Exhibit 99.8
 
       (SIGNATURE)
    
    (SIGNATURE)YVES ROSCONI
    
    LUC TANGUAYPRESIDENT AND
    
    SENIOR EXECUTIVE VICE PRESIDENTCHIEF EXECUTIVE OFFICER
    
    AND CHIEF FINANCIAL OFFICER




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##### 








---



##### 



2008(restated (in thousands of dollars)
    
    2009
    
    
    note 2A))AssetsCurrent assets:Cash
    
    $
    1,519
    
    
    $
    133Bonds
    
    
    10,036
    
    
    
    10,955Accounts receivable
    
    
    375
    
    
    
    610Tax credits receivable
    
    
    1,666
    
    
    
    1,784Inventories
    
    
    2,225
    
    
    
    Research supplies
    
    
    287
    
    
    
    301Prepaid expenses
    
    
    302
    
    
    
    39716,410
    
    
    
    14,180Bonds
    
    
    51,807
    
    
    
    35,249Property and equipment (note 4)
    
    
    1,229
    
    
    
    1,299Other assets (note 5)
    
    
    41
    
    
    
    2,817$
    69,487
    
    
    $
    53,545Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    5,901
    
    
    $
    7,198Current portion of deferred revenues (note 7)
    
    
    6,847
    
    
    
    12,748
    
    
    
    7,198Deferred revenues (note 7)
    
    
    13,691
    
    
    
    Shareholders equity:Capital stock (note 6)
    
    
    279,169
    
    
    
    269,219Contributed surplus
    
    
    6,484
    
    
    
    5,585Accumulated other comprehensive income
    
    
    1,282
    
    
    
    372Deficit
    
    
    (243,887
    )
    
    
    (228,829
    )(242,605
    )
    
    
    (228,457
    )Total shareholders equity
    
    
    43,048
    
    
    
    46,347Commitments (note 9)Subsequent events (note 15)$
    69,487
    
    
    $
    53,545
   (SIGNATURE)
    
    (SIGNATURE)PAUL POMMIER
    
    JEAN-DENIS TALONDIRECTOR
    
    DIRECTOR




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##### 



2008(restated (in thousands of dollars, except per share amounts)
    
    2009
    
    
    note 2 A))Revenues:Royalties, technologies and other (note 7)
    
    $
    17,468
    
    
    $
    214Interest
    
    
    2,252
    
    
    
    2,42719,720
    
    
    
    2,641Operating costs and expenses:Research and development
    
    
    22,226
    
    
    
    35,326Tax credits
    
    
    (1,795
    )
    
    
    (2,111
    )20,431
    
    
    
    33,215General and administrative
    
    
    7,149
    
    
    
    6,185Selling and market development
    
    
    2,583
    
    
    
    3,811Patents, amortization and impairment of other assets (note 5)
    
    
    346
    
    
    
    5,239Fees associated with the strategic review process
    
    
    
    
    
    
    2,224Fees associated with the Collaboration and Licensing
Agreement (note 7)
    
    
    4,269
    
    
    
    34,778
    
    
    
    50,674Operating loss before undernoted item
    
    
    (15,058
    )
    
    
    (48,033
    )Realized loss on impairment of available-for-sale financial
assets (note 11 B))
    
    
    
    
    
    
    (578
    )Net loss
    
    $
    (15,058
    )
    
    $
    (48,611
    )Basic and diluted loss per share (note 6 C))
    
    $
    (0.25
    )
    
    $
    (0.85
    )Weighted average number of common shares outstanding
    
    
    60,314,309
    
    
    
    57,415,468See accompanying notes to consolidated financial statements.CONSOLIDATED STATEMENTS
OF COMPREHENSIVE LOSS
YEARS ENDED NOVEMBER 30, 2009 AND 20082008(restated (in thousands of dollars)
    
    2009
    
    
    note 2A))Net loss
    
    $
    (15,058
    )
    
    $
    (48,611
    )Unrealized gains on available-for-sale financial assets
    
    
    1,039
    
    
    
    133Reclassification adjustment for gains and losses
on available-for-sale financial assets (note 11 B))
    
    
    (129
    )
    
    
    572Comprehensive loss
    
    $
    (14,148
    )
    
    $
    (47,906
    )




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##### 



AccumulatedothercomprehensiveCapital stock
    
    
    Contributed
    
    
    income(in thousands of dollars)
    
    Number
    
    
    Dollars
    
    
    surplus
    
    
    (loss)
    
    
    Deficit
    
    
    TotalBalance, November 30, 2007
    
    
    54,531,133
    
    
    $
    238,842
    
    
    $
    4,807
    
    
    $
    (333
    )
    
    $
    (177,339
    )
    
    $
    65,977Changes in accounting policies (note 2 A))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (941
    )
    
    
    (941
    )Issuance of share capital (note 6)
    
    
    3,564,291
    
    
    
    29,899
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,899Share issue costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,938
    )
    
    
    (1,938
    )Exercise of stock options:Cash proceeds
    
    
    119,666
    
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397Ascribed value
    
    
    
    
    
    
    81
    
    
    
    (81
    )
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    859
    
    
    
    
    
    
    
    
    
    
    
    859Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,611
    )
    
    
    (48,611
    )Change in unrealized gains and losses
on available-for-sale financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    705
    
    
    
    
    
    
    
    705Balance, November 30, 2008
    
    
    58,215,090
    
    
    
    269,219
    
    
    
    5,585
    
    
    
    372
    
    
    
    (228,829
    )
    
    
    46,347Issuance of share capital (note 6)
    
    
    2,214,303
    
    
    
    9,950
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,950Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    899
    
    
    
    
    
    
    
    
    
    
    
    899Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,058
    )
    
    
    (15,058
    )Change in unrealized gains and losses
on available-for-sale financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    910
    
    
    
    
    
    
    
    910Balance, November 30, 2009
    
    
    60,429,393
    
    
    $
    279,169
    
    
    $
    6,484
    
    
    $
    1,282
    
    
    $
    (243,887
    )
    
    $
    43,048




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##### 



2008(restated (in thousands of dollars)
    
