Exhibit 99.12
 
 THERATECHNOLOGIES INC.




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##### 



THERATECHNOLOGIES INC.
  Amended Financial Statements
 Consolidated Statement of Financial Position
    
    
    1Consolidated Statement of Comprehensive Income
    
    
    2Consolidated Statement of Changes in Equity
    
    
    3Consolidated Statement of Cash Flows
    
    
    5Notes to the Consolidated Financial Statements
    
    
    6




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##### 



EXPLANATORY NOTE




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##### 



THERATECHNOLOGIES INC.
 
 August 31,
    
    
    November 30,
    
    
    December 1,Note
    
    
    2010
    
    
    2009
    
    
    2008$
    
    
    $
    
    
    $AssetsCurrent assets:Cash
    
    
    
    
    
    
    2,370
    
    
    
    1,519
    
    
    
    133Bonds
    
    
    
    
    
    
    1,694
    
    
    
    10,036
    
    
    
    10,955Trade and other receivables
    
    
    
    
    
    
    131
    
    
    
    375
    
    
    
    610Tax credits and grants receivable
    
    
    
    
    
    
    181
    
    
    
    1,333
    
    
    
    1,451Inventories
    
    
    
    
    
    
    4,585
    
    
    
    2,225
    
    
    
    Prepaid expenses
    
    
    
    
    
    
    1,004
    
    
    
    630
    
    
    
    739Total current assets
    
    
    
    
    
    
    9,965
    
    
    
    16,118
    
    
    
    13,888Non-current assets:Bonds
    
    
    
    
    
    
    39,355
    
    
    
    51,807
    
    
    
    35,249Property and equipment
    
    
    
    
    
    
    1,106
    
    
    
    1,229
    
    
    
    1,299Other assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,776Total non-current assets
    
    
    
    
    
    
    40,461
    
    
    
    53,036
    
    
    
    39,324Total assets
    
    
    
    
    
    
    50,426
    
    
    
    69,154
    
    
    
    53,212LiabilitiesCurrent liabilities:Accounts payable and accrued liabilities
    
    
    
    
    
    
    3,490
    
    
    
    5,568
    
    
    
    6,865Current portion of deferred revenue
    
    
    4
    
    
    
    6,849
    
    
    
    6,847
    
    
    
    Total current liabilities
    
    
    
    
    
    
    10,339
    
    
    
    12,415
    
    
    
    6,865Non-current liabilities:Other liabilities
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    Deferred revenue
    
    
    4
    
    
    
    8,557
    
    
    
    13,691
    
    
    
    Total non-current liabilities
    
    
    
    
    
    
    8,724
    
    
    
    13,691
    
    
    
    Total liabilities
    
    
    
    
    
    
    19,063
    
    
    
    26,106
    
    
    
    6,865EquityShare capital
    
    
    5
    
    
    
    279,389
    
    
    
    279,169
    
    
    
    269,219Contributed surplus
    
    
    
    
    
    
    7,631
    
    
    
    6,757
    
    
    
    5,760Deficit
    
    
    
    
    
    
    (256,529
    )
    
    
    (244,160
    )
    
    
    (229,004
    )Accumulated other comprehensive income
    
    
    
    
    
    
    872
    
    
    
    1,282
    
    
    
    372Total equity
    
    
    
    
    
    
    31,363
    
    
    
    43,048
    
    
    
    46,347Subsequent events
    
    
    7Total liabilities and equity
    
    
    
    
    
    
    50,426
    
    
    
    69,154
    
    
    
    53,212
  1




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##### 



THERATECHNOLOGIES INC.
 
 August 31,
    
    
    August 31,Note
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009(3 months)
    
    
    (9 months)$
    
    
    $
    
    
    $
    
    
    $Revenue:Research services:Milestone payment
    
    
    4
    
    
    
    
    
    
    
    10,884
    
    
    
    
    
    
    
    10,884Upfront payments and initial technology
access fees
    
    
    4
    
    
    
    1,711
    
    
    
    1,711
    
    
    
    5,134
    
    
    
    4,848Royalties and license fees
    
    
    
    
    
    
    6
    
    
    
    6
    
    
    
    17
    
    
    
    18Total revenue
    
    
    
    
    
    
    1,717
    
    
    
    12,601
    
    
    
    5,151
    
    
    
    15,750Cost of sales
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    120
    
    
    
    Research and development expenses, net of tax
credits of $448 (2009 - $294) for the three-month
period and $783 (2009 - $1,384) for the nine-month
period
    
    
    
    
    
    
    2,591
    
    
    
    5,523
    
    
    
    10,892
    
    
    
    16,598Selling and market development expenses
    
    
    
    
    
    
    524
    
    
    
    498
    
    
    
    1,909
    
    
    
    5,793General and administrative expenses
    
    
    
    
    
    
    2,262
    
    
    
    1,488
    
    
    
    5,966
    
    
    
    4,980Total operating expenses
    
    
    
    
    
    
    5,497
    
    
    
    7,509
    
    
    
    18,887
    
    
    
    27,371Results from operating activities
    
    
    
    
    
    
    (3,780
    )
    
    
    5,092
    
    
    
    (13,736
    )
    
    
    (11,621
    )Finance income
    
    
    
    
    
    
    435
    
    
    
    547
    
    
    
    1,522
    
    
    
    1,724Finance costs
    
    
    
    
    
    
    (12
    )
    
    
    140
    
    
    
    (155
    )
    
    
    (605
    )Total net financial income
    
    
    
    
    
    
    423
    
    
    
    687
    
    
    
    1,367
    
    
    
    1,119Net (loss) profit
    
    
    
    
    
    
    (3,357
    )
    
    
    5,779
    
    
    
    (12,369
    )
    
    
    (10,502
    )Other comprehensive loss, net of tax:Net change in fair value available-for-sale
financial assets, net of tax
    
    
    
    
    
    
    586
    
    
    
    342
    
    
    
    (151
    )
    
    
    1,327Net change in fair value available-for-sale
financial assets transferred to net loss, net of tax
    
    
    
    
    
    
    (65
    )
    
    
    (48
    )
    
    
    (259
    )
    
    
    (118
    )521
    
    
    
    294
    
    
    
    (410
    )
    
    
    1,209Total comprehensive (loss) income for the period
    
    
    
    
    
    
    (2,836
    )
    
    
    6,073
    
    
    
    (12,779
    )
    
    
    (9,293
    )Basic and diluted (loss) earnings per share
    
    
    5
    
    
    
    (0.06
    )
    
    
    0.10
    
    
    
    (0.20
    )
    
    
    (0.17
    )
  2




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##### 



THERATECHNOLOGIES INC.
 
