANTECEDENTS
  Bankruptcy and Insolvency Act Bankruptcy Act
 Bankruptcy Act Bankruptcy Act
 Companies Creditors Arrangement Act
 
 4.5 SECURITIES HELD BY THE DIRECTORS AND EXECUTIVE OFFICERS
  - 60 -




---



##### 



ITEM 5 INTERESTS OF EXPERTS
   - 61 -




---



##### 



ITEM 6 SECURITIES OF THE COMPANY
 
 6.1 AUTHORIZED SHARE CAPITAL
     
 6.2 DIVIDEND POLICY
  
 6.3 TRANSFER AGENT AND REGISTRAR
  - 62 -




---



##### 



ITEM 7 MARKET FOR SECURITIES
 
 7.1 TRADING PRICE AND VOLUME
  PricePeriod
    
    $ High
    
    $ Low
    

    VolumeFebruary 1 to February 18, 2011
    
    $
    5.88
    
    
    $
    5.01
    
    
    
    4,371,300January 2011
    
    $
    5.90
    
    
    $
    5.43
    
    
    
    3,319,500December 2010
    
    $
    5.69
    
    
    $
    5.27
    
    
    
    4,038,000November 2010
    
    $
    5.80
    
    
    $
    4.91
    
    
    
    8,127,400October 2010
    
    $
    5.15
    
    
    $
    4.44
    
    
    
    2,944,000September 2010
    
    $
    4.98
    
    
    $
    4.78
    
    
    
    1,230,300August 2010
    
    $
    5.08
    
    
    $
    4.75
    
    
    
    1,934,900July 2010
    
    $
    5.48
    
    
    $
    4.82
    
    
    
    3,795,500June 2010
    
    $
    5.59
    
    
    $
    4.61
    
    
    
    6,188,600May 2010
    
    $
    5.02
    
    
    $
    2.09
    
    
    
    11,593,700April 2010
    
    $
    5.20
    
    
    $
    4.82
    
    
    
    1,960,000March 2010
    
    $
    5.50
    
    
    $
    4.80
    
    
    
    2,612,100February 2010
    
    $
    5.03
    
    
    $
    4.67
    
    
    
    2,205,500January 2010
    
    $
    5.42
    
    
    $
    4.28
    
    
    
    4,505,000December 2009
    
    $
    4.45
    
    
    $
    3.55
    
    
    
    5,517,800
 
 7.2 PRIOR SALES
  Date
    
    Type of Security
    
    Price per Security
    
    Number of SecuritiesDecember 8, 2009
    
    Options
    
    $
    3.84
    
    
    
    265,000June 8, 2010
    
    Options
    
    $
    4.75
    
    
    
    70,000
 - 63 -




---



##### 



ITEM 8 LEGAL PROCEEDINGS
 EGRIFTA ®
  - 64 -




---



##### 



ITEM 9 MATERIAL CONTRACTS
 Licensing Agreements EGRIFTA ®
 Supply Agreements.
 Shareholder Rights Plan Agreement.
   (a)
    
    the date of the first public announcement made by us or an Acquiring Person that a
person has become an Acquiring Person;(b)
    
    the date of the commencement of, or first public announcement of the intent of any
Person to commence, a take-over bid (other than a Permitted Bid (as defined in the Rights
Plan) or a Competing Permitted Bid (as defined in the Rights Plan)) by any person for our
common shares;(c)
    
    the date upon which a Permitted Bid or Competing Permitted Bid ceases to be such; or(d)
    
    such later date as may be determined by the board of directors.
   - 65 -




---



##### 



Lease Agreement. Société de
portefeuille immobilier GE Q-Tech inc
 - 66 -




---



##### 



ITEM 10 ADDITIONAL INFORMATION
   - 67 -




---



##### 



APPENDIX A  AUDIT COMMITTEE CHARTER
 I.
    
    MandateThe Audit Committee (the Committee) is responsible for assisting the Companys Board of
Directors (the Board) in overseeing the following:
 A.
    
    the integrity of the Companys financial statements and related information;B.
    
    the internal control systems of the Company;C.
    
    the appointment and performance of the external auditor; andD.
    
    the supervision of the Companys Risk Management.
 II.
    