    2009
    
    
    note 2A))Cash flows from operating activities:Net loss
    
    $
    (15,058
    )
    
    $
    (48,611
    )Adjustments for:Amortization of property and equipment
    
    
    612
    
    
    
    625Amortization and impairment of other assets
    
    
    
    
    
    
    4,957Stock-based compensation
    
    
    899
    
    
    
    859Realized loss on impairment of available-for-sale financial assets
    
    
    
    
    
    
    578(13,547
    )
    
    
    (41,592
    )Changes in operating assets and liabilities:Interest receivable on bonds
    
    
    (923
    )
    
    
    405Accounts receivable
    
    
    260
    
    
    
    (134
    )Tax credits receivable
    
    
    118
    
    
    
    (366
    )Inventories
    
    
    (2,225
    )
    
    
    Research supplies
    
    
    2,765
    
    
    
    582Prepaid expenses
    
    
    95
    
    
    
    17Accounts payable and accrued liabilities
    
    
    (1,424
    )
    
    
    (1,324
    )Deferred revenues
    
    
    20,538
    
    
    
    19,204
    
    
    
    (820
    )5,657
    
    
    
    (42,412
    )Cash flows from financing activities:Share issuance
    
    
    9,950
    
    
    
    30,296Share issue costs
    
    
    (8
    )
    
    
    (1,930
    )9,942
    
    
    
    28,366Cash flows from investing activities:Additions to property and equipment
    
    
    (407
    )
    
    
    (301
    )Acquisition of bonds
    
    
    (29,111
    )
    
    
    (17,987
    )Disposal of bonds
    
    
    15,305
    
    
    
    29,889(14,213
    )
    
    
    11,601Net change in cash
    
    
    1,386
    
    
    
    (2,445
    )Cash, beginning of year
    
    
    133
    
    
    
    2,578Cash, end of year
    
    $
    1,519
    
    
    $
    133




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##### 



1.
    
    Organization and business activities
 The Company, incorporated under Part 1A of the Québec Companies Act, is a Canadian
biopharmaceutical company that discovers and develops novel therapeutic products, with an
emphasis on peptides, for commercialization. The Company targets unmet medical needs in
financially attractive speciality markets where it can retain all or some of the whole or a
part of the commercial rights for its products.
 2.
    
    New accounting policies
 A)
    
    ADOPTION OF NEW ACCOUNTING STANDARDS
 Goodwill and intangible assets
 Effective with the commencement of its 2009 fiscal year, the Company adopted the Canadian
Institute of Chartered Accountants (CICA) Handbook Section 3064, Goodwill and
Intangible Assets, which will replace Section 3062, Goodwill and Other Intangible Assets,
and Section 3450, Research and Development Costs. The standard provides guidance on the
recognition of intangible assets in accordance with the definition of an asset and the
criteria for asset recognition, whether these assets are separately acquired or
internally developed. The impact of adopting this standard has been to increase the
opening deficit and to reduce other assets at December 1, 2007 and 2008 by $941 and $599,
respectively, which is the amount of patent costs related to periods prior to these
dates. Furthermore, following the adoption of this standard, patents and amortization of
other assets presented on the consolidated statements of earnings were reduced by $342
for the year ended November 30, 2008.
 Inventories
 Effective with the commencement of its 2009 fiscal year, the Company adopted CICA Section
3031, Inventories, which replaces Section 3030 and harmonizes the Canadian standards
related to inventories with International Financial Reporting Standards (IFRS). This
Section provides changes to the measurement and more extensive guidance on the
determination of cost, including allocation of overhead; narrows the permitted cost
formulas; requires impairment testing; and expands the disclosure requirements to
increase transparency. As the Company had no inventories on November 30, 2008, the
adoption of this section had no impact on the Companys consolidated financial
statements.
 Credit risk and fair value of financial assets and financial liabilities
 On January 20, 2009, the Emerging Issues Committee (EIC) of the Accounting Standards
Board (AcSB) issued EIC Abstract 173, Credit Risk and Fair Value of Financial Assets
and Financial Liabilities, which establishes that an entitys own credit risk and the
credit risk of the counterparty should be taken into account in determining the fair
value of financial assets and financial liabilities, including derivative instruments.
EIC 173 is applied retrospectively, without restatement of prior years, to all financial
assets and liabilities measured at fair value in the interim and annual financial
statements for periods ending on or after January 20, 2009. The adoption of EIC 173 did
not have an impact on the consolidated financial statements of the Company.




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##### 



2.
    
    New accounting policies (continued)
 A)
    
    ADOPTION OF NEW ACCOUNTING STANDARDS (CONTINUED)
 Financial instruments  Disclosures
 In June 2009, the AcSB issued amendments to CICA Handbook Section 3862, Financial
Instruments  Disclosures, in order to align with IFRS 7, Financial Instruments:
Disclosures. This Section has been amended to include additional disclosure requirements
about fair value measurements of financial instruments and to enhance liquidity risk
disclosure. The amendments establish a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value. These tiers include: Level 1, defined as
observable inputs such as quoted prices in active markets; Level 2, defined as inputs
other than quoted prices in active markets that are either directly or indirectly
observable; and Level 3, defined as unobservable inputs in which little or no market data
exists, therefore requiring an entity to develop its own assumptions. The amendments apply
to annual financial statements relating to fiscal years ended after September 30, 2009 and
are applicable to the Company as at November 30, 2009. The amended section relates to
disclosure only and did not impact the financial results of the Company.
 B)
    