 Unrealized gainsor losses onavailable-for-saleShare capital
    
    
    Contributed
    
    
    financialNote
    
    
    Number
    
    
    Dollars
    
    
    surplus
    
    
    assets (i)
    
    
    Deficit
    
    
    Total$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Balance as at November 30, 2009
    
    
    
    
    
    
    60,429,393
    
    
    
    279,169
    
    
    
    6,757
    
    
    
    1,282
    
    
    
    (244,160
    )
    
    
    43,048Total comprehensive loss for the period:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,369
    )
    
    
    (12,369
    )Other comprehensive loss:Net change in fair value of available-for-sale financial assets, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (151
    )
    
    
    
    
    
    
    (151
    )Net change in fair value of available-for-sale financial assets transferred to net loss,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (259
    )
    
    
    
    
    
    
    (259
    )Total comprehensive loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (410
    )
    
    
    (12,369
    )
    
    
    (12,779
    )Transactions with owners, recorded directly in equity:Issue of common shares
    
    
    
    
    
    
    2,880
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15Share-based compensation for stock option plan
    
    
    5
    (c)
    
    
    
    
    
    
    
    
    
    
    951
    
    
    
    
    
    
    
    
    
    
    
    951Exercise of stock option:Monetary consideration
    
    
    5
    (c)
    
    
    77,493
    
    
    
    128
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128Attributed value
    
    
    5
    (c)
    
    
    
    
    
    
    77
    
    
    
    (77
    )
    
    
    
    
    
    
    
    
    
    
    Total contributions by owners
    
    
    
    
    
    
    80,373
    
    
    
    220
    
    
    
    874
    
    
    
    
    
    
    
    
    
    
    
    1,094Balance as at August 31, 2010
    
    
    
    
    
    
    60,509,766
    
    
    
    279,389
    
    
    
    7,631
    
    
    
    872
    
    
    
    (256,529
    )
    
    
    31,363
 
 (i)
    
    Accumulated other comprehensive income. 3




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##### 



THERATECHNOLOGIES INC.
 
 Unrealized gainsor losses onavailable-for-saleShare capital
    
    
    Contributed
    
    
    financialNote
    
    
    Number
    
    
    Dollars
    
    
    surplus
    
    
    assets (i)
    
    
    Deficit
    
    
    Total$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Balance as at November 30, 2008
    
    
    
    
    
    
    58,215,090
    
    
    
    269,219
    
    
    
    5,760
    
    
    
    372
    
    
    
    (229,004
    )
    
    
    46,347Total comprehensive loss for the period:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,502
    )
    
    
    (10,502
    )Other comprehensive loss:Net change in fair value of available-for-sale financial assets, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,327
    
    
    
    
    
    
    
    1,327Net change in fair value of available-for-sale financial assets transferred to net loss,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118
    )
    
    
    
    
    
    
    (118
    )Total comprehensive loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,209
    
    
    
    (10,502
    )
    
    
    (9,293
    )Transactions with owners, recorded directly in equity:Issue of common shares
    
    
    4
    
    
    
    2,182,387
    
    
    
    9,861
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,861Share-based compensation plan:Share-based compensation for stock option plan
    
    
    5
    (c)
    
    
    
    
    
    
    
    
    
    
    847
    
    
    
    
    
    
    
    
    
    
    
    847Total contributions by owners
    
    
    
    
    
    
    2,182,387
    
    
    
    9,861
    
    
    
    847
    
    
    
    
    
    
    
    
    
    
    
    10,708Balance as at August 31, 2009
    
    
    
    
    
    
    60,397,477
    
    
    
    279,080
    
    
    
    6,607
    
    
    
    1,581
    
    
    
    (239,506
    )
    
    
    47,762
 
 (i)
    
    Accumulated other comprehensive income.  4




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##### 



THERATECHNOLOGIES INC.
 
 August 31,
    
    
    August 31,Note
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009(3 months)
    
    
    (9 months)$
    
    
    $
    
    
    $
    
    
    $Operating activities:Net loss
    
    
    
    
    
    
    (3,357
    )
    
    
    5,779
    
    
    
    (12,369
    )
    
    
    (10,502
    )Adjustments for:Depreciation of property and equipment
    
    
    
    
    
    
    92
    
    
    
    157
    
    
    
    374
    
    
    
    441Share-based compensation
    
    
    
    
    
    
    511
    
    
    
    249
    
    
    
    951
    
    
    
    847Lease inducements and amortization
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    167
    
    
    
    Operating activities before changes in operating
assets and liabilities
    
    
    
    
    
    
    (2,629
    )
    
    
    6,185
    
    
    
    (10,877
    )
    
    
    (9,214
    )Change in accrued interest income on bonds
    
    
    
    
    
    
    317
    
    
    
    74
    
    
    
    696
    
    
    
    (728
    )Change in trade and other receivables
    
    
    
    
    
    
    45
    
    
    
    57
    
    
    
    244
    
    
    
    391Change in tax credits and grants receivable
    
    
    
    
    
    
    1,487
    
    
    
    (294
    )
    
    
    1,485
    
    
    
    (1,050
    )Change in inventories
    
    
    
    
    
    
    (89
    )
    
    
    
    
    
    
    (2,360
    )
    
    
    (1,594
    )Change in prepaid expenses
    
    
    
    
    
    
    (30
    )
    
    
    (532
    )
    
    
    (375
    )
    
    
    (1,055
    )Change in other assets
    
    
    
    
    
    
    
    
    
    
    2,129
    
    
    
    
    
    
    
    2,776Change in accounts payable and accrued liabilities
    
    
    
    
    
    
    (3,214
    )
    
    
    (921
    )
    
    
    (2,282
    )
    
    
    (2,923
    )Change in deferred revenue
    
    
    
    
    
    
    (1,714
    )
    
    
    (1,715
    )
    
    
    (5,132
    )
    
    
    22,252(3,198
    )
    
    
    (1,202
    )
    
    
    (7,724
    )
    
    
    18,069Cash flows from operating activities
    
    
    
    
    
    
    (5,827
    )
    
    
    4,983
    
    
    
    (18,601
    )
    
    
    8,855Financing activities:Proceeds from issue of share capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    9,861Proceeds from exercise of stock options
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    128
    
    
    
    Share issue costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )Cash flows from financing activities
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    143
    
    
    
    9,853Investing activities:Acquisition of property and equipment
    
    
    
    
    
    
    (43
    )
    
    
    (55
    )
    
    
    (379
    )
    
    
    (290
    )Proceeds from sale of bonds
    
    
    
    
    
    
    4,706
    
    
    
    3,963
    
    
    
    19,688
    
    
    
    13,805Acquisition of bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,631
    )Cash flows from (used in) investing activities
    
    
    
    
    
    
    4,663
    
    
    
    3,908
    
    
    
    19,309
    
    
    
    (6,116
    )Net change in cash
    
    
    
    
    
    
    (1,127
    )
    
    
    8,891
    
    
    
    851
    
    
    
    12,592Cash as at December 1
    
    
    
    
    
    
    3,497
    
    
    
    3,834
    
    
    
    1,519
    
    
    
    133Cash as at August 31
    
    
    
    
    
    
    2,370
    
    
    
    12,725
    
    
    
    2,370
    
    
    
    12,725
   5




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##### 



THERATECHNOLOGIES INC.
 