    Obligations and DutiesThe Committee carries out the duties usually entrusted to an audit committee and any other
duty assigned from time to time by the Board. Management has the responsibility to ensure
the integrity of the financial information and the effectiveness of the Companys internal
controls. The external auditor has the responsibility to verify and certify the accurate
presentation of the Companys financial statements; at the same time evaluating the internal
control process to determine the nature, extent and chronology of the auditing procedures
used. The Committee has the responsibility to supervise the participants involved in the
preparation process of the financial information and to report on this to the Board.Specifically, the Committee is charged with the following obligations and duties:
 A.
    
    Integrity of the Companys Financial Statements and Related Information
 1.
    
    Review annual and quarterly consolidated financial statements and
all financial information legally required to be disclosed by the Company, i.e.
financial information contained in the Management Discussion and Analysis
report, the annual information form and the press releases, as the case may be,
discuss such with management and the external auditor, and suggest
recommendations to the Board, as the case may be.2.
    
    Approve the interim Financial Statements, the interim Management
Discussion and Analysis reports and all supplements to these Management
Discussion and Analysis reports which have to be filed with regulatory
authorities.3.
    
    On a periodic basis, review and discuss with management and the
external auditor the following:
 a.
    
    major issues regarding accounting principles and
financial statement presentations, including any significant changes in
the Companys selection or application of accounting principles, and
major issues as to the adequacy of the Companys internal controls and
any special audit steps adopted in light of material control
deficiencies;b.
    
    the effect of regulatory and accounting
initiatives, as well as off-balance sheet structures, on the financial
statements of the Company; andc.
    
    the type and presentation of information to be
included in press releases dealing with financial results (paying
particular attention to any use of pro-forma information or information
adjusted by means of non-generally accepted accounting principles).
 - 68 -




---



##### 



4.
    
    Review and discuss reports from the external auditor on:
 a.
    
    all critical accounting policies and practices used
by the Company; andb.
    
    all material alternative treatments of financial
information within generally accepted accounting principles that have
been discussed with management, including the ramifications of the use of
such alternate treatments and disclosures and the treatment preferred by
the external auditor.
 B.
    
    Supervision of the Companys Internal Control Systems
 1.
    
    Review and discuss with management and with the external auditor
present reports and, when appropriate, provide recommendations to the Board on
the following:
 a.
    
    actual financial data compared with budgeted data;b.
    
    the Companys internal control system;c.
    
    the relationship of the Committee with the
management and audit committees of the Companys consolidated
subsidiaries. With respect to the subsidiaries, the Committee must:
 
    
    obtain precisions as to the mandate of the audit committees;
    
    enquire about internal controls and study related risks;
    
    obtain the external auditors report to the audit committees on
the planning of external auditing;
    
    obtain the external auditors report to the audit committees on
the auditing results;
    
    obtain copy of the minutes of the audit committees meetings;
and
    
    ensure that the critical accounting policies and practices are
identical to the Companys.
 2.
    
    Study the feasibility of implementing an internal auditing system
and when implemented, establish its responsibilities and supervise its work.3.
    
    Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and procedures for the confidential, anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.
 C.
    
    Appointment and Performance Supervision of the External Auditor
 1.
    
    Provide recommendations to the Board on the selection of the
external auditor to be appointed by the shareholders.2.
    
    Approve in advance and recommend to the Board the external
auditors remuneration and more specifically fees and terms of all audit, review
or certification services to be provided by the external auditor to the Company
and any consolidated subsidiary.3.
    
    Supervise the performance of the external auditor in charge of
preparing or issuing an audit report or performing other audit services or
certification services for the Company or any consolidated subsidiary of the
Company,
 - 69 -




---



##### 



where required, and review all related questions as to the terms of its
mission and the revision of its mission.
 4.
    
    Pre-approve all engagements for permitted non-audit services
provided by the external auditor to the Company and any consolidated subsidiary,
and to this effect and at its convenience, establish policies and procedures for
the engagement of the external auditor to provide to the Company and any
consolidated subsidiary permitted non-audit services, which shall include
approval in advance by the Committee of all audit/review services and permitted
non-audit services to be provided to the Company and any consolidated subsidiary
by the external auditor.5.
    