    FUTURE ACCOUNTING CHANGES
 Business combinations, consolidated financial statements and non-controlling interests
 The CICA issued three new accounting standards in January 2009: Section 1582, Business
Combinations, Section 1601, Consolidated Financial Statements, and Section 1602,
Non-controlling Interests. The Company is in the process of evaluating the requirements of
the new standards.
 Section 1582 establishes standards for the accounting for a business combination. It
provides the Canadian equivalent to IFRS 3  Business Combinations. The section applies
prospectively to business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after January 1, 2011 and
early application is permitted.
 Section 1601 establishes standards for the preparation of consolidated financial
statements. Section 1602 establishes standards for accounting for a non-controlling
interest in a subsidiary in consolidated financial statements. It is equivalent to the
corresponding provisions of IFRS IAS 27  Consolidated and Separate Financial Statements,
Sections 1601 and 1602, and applies to interim and annual consolidated financial
statements relating to fiscal years beginning on or after January 1, 2011 and early
application is permitted.
 International Financial Reporting Standards
 In February 2008, Canadas AcSB confirmed that Canadian generally accepted accounting
principles, as used by publicly accountable enterprises, would be fully converged into
IFRS, as issued by the International Accounting Standards Board (IASB). The changeover
date is for interim and annual financial statements relating to fiscal years beginning on
or after January 1, 2011. As a result, the Company will be required to report under IFRS
for its 2012 interim and annual financial statements. The Company will convert to these
new standards according to the timetable set within these new rules. The Company will
determine at a future date the impact of adopting the standards on its consolidated
financial statements.




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##### 



3.
    
    Significant accounting policies
 A)
    
    CONSOLIDATIONThe consolidated financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany transactions and balances have been eliminated.B)
    
    CASH EQUIVALENTSCash equivalents are restricted to investments that are readily convertible into cash,
having a term to initial maturity not exceeding three months and whose value is not likely
to change significantly. As at November 30, 2009 and 2008, there were no cash equivalents.C)
    
    INVENTORIESInventories are stated at the lower of first-in first-out cost or net realizable
value. Inventory costs include the purchase price and other costs directly related to the
acquisition of materials. Inventory costs also include the costs directly related to the
conversion of materials to finished goods, such as direct labour, and a systematic
allocation of fixed and variable production overhead, including manufacturing depreciation
expense. The allocation of fixed production overheads to the cost of inventories is based
on the normal capacity of the production facilities. Normal capacity is the average
production expected to be achieved over a number of periods under normal circumstances.D)
    
    FINANCIAL ASSETS AND LIABILITIESAll financial instruments are classified into one of the following five categories:
held for trading, held-to-maturity investments, loans and receivables, available-for-sale
financial assets or other financial liabilities. All financial instruments, including
derivatives, are included in the consolidated balance sheets and are measured at fair
market value, with the exception of loans and receivables, investments held-to-maturity
and other financial liabilities, which are measured at amortized cost. Subsequent
measurement and recognition of changes in fair value of financial instruments depend on
their initial classification. Held-for-trading financial investments are measured at fair
value and all gains and losses are included in net income in the period in which they
arise. Available-for-sale financial instruments are measured at fair value with
revaluation gains and losses included in other comprehensive income until the assets are
removed from the balance sheet or if there is an impairment in fair value of these assets
that is other than temporary.Derivative instruments are recorded as either assets or liabilities measured at their fair
value unless exempted from derivative treatment as a normal purchase and sale. Certain
derivatives embedded in other contracts must also be measured at fair value. All changes
in the fair value of derivatives are recognized in earnings unless specific hedge criteria
are met, which requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting.The Company has classified its bonds and investments in public companies as
available-for-sale financial assets and are measured at fair market value. The Company has
also classified accounts receivable as loans and receivables, and accounts payable and
accrued liabilities as other financial liabilities, and they are measured at amortized
cost.




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##### 



3.
    
    Significant accounting policies (continued)
 E)
    
    PROPERTY AND EQUIPMENTProperty and equipment are stated at cost. Amortization is provided using the
following methods and annual rates/periods:
 Asset
    
    Method

    
    Rate/periodComputer equipment
    
    Declining balance
    
    
    50%Laboratory equipment
    
    Declining balance and straight-line
    
    
    20% 5 yearsOffice equipment and furniture
    
    Declining balance
    
    
    20%Leasehold improvements
    
    Straight-line
    
    Term of lease
 F)
    
    OTHER ASSETSOther assets consist namely of intellectual property and research supplies.Intellectual property is amortized over a period of 20 years using the straight-line method.Research supplies are purchased in advance in accordance with regulatory requirements to be
used in connection with the Companys clinical trials. Research supplies that are not expected
to be used within one year from the date of the balance sheet are classified as long-term.G)
    
    IMPAIRMENT OF LONG-LIVED ASSETSThe Company reviews property and equipment and other long-term assets for impairment
whenever events or changes in circumstances indicate that the carrying value of property and
equipment or assets may not be recoverable. Recoverability of assets to be used is measured by
the comparison of the carrying amount of an asset to estimated undiscounted future cash flows
expected to be generated from the assets. If the carrying amount of an asset exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by which the
carrying value of the asset exceeds its fair value. The fair value against which the asset is
measured may be established based on comparable information or transactions, or any other
method of assessment.H)
    
    REVENUE RECOGNITIONRevenues from research contracts are recognized when services to be provided are rendered
and all conditions under the terms of the underlying agreement are met. Revenues subject to the
achievement of milestones are recorded only when the specified events have occurred and
collectibility is assured.Upfront payments and initial technology access fees are deferred and recognized as revenue on a
systematic basis over the period during which the related products or services are delivered
and all obligations are performed.License fees are recorded when conditions and events under the license agreement have occurred
and collectibility is reasonably assured.Revenues from a collaboration agreement that includes multiple elements are considered to be a
revenue arrangement with multiple deliverables. Under this type of arrangement, the
identification of separate units of accounting is required and revenue is allocated among the
separate units based on their relative fair values. Payments received under the collaboration
agreement may include upfront payments, milestone payments, research contracts, license fees
and royalties. Revenues for each unit of accounting are recorded as described above.Interest income is recognized as earned using the effective interest method.




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##### 



3.
    