 1.
    
    Reporting entity:
 Theratechnologies Inc. is a Canadian biopharmaceutical company that discovers and develops
innovative therapeutic products, with an emphasis on peptides, for commercialization. The
Company targets unmet medical needs in specialty markets where it can retain all or some of the
commercial rights to its products. Its most advanced compound, tesamorelin, is an analogue of
the human growth hormone releasing factor.
 The consolidated financial statements include the accounts of Theratechnologies Inc. and its
wholly-owned subsidiaries (together referred to as the ''Company and individually as ''the
subsidiaries of the Company).
 Theratechnologies Inc. is incorporated under Part 1A of the Québec Companies Actand is
domiciled in Quebec, Canada. The Company is located at 2310 boul. Alfred-Nobel, Montreal,
Quebec, H4S 2B4.
 2.
    
    Basis of preparation:
 (a)
    
    Statement of compliance:These amended interim consolidated financial statements of the Company have been prepared
in accordance with International Financial Reporting Standards (''IFRSs) as issued by the
International Accounting Standards Board (''IASB). The Companys first IFRS financial
statements were for the annual period ended November 30, 2010 and were prepared using
December 1, 2008 as the date of transition. In preparing the accompanying amended interim
financial statements, the Company applied IFRS 1, First-time Adoption of International
Financial Reporting Standardsas disclosed in note 8.These amended interim consolidated financial statements have been prepared in accordance
with IAS 34, Interim Financial Reporting. However, they should not be read in conjunction
with the notes to the Companys audited consolidated financial statements for the year
ended November 30, 2009 as those were prepared in accordance with Canadian GAAP. The
Companys interim consolidated financial statements as previously filed were also prepared
in accordance with Canadian GAAP. Canadian GAAP differs in some areas from IFRS. In
preparing these amended interim consolidated financial statements, management amended the
accounting and valuation methods previously applied in the Canadian GAAP financial
statements to comply with IFRS. The Companys annual consolidated financial statements as
at November 30, 2010 and 2009 and for the years then ended have been concurrently filed
with these amended unaudited interim consolidated financial statements. The same accounting
policies as described in note 3 of these amended interim consolidated financial statements
were used. The comparative figures for 2009 were also restated to reflect these
adjustments.
 6




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##### 



THERATECHNOLOGIES INC.
 
 2.
    
    Basis of preparation (continued):
 (a)
    
    Statement of compliance (continued):Certain information and footnote disclosures which are considered material to the
understanding of the Companys amended interim consolidated financial statements and which
are normally included in annual financial statements prepared in accordance with IFRS are
presented in note 3 along with reconciliations and descriptions of the effect of the
transition from Canadian GAAP to IFRS on equity, earnings and comprehensive income
presented in note 8. These amended interim consolidated financial statements do not include
all disclosures required under IFRS and accordingly should be read in connection with the
aforementioned annual financial statements and the notes thereto. These amended interim
consolidated financial statements have not been reviewed by the Companys auditors.These amended unaudited interim consolidated financial statements were authorized for issue
by the Audit Committee on February 8, 2011.(b)
    
    Basis of measurement:The Companys consolidated financial statements have been prepared on a going concern and
historical cost basis, except for available-for-sale financial assets which are measured at
fair value.The methods used to measure fair value are discussed in note 22 included in the Companys
annual financial statements dated February 8, 2011.(c)
    
    Functional and presentation currency:These amended interim consolidated financial statements are presented in Canadian dollars,
which is the Companys functional currency. All financial information presented in Canadian
dollars has been rounded to the nearest thousand.(d)
    
    Use of estimates and judgements:The preparation of the Companys amended interim consolidated financial statements in
conformity with IFRSs 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.Information about critical judgements in applying accounting policies and assumption and
estimation uncertainties that have the most significant effect on the amounts recognized in
the amended interim consolidated financial statements relate to the timing of revenue
recognition, the valuation of share-based compensation; the realizability of deferred
income tax assets, and the recognition and measurement of contingent liabilities.
 7




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##### 



THERATECHNOLOGIES INC.
 
 2.
    
    Basis of preparation (continued):
 (d)
    
    Use of estimates and judgements (continued):Other areas of judgement and uncertainty relate to the estimation of accruals for clinical
trial expenses, the recoverability of inventories, the measurement of the amount and
assessment of the recoverability of tax credits and grants receivable and the
capitalization of development expenditures.Reported amounts and note disclosure reflect the overall economic conditions that are most
likely to occur and anticipated measures management intends to take. Actual results could
differ from those estimates.The above estimates and assumptions are reviewed regularly. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future
periods affected.
 3.
    
    Significant accounting policies:The accounting policies set out below have been applied consistently to all periods presented
in these amended interim consolidated financial statements and in preparing the opening IFRS
statement of financial position at December 1, 2008, the date of transition to IFRSs.The accounting policies have been applied consistently by the subsidiaries of the Company.
 (a)
    
    Basis of consolidation:The financial statements of subsidiaries are included in the consolidated financial
statements from the date on which control commences until the date on which control ceases.
Subsidiaries are entities controlled by the Company. Control is present where the Company
has the power to govern the financial and operating policies of the entity so as to obtain
benefits from its activities. In assessing control, potential voting rights that are
exercisable currently are taken into consideration. The accounting policies of subsidiaries
are changed when necessary to align them with the policies adopted by the Company.Reciprocal balances and transactions, revenues and expenses resulting from transactions
between subsidiaries and with the Company are eliminated in preparing the consolidated
financial statements.
 8




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (b)
    
    Foreign currency:Transactions in foreign currencies are translated to the respective functional currencies
of the subsidiaries of the Company at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are
retranslated to the functional currency at the exchange rate at that date. The foreign
currency gain or loss on monetary items is the difference between amortized cost in the
functional currency at the beginning of the period, adjusted for effective interest and
payments during the period, and the amortized cost in foreign currency translated at the
exchange rate at the end of the reporting period.Foreign currency differences arising on translation are recognized in net profit (loss),
except for differences arising on the translation of available-for-sale equity instruments,
which are recognized in other comprehensive income. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value are translated to the
functional currency at the exchange rate at the date that the fair value was determined.
Non-monetary items that are measured at historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.(c)
    