    At least annually, consider, assess and report to the Board on:
 a.
    
    the independence of the external auditor, including
whether the external auditors performance of permitted non-audit
services is compatible with the external auditors independence;b.
    
    the obtaining from the external auditor of a
written statement i) describing all relationships between the external
auditor and the Company; ii) assuring that lead audit partner rotation is
carried out, as required by law; and iii) describing any other
relationship that may adversely affect the independence of the external
auditor; andc.
    
    the evaluation of the lead audit partner, taking
into account the opinions of management and the internal auditor.
 6.
    
    At least annually, obtain and review a report by the external
auditor describing:
 a.
    
    the external auditors internal quality-control
procedures; andb.
    
    any material issues raised by the most recent
internal quality-control review (or peer review) of the external
auditors firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, with respect
to one or more independent audits carried out by the external auditors
firm, and any steps taken to deal with any such issues.
 7.
    
    Resolve any disagreement between management and the external
auditor regarding financial reporting.8.
    
    Review the audit process with the external auditor.9.
    
    Review and discuss with the Chief Executive Officer and Chief
Financial Officer of the Company the process for the certifications to be
provided in the Companys public disclosure documents.10.
    
    Meet periodically with the external auditor in the absence of
management.11.
    
    Establish procedures with respect to hiring the external
auditors employees and former employees.
 D.
    
    Supervision of the Companys Risk ManagementReview, report and, where appropriate, provide recommendations to the Board on the
following:
 1.
    
    the Companys processes for identifying, assessing and managing
risk;2.
    
    the Companys major financial risk exposures and the steps the
Company has taken to monitor and control such exposures;
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3.
    
    the Companys insurance portfolio and the adequacy of the
coverage; and4.
    
    the Companys investment policy.
 III.
    
    External AdvisorsIn discharging its duties and responsibilities, the Committee is empowered to retain
external legal counsel or other external advisors, as appropriate. The Company shall provide
the necessary funds to secure the services of such advisors.IV.
    
    Composition of the CommitteeThe Committee is composed of any number of Directors, but no less than
three, as may be determined by the Board from time to time by
resolution. Each member of the Committee shall be independent from the
Company and is financially literate, as determined by the Board and in
conformity with applicable laws, rules and regulations.V.
    
    Term of the MandateCommittee members are appointed by Board resolution to carry out their mandate extending
from the date of the appointment to the next annual general meeting of the shareholders or
until their successors are so appointed.VI.
    
    VacancyThe Board may fill vacancies at any time by resolution. Subject to
the constitution of the quorum, the Committees members can continue
to act even if there is one or many vacancies on the Committee.VII.
    
    ChairmanThe Board appoints the Committee Chairman who will call and chair the meetings.The Chairman
reports to the Board the deliberations of the Committee and its recommendations.VIII.
    
    SecretaryUnless otherwise determined by resolution of the Board, the Secretary of the Company shall
act as Committee Secretary. The Secretary must attend Committee meetings and prepare the
minutes. He/she must provide notification of meetings as directed by the Committee Chairman.
The Secretary is the guardian of the Committees records, books and archives.IX.
    
    Meeting ProceedingsThe Committee establishes its own procedures as to how meetings are called and conducted.
Unless it is otherwise decided, the Committee shall meet privately and independently from
Management at each regularly scheduled meeting. In the absence of the regularly appointed
Chairman, the meeting shall be chaired by another Committee member selected among attending
participants and appointed accordingly. In the absence of the regularly appointed Secretary,
Committee members shall designate someone to carry out this duty.The Committee shall meet at least four times a year with management and the external
auditor, and at least once a year, separately in executive session in the absence of
management and the external auditor. At least once a year, the Committee invites the Chief
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Financial Officer of each subsidiary to present the financial information and internal
control systems related to such subsidiary.
 X.
    
    Quorum and VotingUnless the Board otherwise specifies by resolution, two Committee
members shall constitute an appropriate quorum for deliberation of
items on the agenda. During meetings, decisions are reached by a
majority of votes from Committee members, unless the quorum is of two
members, in which case decisions are made by consensus of opinion.XI.
    
    RecordsThe Committee keeps records that are deemed necessary of its
deliberations and reports regularly to the Board on its activities
and recommendations.XII.
    
    Effective DateThis charter was adopted by the Directors at its May 3, 2004 Board
meeting. It was amended by the Directors during the April 13, 2005
and February 8, 2006 Board meetings.
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