    Significant accounting policies (continued)
 I)
    
    RESEARCH AND DEVELOPMENTResearch expenditures, net of related research tax credits and grants, are charged to
earnings in the year in which they are incurred. Development expenditures, net of tax
credits, if any, are capitalized when they meet the appropriate criteria for
capitalization in accordance with generally accepted accounting principles. During the
years ended November 30, 2009 and 2008, no development expenditures were capitalized.J)
    
    STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTSThe Company records stock-based compensation related to employee stock options granted
using the fair value based method estimated using the Black-Scholes model. Under this
method, compensation cost is measured at fair value at the date of grant and is expensed
over the awards vesting period. Stock-based compensation related to non-employee stock
options is based on the fair value of the consideration received, or the fair value of the
equity instrument issued, whichever is more reliably measured.K)
    
    GOVERNMENT ASSISTANCEGovernment assistance, consisting of research tax credits and grants, is recorded as a
reduction of the related expense or cost of the asset acquired. Government grants are
recognized when there is reasonable assurance that the Company has met the requirements of
the approved grant program. Research tax credits are recorded when there is reasonable
assurance that they will be realized.L)
    
    FOREIGN EXCHANGEForeign denominated monetary assets and liabilities are converted to Canadian dollars
at the rates of exchange prevailing at the balance sheet dates. Other assets and
liabilities are converted to the exchange rates prevailing when the assets were acquired
or the liabilities incurred. Revenues and expenses are converted at the rates prevailing
at the respective transaction date, except for depreciation and amortization which are
converted at the same rates as those used in the translation of the corresponding assets.
Foreign exchange gains and losses are included in the determination of net earnings or net
loss.M)
    
    INCOME TAXESThe Company uses the asset and liability method of accounting for income taxes. Future
income tax assets and liabilities are recognized in the balance sheet to account for the
future tax consequences attributable to temporary differences between the respective
accounting and taxable value of balance sheet assets and liabilities. As appropriate, a
valuation allowance is recognized to decrease the value of tax assets to an amount that is
more likely than not to be realized. Future income tax assets and income tax liabilities
are measured using income tax rates that are enacted or substantively enacted when the
asset is realized or the liability is settled. The effect of changes in income tax rates
is recognized in the year during which these rates change.N)
    
    EARNINGS PER SHAREThe earnings per share are determined using the weighted average number of outstanding shares during the year.The treasury stock method is used for the computation of the diluted earnings per share.
Under this method, a number of additional shares, if they are dilutive, are calculated
assuming that the outstanding stock options are exercised, and that the proceeds from the
transactions are used to purchase common shares at the average market price during the
period.




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##### 



3.
    
    Significant accounting policies (continued)
 O)
    
    USE OF ESTIMATESThe preparation of the financial statements in conformity with generally accepted
accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the
reporting period. Significant areas requiring the use of Management estimates include
estimating the useful lives and recoverability of long-lived assets, including property
and equipment and other assets, estimating accruals for clinical trial expenses,
estimating stock-based compensation and revenue, as well as assessing the recoverability
of inventories, research tax credits and grants, investments and future income taxes.
Reported amounts and note disclosure reflect the overall economic conditions that are most
likely to occur and anticipated measures to be taken by Management. Actual results could
differ from those estimates.
 4.
    
    Property and equipment
 2009Accumulated
    
    
    Net bookCost
    
    
    amortization
    
    
    valueComputer equipment
    
    $
    874
    
    
    $
    617
    
    
    $
    257Laboratory equipment
    
    
    1,945
    
    
    
    1,519
    
    
    
    426Office equipment and furniture
    
    
    1,124
    
    
    
    701
    
    
    
    423Leasehold improvements
    
    
    1,854
    
    
    
    1,731
    
    
    
    123$
    5,797
    
    
    $
    4,568
    
    
    $
    1,229
 2008Accumulated
    
    
    Net bookCost
    
    
    amortization
    
    
    valueComputer equipment
    
    $
    682
    
    
    $
    500
    
    
    $
    182Laboratory equipment
    
    
    1,824
    
    
    
    1,427
    
    
    
    397Office equipment and furniture
    
    
    1,015
    
    
    
    700
    
    
    
    315Leasehold improvements
    
    
    1,846
    
    
    
    1,441
    
    
    
    405$
    5,367
    
    
    $
    4,068
    
    
    $
    1,299
 5.
    
    Other assets
 2009Accumulated
    
    
    Net bookCost
    
    
    amortization
    
    
    valueOther assets
    
    $
    41
    
    
    $
    
    
    
    $
    41




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##### 



5.
    
    Other assets (continued)For the year ended November 30, 2009, research and development expenses include a charge
of $1,377 related to research supplies that were produced in order to obtain stability data
and to validate the production process as required by the U.S. Food and Drug Administration
(FDA).
 2008(Restated note 2A))Accumulated
    
    
    Net bookCost
    
    
    amortization
    
    
    valueIntellectual property
    
    $
    7,670
    
    
    $
    7,670
    
    
    $
    Research supplies
    
    
    2,751
    
    
    
    
    
    
    
    2,751Other assets
    
    
    66
    
    
    
    
    
    
    
    66$
    10,487
    
    
    $
    7,670
    
    
    $
    2,817
 In 2008, the Company conducted an impairment test on the intellectual property included in
Other assets following a review of the development strategy by Management for new products.
As a consequence, the Company wrote off the carrying amount of this intellectual property. The
write-off of $4,571 is included in Patents, amortization and impairment of other assets in
the consolidated statements of earnings.
 6.
    
    Capital stock
 2009
    
    
    2008Authorized in unlimited number and without par value:Common sharesPreferred shares issuable in one or more seriesIssued:60,429,393 common shares (58,215,090 in 2008)
    
    $
    279,169
    
    
    $
    269,219
 2009Under the terms of the agreement with EMD Serono Inc. (EMD Serono), the Company issued
2,179,837 common shares for a cash consideration of $9,854 (see note 7).In 2009, the Company received subscriptions in the amount of $96 for the issuance of 34,466
common shares in connection with its share purchase plan.2008On February 13, 2008, the Company completed a public offering for the sale and issue of
3,500,000 common shares for cash proceeds of $29,750. The issuance costs amounted to $1,938.In 2008, the Company received subscriptions in the amount of $149 for the issuance of 64,291
common shares in connection with its share purchase plan.All shares were issued for a cash consideration.




---



##### 



6.
    