    Revenue recognition:Collaboration agreements that include multiple deliverables are considered to be
multi-element arrangements. 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 services, royalties and license fees. Revenues for each unit of
accounting are recorded as described below:
 (i)
    
    Sale of goods:Revenues from the sale of goods are recognized when the Company has transferred to the
buyer the significant risks and rewards of ownership of the goods, there is no
continuing management involvement with the goods, and the amount of revenue can be
measured reliably.(ii)
    
    Royalties and license fees:Royalties and license fees are recognized when conditions and events under the license
agreement have occurred and collectibility is reasonably assured.
 9




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (c)
    
    Revenue recognition (continued):
 (iii)
    
    Research services:Revenues from research contracts are recognized when services to be provided are
rendered and all conditions under the terms of the underlying agreement are met.
 (a)
    
    Upfront payments and initial technology access fees: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.(b)
    
    Milestone payments:Revenues subject to the achievement of milestones are recognized only when the
specified events have occurred and collectibility is reasonably assured.
 (d)
    
    Cost of sales:Cost of sales represents the cost of goods sold and includes the cost of raw materials,
supplies, direct overhead charges, unallocated indirect costs related to production as well
as write-down of inventories. Other direct costs such as manufacturing start-up costs
between validation and the achievement of normal production are expensed as incurred.(e)
    
    Employee benefits:Salaries and short-term employee benefits:Salaries and short-term employee benefit obligations are measured on an undiscounted basis
and are expensed as the related service is provided. A liability is recognized for the
amount expected to be paid under short-term profit-sharing or cash bonus plans if the
Company has a legal or constructive obligation to pay an amount as a result of past
services rendered by an employee and the obligation can be estimated reliably.Post-employment benefits:Post-employment benefits include a defined contribution plan under which an entity pays
fixed contributions into a separate entity and will have no legal or constructive
obligation to pay further amounts. Obligations for contributions to defined contribution
plans are recognized as an employee benefit expense when due. Prepaid contributions are
recognized as an asset to the extent that a cash refund or a reduction in future payments
is available. The Companys defined contribution plan comprises the registered retirement
savings plan, the Quebec Pension Plan and unemployment insurance.
 10




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (e)
    
    Employee benefits (continued):Termination benefits:Termination benefits are recognized as an expense when the Company is committed
demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to
either terminate employment before the normal retirement date, or to provide termination
benefits as a result of an offer made to encourage voluntary redundancy.(f)
    
    Finance income and finance costs:Finance income comprises interest income on available-for-sale financial assets and gains
(losses) on the disposal of available-for-sale financial assets. Interest income is
recognized as it accrues in profit (loss), using the effective interest method.Finance costs are comprised of bank charges, impairment losses on financial assets
recognized in profit (loss) and foreign currency gains and losses which are reported on a
net basis.(g)
    
    Inventories:Inventories are presented at the lower of cost, determined using the first-in first-out
method, or net realizable value. Inventory costs include the purchase price and other costs
directly related to the acquisition of materials, and other costs incurred in bringing the
inventories to their present location and condition. 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.Net realizable value is the estimated selling price in the Companys ordinary course of
business, less the estimated costs of completion and selling expenses.(h)
    
    Property and equipment:Recognition and measurement:Items of property and equipment are recognized at cost less accumulated depreciation and
accumulated impairment losses. Cost includes expenditure that is directly attributable to
the acquisition of the asset and the costs of dismantling and removing the item and
restoring the site on which it is located, if any.
 11




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (h)
    
    Property and equipment (continued):Recognition and measurement(continued):When parts of an item of property and equipment have different useful lives, they are
accounted for as separate items (major components) of property and equipment.Gains and losses on disposal of an item of property and equipment are determined by
comparing the proceeds from disposal with the carrying amount of property and equipment,
and are recognized in net profit (loss).Subsequent costs:The cost of replacing a part of an item of property and equipment is recognized in the
carrying amount of the item if it is probable that the future economic benefits embodied
within the part will flow to the Company, and its cost can be measured reliably. The
carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing
of property and equipment are recognized in profit (loss) as incurred.Depreciation:The estimated useful lives and the methods of depreciation for the current and comparative
periods are as follows:
 Asset
    
    Method
    
    
    Rate/PeriodComputer equipment
    
    Declining balance
    
    
    50
    %Laboratory equipment
    
    Declining balance
    
    
    20
    %and straight-line
    
    5 yearsOffice furniture and equipment
    
    Declining balance
    
    
    20
    %Leasehold improvements
    
    Straight-line
    
    Lower of term of leaseor economic life
 This most closely reflects the expected pattern of consumption of the future economic
benefits embodied in the asset.Estimates for depreciation methods, useful lives and residual values are reviewed at each
reporting period-end and adjusted, if appropriate.
 12




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (i)
    
    Intangible assets:Research and development:Expenditure on research activities, undertaken with the prospect of gaining new scientific
or technical knowledge and understanding, is expensed as incurred.Development activities involve a plan or design for the production of new or substantially
improved products and processes. Development expenditure is capitalized only if development
costs can be measured reliably, the product or process is technically and commercially
feasible, future economic benefits are probable, and the Company intends to and has
sufficient resources to complete development and to use or sell the asset. These criteria
are usually met when a regulatory filing has been made in a major market and approval is
considered highly probable. The expenditure capitalized includes the cost of materials,
direct labour, and overhead costs that are directly attributable to preparing the asset for
its intended use. Other development expenditures are expensed as incurred. Capitalized
development expenditures are measured at cost less accumulated amortization and accumulated
impairment losses.During the periods ended August 31, 2010 and 2009, November 30, 2009 and as at December 1,
2008, no development expenditures were capitalized.(j)
    
    Financial instruments:The Companys financial instruments are classified into one of three categories: loans and
receivables, available-for-sale financial assets and other financial liabilities. Loans and
receivables and other financial liabilities are measured at amortized cost.The Company has classified its bonds as available-for-sale financial assets. The Company
has classified cash, and trade and other receivables as loans and receivables, and accounts
payable and accrued liabilities as other financial liabilities.Available-for-sale financial assets are non-derivative financial assets that are designated
as available-for-sale and that are not classified in any of the other categories.
Subsequent to initial recognition, they are measured at fair value and changes therein,
other than impairment losses and foreign currency differences on available-for-sale debt
instruments, are recognized in other comprehensive income and presented within equity. When
an investment is derecognized, the cumulative gain or loss in other comprehensive income is
transferred to profit (loss).
 13




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (k)
    
    Other assets:Other assets consist of prepaid expenses for research supplies that are not expected to be
used within one year from the date of the consolidated statement of financial position.Research supplies are purchased in advance, in accordance with specific regulatory
requirements, to be used in connection with the Companys clinical trials.(l)
    