    Capital stock (continued)
 A)
    
    STOCK OPTION PLANThe Company has established a stock option plan under which it can grant to its
Directors, Officers, Employees, Researchers and Consultants non-transferable options for
the purchase of common shares. The exercise date of an option may not be later than 10
years after the date it is granted. A maximum number of 5,000,000 options can be granted
under the plan. Generally, the options vest at the date of the grant or over a period of 0
to 5 years. On November 30, 2009, 1,244,834 additional options could be granted by the
Company.Changes in the number of options outstanding during the past two fiscal years were as
follows:
 Weighted averageexercise priceOptions
    
    
    per shareOptions as at November 30, 2007
    
    
    2,207,633
    
    
    $
    6.32Granted
    
    
    111,000
    
    
    
    7.98Exercised
    
    
    (119,666
    )
    
    
    3.32Cancelled
    
    
    (37,167
    )
    
    
    9.57Options as at November 30, 2008
    
    
    2,161,800
    
    
    
    6.52Granted
    
    
    680,500
    
    
    
    1.83Cancelled and expired
    
    
    (176,500
    )
    
    
    8.34Options as at November 30, 2009
    
    
    2,665,800
    
    
    $
    5.20
  Options outstanding
    
    
    Exercisable optionsWeightedaverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    remaining
    
    
    average
    
    
    Number of
    
    
    averageoptions
    
    
    life
    
    
    exercise
    
    
    exercisable
    
    
    exercisePrice range
    
    
    outstanding
    
    
    (years)
    
    
    price
    
    
    options
    
    
    price$
    1.20 -
    
    $
    2.00
    
    
    
    1,291,508
    
    
    
    7.57
    
    
    $
    1.71
    
    
    
    742,508
    
    
    $
    1.632.01 -
    
    
    2.75
    
    
    
    141,459
    
    
    
    4.85
    
    
    
    2.59
    
    
    
    141,459
    
    
    
    2.592.76 -
    
    
    3.75
    
    
    
    70,000
    
    
    
    6.51
    
    
    
    3.37
    
    
    
    43,333
    
    
    
    3.644.61 -
    
    
    6.00
    
    
    
    25,000
    
    
    
    3.53
    
    
    
    5.43
    
    
    
    25,000
    
    
    
    5.436.01 -
    
    
    9.00
    
    
    
    591,333
    
    
    
    5.76
    
    
    
    8.18
    
    
    
    526,977
    
    
    
    8.169.01 -
    
    
    13.50
    
    
    
    495,000
    
    
    
    3.76
    
    
    
    10.72
    
    
    
    441,662
    
    
    
    10.6813.51 -
    
    
    15.30
    
    
    
    51,500
    
    
    
    1.28
    
    
    
    15.15
    
    
    
    51,500
    
    
    
    15.152,665,800
    
    
    
    6.13
    
    
    $
    5.20
    
    
    
    1,972,439
    
    
    $
    5.92
 B)
    
    STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTSThe estimated fair value of the options granted was estimated at the date of grant using
the Black-Scholes option pricing model with the following weighted average assumptions:
 2009
    
    
    2008Risk-free interest rate
    
    
    1.83
    %
    
    
    3.36
    %Volatility
    
    
    79.5
    %
    
    
    70.4
    %Average option life in years
    
    
    6
    
    
    
    6Dividend yield
    
    nil
    
    
    nil




---



##### 



6.
    
    Capital stock (continued)
 B)
    
    STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS (CONTINUED)The risk-free interest rate is based on the implied yield on a Canadian Treasury zero-coupon
issue with a remaining term equal to the expected term of the option. The volatility is based
solely on historical volatility equal to the expected term of the option. The average life of the
options is estimated considering the vesting period, the term of the option and the length of time
similar grants have remained outstanding in the past. Dividend yield was excluded from the
calculation, since it is the present policy of the Company to retain all earnings to finance
operations and future growth.The following table summarizes the weighted average fair value of stock options granted during the
years ended November 30, 2009 and 2008:
 Number
    
    
    Weighted averageof options
    
    
    grant-date fair value2009
    
    
    680,500
    
    
    $
    1.262008
    
    
    111,000
    
    
    $
    5.16
 The Black-Scholes model, used by the Company to calculate option values, as well as other accepted
option valuation models, were developed to estimate the fair value of freely tradable, fully
transferable options without vesting restrictions, which significantly differs from the Companys
stock option awards. These models also require four highly subjective assumptions, including future
stock price volatility and expected time until exercise, which greatly affect the calculated
values.C)
    
    DILUTED LOSS PER SHAREDiluted loss per share was not presented as the effect of options would have been
anti-dilutive. All options outstanding at the end of the year could potentially dilute basic
earnings per share in the future.
 7.
    
    Collaboration and Licensing AgreementOn October 28, 2008, the Company entered into a Collaboration and Licensing Agreement with EMD
Serono, an affiliate of Merck KGaA, of Darmstadt, Germany, regarding the exclusive
commercialization rights of tesamorelin in the United States for the treatment of excess abdominal
fat in HIV-infected patients with lipodystrophy (the Initial Product). Theratechnologies retains
all tesamorelin commercialization rights outside of the United States.Under the terms of the agreement, the Company is responsible for the development of the Initial
Product up to obtaining marketing approval in the United States. The Company is also responsible
for product production and for the development of a new formulation of the Initial Product. EMD
Serono is responsible for conducting product commercialization activities.At the closing of the agreement, on December 15, 2008, the Company received US$30,000 (CAD$36,951)
which, includes an initial payment of US$22,000 (CAD$27,097) and US$8,000 (CAD$9,854) as a
subscription for common shares in the Company by Merck KGaA at a price of US$3.67 (CAD$4.52) per
share. The Company may receive up to US$215,000, which amount includes the initial payment of
US$22,000, the equity investment of US$8,000, as well as payments based on the achievement of
certain development, regulatory and sales milestones. The Company will also be entitled to receive
increasing royalties on annual net sales of tesamorelin in the United States, if applicable.The initial payment of $27,097 has been deferred and is being amortized over its estimated service
period on a straight-line basis. This period may be modified in the future based on additional
information that may be received by the Company. For the year ended November 30, 2009, an amount of
$6,560 related to this transaction was recognized as revenue. At November 30, 2009, the deferred
revenues related to this transaction amounted to $20,537.