    Leases:Operating lease payments are recognized in net profit (loss) on a straight-line basis over
the term of the lease.Lease inducements arising from leasehold improvements allowances and rent-free periods form
an integral part of the total lease cost and are deferred and recognized in net profit
(loss) over the term of the lease on a straight-line basis.(m)
    
    Impairment:Financial assets:A financial asset not carried at fair value through profit or loss is assessed at each
consolidated financial statement reporting date to determine whether there is objective
evidence that it is impaired. The Company considers that a financial asset is impaired if
objective evidence indicates that one or more loss events had a negative effect on the
estimated future cash flows of that asset that can be estimated reliably.An impairment test is performed, on an individual basis, for each material financial asset.
Other individually non-material financial assets are tested as groups of financial assets
with similar risk characteristics. Impairment losses are recognized in net profit (loss).An impairment loss in respect of a financial asset measured at amortized cost is calculated
as the difference between its carrying amount and the present value of the estimated future
cash flows discounted at the assets original effective interest rate. Losses are
recognized in net profit (loss) and reflected in an allowance account against the
respective financial asset. Interest on the impaired asset continues to be recognized
through the unwinding of the discount. When a subsequent event causes the amount of
impairment loss to decrease, the decrease in impairment loss is reversed through net profit
(loss).
 14




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (m)
    
    Impairment (continued):Financial assets(continued):Impairment losses on available-for-sale investment securities are recognized by
transferring the cumulative loss that has been recognized in other comprehensive income,
and presented in unrealized gains/losses on available-for-sale financial assets in equity,
to net profit (loss). The cumulative loss that is removed from other comprehensive income
and recognized in net profit (loss) is the difference between the acquisition cost, net of
any principal repayment and amortization, and the current fair value, less any impairment
loss previously recognized in net profit (loss). Changes in impairment provisions
attributable to time value are reflected as a separate component of interest income.If, in a subsequent period, the fair value of an impaired available-for-sale debt security
increases and the increase can be related objectively to an event occurring after the
impairment loss was recognized in net profit (loss), then the impairment loss is reversed,
with the amount of the reversal recognized in net profit (loss). However, any subsequent
recovery in the fair value of an impaired available-for-sale equity security is recognized
in other comprehensive income.Non-financial assets:The carrying amounts of the Companys non-financial assets, other than inventories and
deferred tax assets, are reviewed at each reporting date to determine whether there is any
indication of impairment. If such an indication exists, the recoverable amount is
estimated.The recoverable amount of an asset or a cash-generating unit is the greater of its value in
use and its fair value less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to
the asset. For the purpose of impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that are largely
independent of cash inflows from other assets or groups of assets (''cash-generating
unit). Impairment losses recognized in prior periods are determined at each reporting
date for any indications that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. An assets carrying amount, increased through reversal of an impairment
loss, must not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized.
 15




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (n)
    
    Provisions:A provision is recognized if, as a result of a past event, the Company has a present legal
or constructive obligation that can be estimated reliably, and it is probable that an
outflow of economic benefits will be required to settle the obligation. Provisions are
assessed by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the
liability. The unwinding of the discount on provisions is recognized in finance costs.Onerous contracts:A provision for onerous contracts is recognized when the expected benefits to be derived by
the Company from a contract are lower than the unavoidable cost of meeting its obligations
under the contract. The provision is measured at the present value of the lower of the
expected cost of terminating the contract and the expected net cost of continuing with the
contract. Before a provision is established, the Company recognizes any impairment loss on
the assets associated with that contract. There were no onerous contracts as at August 31,
2010 and 2009, November 30, 2009 and December 1, 2008.Site restoration:Where there is a legal or constructive obligation to restore leased premises to good
condition, except for normal aging on expiry or early termination of the lease, the
resulting costs are provisioned up to the discounted value of estimated future costs and
increase the carrying amount of the corresponding item of property and equipment. The
Company amortizes the cost of restoring leased premises and recognizes an unwinding of
discount expense on the liability related to the term of the lease.Contingent liability:A contingent liability is a possible obligation that arises from past events and of which
the existence will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company; or a present
obligation that arises from past events (and therefore exists), but is not recognized
because it is not probable that a transfer or use of assets, provision of services or any
other transfer of economic benefits will be required to settle the obligation, or the
amount of the obligation cannot be estimated reliably.
 16




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (o)
    
    Income taxes:Income tax expense comprises current and deferred tax. Current tax and deferred tax are
recognized in net profit (loss), except to the extent that they relate to items recognized
directly in other comprehensive income or in equity.Current tax:Current tax is the expected tax payable or receivable on the taxable income or loss for the
year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years. The Company establishes provisions
where appropriate on the basis of amounts expected to be paid to the tax authorities.Deferred tax:Deferred tax is recognized in respect of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date.A deferred tax liability is generally recognized for all taxable temporary differences.A deferred tax asset is recognized for unused tax losses and deductible temporary
differences, to the extent that it is probable that future taxable profits will be
available against which they can be utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realized.
 (p)
    
    Share-based compensation:The Company records share-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 expensed, as
employee benefits, over the period in which employees unconditionally become entitled to
the award. The amount recognized as an expense is adjusted to reflect the number of awards
for which the related service conditions are expected to be met, such that the amount
ultimately recognized as an expense is based on the number of awards that do meet the
related service and non-market performance conditions at the vesting date.Share-based payment arrangements in which the Company receives goods or services as
consideration for its own equity instruments are accounted for as equity-settled
share-based payment transactions, regardless of how the equity instruments are obtained by
the Company.
 17




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (p)
    
    Share-based compensation (continued):As permitted by IFRS 1, the Company elected not to restate options that were granted before
November 7, 2002 and those granted after November 7, 2002 that were fully vested prior to
the date of transition to IFRS.(q)
    
    Government grants:Government grants, consisting of grants and research investment tax credits, are 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 and there is reasonable assurance that the grant will be
received.(r)
    
    Share capital:Common shares:Common shares are classified as equity. Incremental costs directly attributable to the
issue of common shares and share options are recognized as a deduction from equity, net of
any tax effects.(s)
    
    Earnings per share:The Company presents basic and diluted earnings per share (''EPS) data for its common
            shares. Basic EPS is calculated by dividing the net profit or loss attributable to common
shareholders of the Company by the weighted average number of common shares outstanding
during the period, adjusted for own shares held, if applicable. Diluted EPS is determined
by adjusting the profit or loss attributable to common shareholders and the weighted
average number of common shares outstanding, adjusted for own shares held, if applicable,
for the effects of all dilutive potential common shares, which consist of the stock options
granted to employees.(t)
    