---



##### 



7.
    
    Collaboration and Licensing Agreement (continued)On August 12, 2009, the FDA accepted the New Drug Application (NDA) made by the Company
for tesamorelin. Under the terms of the Companys Collaboration and Licensing Agreement with
EMD Serono, the acceptance of the tesamorelin NDA resulted in a milestone payment of US$10,000
(CAD$10,884). This milestone payment has been recorded in the third quarter of 2009.The Company may conduct research and development for additional indications. Under the
Collaboration and Licensing Agreement, EMD Serono will have the option to commercialize
additional indications for tesamorelin in the United States. If it exercises this option, EMD
Serono will pay half of the development costs related to such additional indications. In such
cases, the Company will also have the right, subject to EMD Seronos agreement, to participate
in the promotion of the additional indications.8.
    
    Future income taxesDetails of the components of income taxes are as follows:
 2009
    
    
    2008Net loss before income taxes
    
    $
    (15,058
    )
    
    $
    (48,611
    )Basic income tax rate
    
    
    30.9
    %
    
    
    31.0
    %Computed income tax provision
    
    
    (4,652
    )
    
    
    (15,069
    )Adjustments to income tax provision resulting from:Impact of decrease in federal tax rates:Decrease in value of future tax assets
    
    
    
    
    
    
    5,910Change in valuation allowance
    
    
    
    
    
    
    (5,910
    )Unrecorded potential tax benefit of current year
losses and other deductions
    
    
    4,029
    
    
    
    17,201Non-deductible items and others
    
    
    623
    
    
    
    (2,132
    )$
    
    
    
    $
    
 The tax incidence of temporary differences resulting in significant portions of future income tax
assets is as follows:
 2009
    
    
    2008Future income tax assets:Losses carried forward
    
    $
    21,490
    
    
    $
    16,045Unused research and development expenses
    
    
    29,380
    
    
    
    26,591Property and equipment
    
    
    674
    
    
    
    544Share issue costs
    
    
    776
    
    
    
    1,174Intellectual property and patent fees
    
    
    12,307
    
    
    
    16,248Available deductions and other
    
    
    4,187
    
    
    
    4,18368,814
    
    
    
    64,785Less valuation allowance
    
    
    (68,814
    )
    
    
    (64,785
    )Net future income tax asset
    
    $
    
    
    
    $
    
 In estimating the realization of future income tax assets, Management considers whether a portion
or all future tax assets are more likely than not to be realized. Realization of future tax assets
is subject to the generation of future taxable income.




---



##### 



8.
    
    Future income taxes (continued)As at November 30, 2009, the Company had available the following deductions, losses
and credits:
 Federal
    
    
    ProvincialResearch and development expenses, without time limitation
    
    $
    103,346
    
    
    $
    115,686Losses carried forward, until:2014
    
    $
    9,603
    
    
    $
    2015
    
    
    275
    
    
    
    2027
    
    
    7,638
    
    
    
    7,6282028
    
    
    46,316
    
    
    
    46,2712029
    
    
    21,785
    
    
    
    18,802$
    85,617
    
    
    $
    72,701Unused tax credits expiring in:2023
    
    $
    5592024
    
    
    1,5972025
    
    
    1,8632026
    
    
    2,1782027
    
    
    3,0002028
    
    
    3,3282029
    
    
    2,250$
    14,775
 Federal
    
    
    ProvincialShare issue costs
    
    $
    2,732
    
    
    $
    2,732Excess of tax value of intellectual property
and patent fees over carrying value
    
    
    45,735
    
    
    
    45,718Excess of tax value of property and equipment over carrying value
    
    
    3,121
    
    
    
    1,785
 54
    
    //// 2009 ANNUAL REPORT




---



##### 



9.
    
    Commitments
 A)
    
    RENTAL OF PREMISESThe Company rents premises under an operating lease (the Lease) expiring in April
2010. The Lease was renewed by the Company and the lessor during the 2009 financial year for
a period of 11 years ending April 30, 2021. Under the terms of the Lease, the Company has
also been granted two renewal options for periods of five years each. The minimum payments
required under the terms of the Lease are as follows:
 2010
    
    $
    3402011
    
    
    552012
    
    
    6552013
    
    
    6552014
    
    
    6552015
    
    
    273Thereafter
    
    
    3,943$
    6,576
 The Company has committed to pay the lessor for its share of some operating expenses of the
leased premises. This amount has been set at $240 for the year beginning May 1, 2010 and
will be increased by 2.5% annually for the duration of the Lease.The lessor will provide the Company an amount of $728 to allow it to undertake leasehold
improvements.The Company has issued an irrevocable letter of credit in favour of the lessor in the amount
of $323 which will be cancelled April 30, 2010 under the terms of the Lease renewal, along
with a first rank movable mortgage in the amount of $1,150 covering all the Companys
tangible assets located in the rented premises. This mortgage, however, can be subordinated
to those of lending institutions.B)
    
    LONG-TERM SUPPLY AGREEMENTSDuring and after the year ended November 30, 2009, the Company entered into long-term
procurement agreements with third-party suppliers in anticipation of the commercialization
of tesamorelin. Some of these agreements stipulate an obligation to purchase minimum
quantities of product, subject to certain conditions.C)
    
    CREDIT FACILITYThe Company has a credit facility available in the amount of $1,800, bearing interest at
prime plus 0.5% and secured by bonds. Under the credit facility, the market value of
investments held must always be equivalent to 150% of amounts drawn under the facility. If
the market value falls below $7,000, the Company will provide the bank with a first rank
movable hypothec of $1,850 on securities judged satisfactory by the bank.As at November 30, 2009 and 2008, with the exception of the letter of credit mentioned
in A) above, the credit facility available to the Company was not utilized.




---



##### 



10.
    
    LicensesIn addition to the exclusively held products, the Company has certain exclusive licenses
to market or commercialize intellectual property from research activities assigned to certain
research institutions. Under these licenses, the Company is committed to pay royalties on the
net sales of the products commercialized by the Company, or, if applicable, on the amounts
received from sub-license, subject to the application of the clauses of such agreements.11.
    
    Supplemental information
 A)
    
    STATEMENT OF CASH FLOWSThe following transactions were conducted by the Company and did not impact cash flows:
 20082009
    
    
    (Restated  note 2A))Additions to property and equipment included
in accounts payable and accrued liabilities
    
    $
    183
    
    
    
    $48Share issue costs included in accounts payable and accrued liabilities
    
    
    
    
    
    
    8
 B)
    
    In 2009, the Company reclassified under net earnings an amount of $129 in realized
gains on available-for-sale financial assets previously recorded in accumulated other
comprehensive income.In 2008, the Company reclassified under net earnings an amount of $572 in realized
losses on available-for-sale financial assets previously recorded in accumulated other
comprehensive income. The realized loss includes an impairment loss of $578 related to
a decline in value that is other than temporary for stock options held in a
publicly-traded company.On November 30, 2009, the accumulated other comprehensive income was composed of
unrealized gains on available-for-sale financial assets of $1,282 (gain of $372 on
November 30, 2008).C)
    
    The Company received tax credits of $1,912 in 2009 ($1,746 in 2008).D)
    
    The following items were included in the determination of the Companys net loss:
 20082009
    
    
    (Restated  note 2A))Amortization of property and equipment
    
    $
    612
    
    
    $
    625Amortization and impairment of other assets (note 5)
    
    
    
    
    
    
    4,957Stock-based compensation
    
    
    899
    
    
    
    859




---



##### 



12.
    
    Capital disclosuresThe Companys objective in managing capital is to ensure a sufficient liquidity position
to finance its research and development activities, general and administrative expenses,
working capital and overall capital expenditures, including those associated with patents. The
Company makes every attempt to manage its liquidity to minimize shareholder dilution.To fund its activities, the Company has followed an approach that relies almost exclusively on
the issuance of common equity, as well as proceeds and royalties from technologies following
the closing of the transaction disclosed in note 7. Since inception, the Company has financed
its liquidity needs primarily through public offerings of common shares and private
placements. When possible, the Company tries to optimize its liquidity position by
non-dilutive sources, including investment tax credits, grants, interest income as well as
proceeds and royalties from technologies.The Companys policy is to maintain a minimum level of debt. The Company has a line of credit
of $1,800 for its short-term financing needs. As at November 30, 2009, this line of credit has
not been used, with the exception of the letter of credit mentioned in note 9A).The capital management objectives remain the same as for the previous fiscal year.At November 30, 2009, cash and bonds amounted to $63,362 and tax credits receivable amounted
to $1,666, for a total of $65,028. The Company believes that its cash position will be
sufficient to finance its operations and capital needs for the next year.The Companys general policy on dividends is to retain cash to keep funds available to finance
the Companys growth.The Company is not subject to any externally imposed capital requirements.




---



##### 



13.
    
    Financial risk managementThis note provides disclosures relating to the nature and extent of the Companys exposure
to risks arising from financial instruments, including credit risk, liquidity risk, foreign
currency risk and interest rate risk, and how the Company manages those risks.
 A)
    
    CREDIT RISKCredit risk is the risk of an unexpected loss if a customer or counterparty to a
financial instrument fails to meet its contractual obligations. The Company regularly
monitors the credit risk exposure and takes steps to mitigate the likelihood of these
exposures resulting in losses.Financial instruments other than cash that potentially subject the Company to significant
credit risk consist principally of bonds. The Company invests its available cash in fixed
income instruments from governmental, paragovernmental and municipal bonds ($60,384 as at
November 30, 2009) as well as from corporations with high credit ratings ($1,459 as at
November 30, 2009). As at November 30, 2009, the Company was not exposed to any credit risk
over the carrying amount of the bonds.B)
    
    LIQUIDITY RISKLiquidity risk is the risk that the Company will not be able to meet its financial
obligations as they fall due. The Company manages liquidity risk through the management of
its capital structure and financial leverage, as outlined in note 12. It also manages
liquidity risk by continuously monitoring actual and projected cash flows. The Board of
Directors and/or the Audit Committee reviews and approves the Companys operating and
capital budgets, as well as any material transactions out of the ordinary course of
business.The Company has adopted an investment policy in respect of the safety and preservation of
its capital to ensure the Companys liquidity needs are met.The instruments are selected with regard to the expected timing of expenditures and
prevailing interest rates. Bonds mature during the following fiscal years: $10,036 in 2010,
$15,446 in 2011, $19,716 in 2012, $13,791 in 2013 and $2,854 in 2014.The following are the contractual maturities of financial liabilities, as well as the
payments required under the terms of the operating lease, as at November 30, 2009:
 Carrying
    
    
    Less than
    
    
    1 to
    
    
    More thanTotal
    
    
    amount
    
    
    1 year
    
    
    5 years
    
    
    5 yearsAccounts payable and accrued liabilities
    
    $
    5,901
    
    
    $
    5,901
    
    
    $
    5,901
    
    
    $
    
    
    
    $
    Operating lease
    
    
    6,576
    
    
    
    
    
    
    
    340
    
    
    
    2,020
    
    
    
    4,216$
    12,477
    
    
    $
    5,901
    
    
    $
    6,241
    
    
    $
    2,020
    
    
    $
    4,216




---



##### 



13.
    