    New standards and interpretations not yet applied:Certain pronouncements were issued by the IASB or International Financial Reporting
Interpretations Committee that are mandatory for accounting periods beginning on or after
January 1, 2010 or later periods. Many of these updates are not applicable or are
inconsequential to the Company and have been excluded from the discussion below. The
remaining pronouncements are being assessed to determine their impact on the Companys
results and financial position:
 18




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (t)
    
    New standards and interpretations not yet applied (continued):Annual improvements to IFRS:The IASBs improvements to IFRS published in April 2009 contain fifteen amendments to
twelve standards that result in accounting changes for presentation, recognition or
measurement purposes largely for annual periods beginning on or after January 1, 2010, with
early adoption permitted. These amendments were considered by the Company and deemed to be
not applicable to the Company other than for the amendment to IAS 17  Leases relating to
leases which include both land and buildings elements. In this case, the Company early
adopted this amendment.The IASBs improvements to IFRS contain seven amendments that result in accounting changes
for presentation, recognition or measurement purposes. The most significant features of the
IASBs annual improvements project published in May 2010 are included under the specific
revisions to standards discussed below.
 (i)
    
    IFRS 3:Revision to IFRS 3, Business Combinations:Effective for annual periods beginning on or after July 1, 2010, with earlier adoption
permitted.Clarification on the following areas:
 
    
    the choice of measuring non-controlling interests at fair value or at
the proportionate share of the acquirees net assets applies only to instruments
that represent present ownership interests and entitle their holders to a
proportionate share of the net assets in the event of liquidation. All other
components of non-controlling interest are measured at fair value unless another
measurement basis is required by IFRS.
    
    application guidance relating to the accounting for share-based
payments in IFRS 3 applies to all share-based payment transactions that are part
of a business combination, including unreplaced awards (i.e., unexpired awards
over the acquiree shares that remain outstanding rather than being replaced by the
acquirer) and voluntarily replaced share-based payment awards.
 19




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (t)
    
    New standards and interpretations not yet applied (continued):Annual improvements to IFRS(continued):
 (ii)
    
    IFRS 7:Amendment to IFRS 7, Financial Instruments: Disclosures:Effective for annual periods beginning on or after January 1, 2011, with earlier
adoption permitted.Multiple clarifications related to the disclosure of financial instruments and in
particular in regards to transfers of financial assets.
 (iii)
    
    IAS 1:Amendment to IAS 1, Presentation of Financial Statements:Effective for annual periods beginning on or after January 1, 2011, with earlier
adoption permitted.Entities may present the analysis of the components of other comprehensive income
either in the statement of changes in equity or within the notes to the financial
statements.(iv)
    
    IAS 27:Amendment to IAS 27, Consolidated and Separate Financial Statements:Effective for annual periods beginning on or after January 1, 2011, with earlier
adoption permitted.The 2008 revisions to this standard resulted in consequential amendments to IAS 21, The
Effects of Changes in Foreign Exchange Rates, IAS 28, Investments in Associates,and
IAS 31, Interests in Joint Ventures.IAS 27 now provides that these amendments are to
be applied prospectively.
 20




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (t)
    
    New standards and interpretations not yet applied (continued):Annual improvements to IFRS(continued):
 (v)
    
    IAS 34:Amendment to IAS 34, Interim Financial Reporting:Effective for annual periods beginning on or after January 1, 2011, with earlier
adoption permitted.The amendments place greater emphasis on the disclosure principles for interim
financial reporting involving significant events and transactions, including changes to
fair value measurements and the need to update relevant information from the most
recent annual report.
 New or revised standards and interpretations:In addition, the following new or revised standards and interpretations have been issued
but are not yet applicable to the Company:
 (i)
    
    IFRS 8:IFRS 8, Operating Segments (revised):Effective for annual periods beginning on or after January 1, 2010.Requires purchase information about segment assets.(ii)
    
    IFRS 9:New standard IFRS 9, Financial Instruments:Effective for annual periods beginning on or after January 1, 2013, with earlier
adoption permitted.As part of the project to replace IAS 39, Financial Instruments: Recognition and
Measurement, this standard retains but simplifies the mixed measurement model and
establishes two primary measurement categories for financial assets. More specifically,
the standard:
 
    
    deals with classification and measurement of financial assets
    
    establishes two primary measurement categories for financial assets:
amortized cost and fair value
 21




---



##### 



THERATECHNOLOGIES INC.
 
 3.
    
    Significant accounting policies (continued):
 (t)
    
    New standards and interpretations not yet applied (continued):New or revised standards and interpretations(continued):
 (ii)
    
    IFRS 9 (continued):New standard IFRS 9, Financial Instruments(continued):
 
    
    classification depends on entitys business model and the contractual
cash flow characteristics of the financial asset
    
    eliminates the existing categories: held to maturity, available for
sale, and loans and receivables.
 Certain changes were also made regarding the fair value option for financial
liabilities and accounting for certain derivatives linked to unquoted equity
instruments.
 4.
    
    Revenue and deferred revenue:On October 28, 2008, the Company entered into a collaboration and licensing agreement with EMD
Serono, Inc. (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). The
Company 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.
 22




---



##### 



THERATECHNOLOGIES INC.
 
 4.
    
    Revenue and deferred revenue (continued):The initial payment of $27,097 has been deferred and is being amortized over its estimated
service period for developing a new formulation of the Initial Product. This period may be
modified in the future based on additional information that may be received by the Company. For
the nine-month period ended August 31, 2010, an amount of $5,134 related to this transaction
was recognized as revenue. As at August 31, 2010, the deferred revenues related to this
transaction amounted to $15,403 (November 30, 2009  $20,537).On August 12, 2009, the US Food and Drug Administration 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 an agreement with EMD Serono, to
participate in the promotion of the additional indications.
 5.
    
    Share capital:During the second quarter of 2010, the Company received subscriptions in the amount of $15 ($7
for the same period in 2009) for the issue of 2,880 common shares (2,550 for the same period in
2009) in connection with its share purchase plan.
 (a)
    
    Shareholder rights plan:On February 10, 2010, the Board of Directors of the Company adopted a shareholder rights
plan (the ''Plan), effective as of that date. The Plan is designed to provide adequate
time for the Board of Directors and the shareholders, to assess an unsolicited takeover bid
for the Company. 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 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
Plan will expire at the close of the Companys annual meeting of shareholders in 2013.
 23




---



##### 



THERATECHNOLOGIES INC.
 
 5.
    
    Share capital (continued):
 (a)
    
    Shareholder rights plan (continued):The rights issued under the Plan will initially attach to and trade with the common shares
and no separate certificates will be issued unless a triggering 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 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 no 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)
    
    Share purchase plan:The Share Purchase Plan entitles full-time and part-time employees of the Company who, on
the participation date, are residents of Canada, are not under a probationary period and do
not hold, directly or indirectly, five percent (5%) or more of the Companys outstanding
common shares, to directly subscribe for common shares of the Company. Under the Share
Purchase Plan, a maximum of 550,000 common shares may be issued to employees.On May 1 and November 1 of each year (the ''Participation Dates), an employee may
subscribe for a number of common shares under the Share Purchase Plan for an amount that
does not exceed 10% of that employees gross annual salary for that year. Under the Share
Purchase Plan, the Board of Directors has the authority to suspend or defer a subscription
of common shares, or to decide that no subscription of common shares will be allowed on a
Participation Date if it is in the Companys best interest.The Share Purchase Plan provides that the number of common shares that may be issued to
insiders, at any time, under all share-based compensation arrangements of the Company,
cannot exceed 10% of the Companys outstanding common shares, and the number of common
shares issued to insiders, within any one-year period, under all security-based
compensation arrangements, cannot exceed 10% of the outstanding common shares.
 24




---



##### 



THERATECHNOLOGIES INC.
 
 5.
    
    Share capital (continued):
 (b)
    
    Share purchase plan (continued):The subscription price for each new common share subscribed for under the Share Purchase
Plan is equal to the weighted average closing price of the common shares on the Toronto
Stock Exchange during a period of five days prior to the Participation Date. Employees may
not assign the rights granted under the Share Purchase Plan.An employee may elect to pay the subscription price for common shares in cash or through an
interest-free loan from the Company. Loans granted by the Company under the Share Purchase
Plan are repayable through salary withholdings over a period not exceeding two years. All
loans may be repaid prior to the scheduled repayment at any time. The loans granted to any
employee may at no time exceed 10% of that employees current annual gross salary. All
common shares purchased through an interest-free loan are hypothecated to secure full and
final repayment of the loan and are held by a trustee until repayment in full. Loans are
immediately due and payable on the occurrence of any of the following events: (i)
termination of employment; (ii) sale or seizure of the hypothecated common shares; (iii)
bankruptcy or insolvency of the employee; or (iv) suspension of the payment of an
employees salary or revocation of the employees right to salary withholdings.At August 31, 2010, $72 (November 30, 2009  $149; December 1, 2008  $150) was receivable
under these loans.(c)
    
    Stock option plan:The 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
grant date. 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 up to 5 years. As at August 31,
2010, 970,171 options could still be granted by the Company (August 31  1,236,168).All options are to be settled by physical delivery of shares.
 25




---



##### 



THERATECHNOLOGIES INC.
 
 5.
    
    Share capital (continued):
 (c)
    
    Stock option plan (continued):Changes in outstanding options granted under the Companys stock option plan for the year
ended November 30, 2009 and the nine-month period ended August 31, 2010 were as follows:
 Weightedaverageexercise priceOptions
    
    
    per option$Options at December 1, 2008
    
    
    2,161,800
    
    
    
    6.52Granted
    
    
    680,500
    
    
    
    1.83Expired
    
    
    (58,500
    )
    
    
    5.16Forfeited
    
    
    (118,000
    )
    
    
    9.92Options at November 30, 2009
    
    
    2,665,800
    
    
    
    5.20Granted
    
    
    335,000
    
    
    
    4.03Expired
    
    
    (25,000
    )
    
    
    9.91Forfeited
    
    
    (35,337
    )
    
    
    3.78Exercised
    
    
    (77,493
    )
    
    
    1.65Options at August 31, 2010
    
    
    2,862,970
    
    
    
    5.14
 The fair value of the options granted was estimated at the grant date using the
Black-Scholes model and the following weighted average assumptions:
 2010
    
    
    2009Risk-free interest rate
    
    
    2.46
    %
    
    
    1.79
    %Volatility
    
    
    81
    %
    
    
    79
    %Average option life in years
    
    
    7.5
    
    
    
    7.5Dividend yield
    
    Nil
    
    
    NilGrant-date share price
    
    $
    4.03
    
    
    $
    1.83Option exercise price
    
    $
    4.03
    
    
    $
    1.83
 26




---



##### 



THERATECHNOLOGIES INC.
 
 5.
    
    Share capital (continued):
 (c)
    
    Stock option plan (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 that similar grants have remained outstanding in
the past. Dividend yield was excluded from the calculation, since it is the present policy
of the Company not to retain in cash in order to keep funds available to finance the
Companys growth.The following table summarizes the measurement date weighted average fair value of stock
options granted during the periods ended August 31, 2010 and 2009:
 WeightedaverageNumber of
    
    
    grant-datePeriods ended August 31 (9 months)
    
    options
    
    
    fair value$2010
    
    
    335,000
    
    
    
    3.052009
    
    
    660,500
    
    
    
    1.34
 WeightedaverageNumber of
    
    
    grant-datePeriods ended August 31 (3 months)
    
    options
    
    
    fair value$2010
    
    
    70,000
    
    
    
    3.622009
    
    
    
    
    
    
    
 The Black-Scholes model used by the Company to calculate option values was 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. This
model also requires four highly subjective assumptions, including future stock price
volatility and average option life, which greatly affect the calculated values.
 27




---



##### 



THERATECHNOLOGIES INC.
 
 5.
    
    Share capital (continued):
 (d)
    
    Earnings per share:The calculation of basic earnings per share at August 31, 2010 was based on the net loss
attributable to common shareholders of the Company of ($12,369) (2009  ($10,502)), and a
weighted average number of common shares outstanding of 60,469,621 (2009  60,284,591),
calculated as follows:
 August 31,
    
    
    August 31,2010
    
    
    2009Issued common shares at December 1
    
    
    60,429,393
    
    
    
    58,215,090Effect of share options exercised
    
    
    39,040
    
    
    
    Effect of shares issued during the period
    
    
    1,188
    
    
    
    2,069,501Weighted average number of common shares at August 31
    
    
    60,469,621
    
    
    
    60,284,591
 The calculation of diluted earnings per share was based on a weighted average number
of common shares calculated as follows:
 August 31,
    
    
    August 31,2010
    
    
    2009Weighted average number of common shares (basic)
    
    
    60,469,621
    
    
    
    60,284,591Effect of stock options on issue
    
    
    
    
    
    
    165,420Weighted average number of common shares (diluted) at August 31
    
    
    60,469,621
    
    
    
    60,450,011
 At August 2010, 1,127,164 options (2009  1,385,833) were excluded from the diluted
weighted average number of common shares calculation as their effect would have been
anti-dilutive.The average market value of the Companys shares for purposes of calculating the dilutive
effect of share options was based on quoted market prices for the period during which the
options were outstanding.
 28




---



##### 



THERATECHNOLOGIES INC.
 
 6.
    