    Financial risk management (continued)
 C)
    
    FOREIGN CURRENCY RISKThe Company is exposed to the financial risk related to the fluctuation of foreign
exchange rates and the degree of volatility of those rates. Foreign currency risk is limited
to the portion of the Companys business transactions denominated in currencies other than
the Canadian dollar, primarily revenues from royalties, technologies and other expenses for
research and development incurred in US dollars, euros and pounds sterling (GBP). The
Company does not use derivative financial instruments to reduce its foreign exchange
exposure.The Company manages foreign exchange risk by maintaining US cash on hand to support US
forecasted cash outflows for a maximum 12-month period. The Company does not currently view
its exposure to the euro and GBP as a significant foreign exchange risk due to the limited
volume of transactions conducted by the Company in these currencies.Exchange rate fluctuations for foreign currency transactions can cause cash flow as well as
amounts recorded in the consolidated statement of earnings to vary from period to period and
not necessarily correspond to those forecasted in operating budgets and projections.
Additional earnings variability arises from the translation of monetary assets and
liabilities denominated in currencies other than the Canadian dollar at the rates of
exchange at each balance sheet date, the impact of which is reported as foreign exchange
gain or loss in the consolidated statement of earnings. Given the Companys policy on the
management of foreign currencies, a sudden change in foreign exchange rates would not impair
or enhance its ability to pay its US dollar denominated obligations.The following table provides significant items exposed to foreign exchange as at November
30, 2009:
 November 30, 2009(in thousands of Canadian dollars)
    
    US$
    
    
    EURO
    
    
    GBPCash
    
    
    1,471
    
    
    
    
    
    
    
    Accounts receivable
    
    
    
    
    
    
    4
    
    
    
    Accounts payable and accrued liabilities
    
    
    (1,095
    )
    
    
    
    
    
    
    (25
    )Balance sheets elements exposed
to foreign currency risk
    
    
    376
    
    
    
    4
    
    
    
    (25
    )
 The following exchange rates applied during the year ended November 30, 2009:
 ReportingAverage rate
    
    
    date rateNovember 30, 2009
    
    
    November 30, 2009US$  CAD $
    
    
    1.0594
    
    
    
    1.0556EUR  CAD$
    
    
    1.5808
    
    
    
    1.5852GBP  CAD$
    
    
    1.7597
    
    
    
    1.7366
 Based on the Companys foreign currency exposures noted above, varying the above foreign
exchange rates to reflect a 5% strengthening of the Canadian dollar would have increased the
net loss as follows, assuming that all other variables remained constant:
 (in thousands of Canadian dollars)
    
    US$
    
    
    EURO
    
    
    GBPIncreased in net loss
    
    
    19
    
    
    
    
    
    
    
    (1
    )
 An assumed 5% weakening of the Canadian dollar would have had an equal but opposite effect
on the above currencies to the amounts shown above, on the basis that all other variables
remain constant.




---



##### 



13.
    
    Financial risk management (continued)
 D)
    
    INTEREST RATE RISKInterest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates.Short-term bonds of the Company are invested at fixed interest rates and mature in the
short-term. Long-term bonds are also instruments that bear interest at fixed rates. The
risk that the Company will realize a loss as a result of a decline in the fair value of its
bonds is limited because these investments, although they are available for sale, are
generally held to maturity. The unrealized gains or losses on bonds are recorded in the
accumulated other comprehensive income (loss).Based on the value of the Companys short and long-term bonds at November 30, 2009, an
assumed 0.5% decrease in market interest rates would have increased the fair value of these
bonds and the accumulated other comprehensive loss by $620; an assumed increase in interest
rate of 0.5% would have an equal but opposite effect, assuming that all other variables
remained constant.Cash bears interest at a variable rate. Accounts receivable, accounts payable and accrued
liabilities bear no interest.Based on the value of variable interest-bearing cash during the year ended November 30,
2009 ($5,800), an assumed 0.5% increase in interest rates during such period would have
increased the future cash flow and decreased the net loss by $29; an assumed decrease of
0.5% would have had an equal but opposite effect.
 14.
    
    Financial instruments
 A)
    
    CARRYING VALUE AND FAIR VALUEThe Company has determined that the carrying values of its short-term financial assets
and liabilities, including cash, accounts receivable, as well as accounts payable and
accrued liabilities, approximate their fair value because of the relatively short period to
maturity of the instruments.Bonds and investments in public companies are stated at estimated fair value, determined by
inputs that are directly observable (Level 2 inputs).B)
    
    INTEREST INCOME AND EXPENSESInterest income consists of interest earned on cash and bonds.C)
    
    LOSS ON EXCHANGEGeneral and administrative expenses include a loss on foreign exchange of $635 for the
year ended November 30, 2009 (loss of $247 in 2008).




---



##### 



15.
    
    Subsequent events
 A)
    
    SHAREHOLDER RIGHTS PLANOn February 10, 2010, the Board of Directors of the Company adopted a shareholder
rights plan (the Plan), effective as of such date. The Plan is designed to provide
adequate time for the Board of Directors, and the shareholders, to assess an unsolicited
takeover bid for Theratechnologies. In addition, the Plan provides the Board of Directors
with sufficient time to explore and develop alternatives for maximizing shareholder value
if a takeover bid is made, as well as provide shareholders with an equal opportunity to
participate in a takeover bid to receive full and fair value for their common shares (the
Common Shares). The Plan, if approved by the shareholders, will expire at the close of
the Companys annual meeting of shareholders in 2013.The rights issued under the Plan will initially attach to and trade with the Common Shares
and no separate certificates will be issued unless an event triggering these rights occurs.
The rights will become exercisable only when a person, including any party related to it,
acquires or attempts to acquire 20% or more of the outstanding Common Shares without
complying with the Permitted Bid provisions of the Plan or without approval of the Board
of Directors. Should such an acquisition occur or be announced, each right would, upon
exercise, entitle a rights holder, other than the acquiring person and related persons, to
purchase Common Shares at a 50% discount to the market price at the time.Under the Plan, a Permitted Bid is a bid made to all holders of the Common Shares and which
is open for acceptance for not less than 60 days. If at the end of 60 days at least 50% of
the outstanding Common Shares, other than those owned by the offeror and certain related
parties have been tendered, the offeror may take up and pay for the Common Shares but must
extend the bid for a further 10 days to allow other shareholders to tender.B)
    
    GRANTING OF STOCK OPTIONSOn December 8, 2009, the Company granted 265,000 options at an exercise price of $3.84
per share and cancelled 19,167 options at a weighted exercise price of $2.38 per share in
connection with its stock option plan.
 16.
    
    Comparative figuresCertain of the 2008 comparative figures have been reclassified to conform with the
financial statement presentation adopted in 2009.