    Supplemental information:The following transactions were conducted by the Company and did not impact cash flows:
 August 31,
    
    
    August 31,
    
    
    November 30,2010
    
    
    2009
    
    
    2009$
    
    
    $
    
    
    $Additions to property and equipment included in accounts payable and
accrued liabilities
    
    
    55
    
    
    
    28
    
    
    
    183
 7.
    
    Subsequent events:
 (a)
    
    Except for changes related to the Companys adoption of IFRS, these amended unaudited
interim consolidated financial statements do not reflect events occurring after October
12, 2010, the date of the filing of the consolidated financial statements prepared in
accordance with Canadian GAAP. The annual audited consolidated financial statements of the
Company prepared in accordance with IFRS have been filed concurrently with these amended
unaudited interim consolidated financial statements. These amended unaudited interim
consolidated financial statements should be read in connection with the annual financial
statements for additional disclosures with respect to subsequent events.(b)
    
    On July 26, 2010, the Company received a motion of authorization to institute a class
action against the Company and certain of its executive officers (the Motion). This
Motion was filed in the Superior Court of Quebec, district of Montreal. The applicant is
seeking to initiate a class action suit to represent the class of persons who were
shareholders at May 21, 2010 and who sold their common shares of the Company on May 25 or
26, 2010. This applicant alleges that the Company did not comply with its continuous
disclosure obligations as a reporting issuer by failing to disclose a material change. The
Company is of the view that the allegations contained in the Motion are frivolous and
entirely without merit and intends to take all appropriate actions to vigorously defend
its position.As of October 11, 2010, the Motion has not yet been heard by the Superior Court of Quebec.The Company subscribed insurances covering the responsibility of its administrators and
officers in the exercise of their functions.
 29




---



##### 



THERATECHNOLOGIES INC.
 
 8.
    
    Transition to IFRS:
 As stated in note 2 (a), the Company has applied IFRS 1 and the accounting policies set out in
note 3 in preparing the financial statements for the period ended August 31, 2010, the
comparative period ended August 31, 2009, for the year ended November 30, 2009, and for the
opening IFRS statement of financial position as at December 1, 2008 (the Companys date of
transition).In preparing these consolidated financial statements in accordance with IFRS 1, the Company has
applied the mandatory exceptions and certain of the optional exemptions from full retrospective
application of IFRS.The Company elected to apply the following optional exemptions from full retrospective
application:
 (i)
    
    Share-based payment transaction exemption:The Company has elected to apply the share-based payment exemption. It applied IFRS 2 from
December 1, 2008 to those stock options that were issued after November 7, 2002 but that
had not vested by December 1, 2008. The application of the exemption is detailed below.(ii)
    
    Designation of financial assets and financial liabilities exemption:The Company elected to re-designate cash from the held for trading category to loans and
receivables.
 As required by IFRS 1, estimates made under IFRS at the date of transition must be consistent
with estimates made for the same date under previous GAAP, unless there is evidence that those
estimates were in error.In preparing its opening IFRS consolidated statement of financial position, the Company has
adjusted amounts reported previously in financial statements prepared in accordance with
Canadian GAAP.An explanation of how the transition from previous Canadian GAAP to IFRS has affected the
Companys financial position, financial performance and cash flows is set out in the following
tables and accompanying notes.
 30




---



##### 



THERATECHNOLOGIES INC.
 
 8.
    
    Transition to IFRS (continued):Reconciliation of equity as at December 1, 2008 and November 30, 2009:
 December 1, 2008
    
    November 30, 2009IFRS
    
    
    IFRS
    
    
    
    
    
    
    
    
    
    
    IFRS
    
    
    IFRSCanadian
    
    
    adjust-
    
    
    reclassi-
    
    
    
    
    
    
    Canadian
    
    
    adjust-
    
    
    reclassi-Note
    
    
    GAAP
    
    
    ments
    
    
    fications
    
    
    IFRS
    
    
    GAAP
    
    
    ments
    
    
    fications
    
    
    IFRS$
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $AssetsCurrent assets:Cash
    
    
    
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    1,519
    
    
    
    
    
    
    
    
    
    
    
    1,519Bonds
    
    
    
    
    
    
    10,955
    
    
    
    
    
    
    
    
    
    
    
    10,955
    
    
    
    10,036
    
    
    
    
    
    
    
    
    
    
    
    10,036Trade and other
receivables
    
    
    
    
    
    
    610
    
    
    
    
    
    
    
    
    
    
    
    610
    
    
    
    375
    
    
    
    
    
    
    
    
    
    
    
    375Tax credits and
grants receivable
    
    
    (a
    )
    
    
    1,784
    
    
    
    
    
    
    
    (333
    )
    
    
    1,451
    
    
    
    1,666
    
    
    
    
    
    
    
    (333
    )
    
    
    1,333Inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,225
    
    
    
    
    
    
    
    
    
    
    
    2,225Research supplies
    
    
    (a
    )
    
    
    301
    
    
    
    
    
    
    
    (301
    )
    
    
    
    
    
    
    287
    
    
    
    
    
    
    
    (287
    )
    
    
    Prepaid expenses
    
    
    (a
    )
    
    
    397
    
    
    
    
    
    
    
    342
    
    
    
    739
    
    
    
    302
    
    
    
    
    
    
    
    328
    
    
    
    630Total current assets
    
    
    
    
    
    
    14,180
    
    
    
    
    
    
    
    (292
    )
    
    
    13,888
    
    
    
    16,410
    
    
    
    
    
    
    
    (292
    )
    
    
    16,118Non-current assets:Bonds
    
    
    
    
    
    
    35,249
    
    
    
    
    
    
    
    
    
    
    
    35,249
    
    
    
    51,807
    
    
    
    
    
    
    
    
    
    
    
    51,807Property and equipment
    
    
    
    
    
    
    1,299
    
    
    
    
    
    
    
    
    
    
    
    1,299
    
    
    
    1,229
    
    
    
    
    
    
    
    
    
    
    
    1,229Other assets
    
    
    (a
    )
    
    
    2,817
    
    
    
    
    
    
    
    (41
    )
    
    
    2,776
    
    
    
    41
    
    
    
    
    
    
    
    (41
    )
    
    
    Total non-current assets
    
    
    
    
    
    
    39,365
    
    
    
    
    
    
    
    (41
    )
    
    
    39,324
    
    
    
    53,077
    
    
    
    
    
    
    
    (41
    )
    
    
    53,036Total assets
    
    
    
    
    
    
    53,545
    
    
    
    
    
    
    
    (333
    )
    
    
    53,212
    
    
    
    69,487
    
    
    
    
    
    
    
    (333
    )
    
    
    69,154LiabilitiesCurrent liabilities:Accounts payable
and accrued liabilities
    
    
    (a
    )
    
    
    7,198
    
    
    
    
    
    
    
    (333
    )
    
    
    6,865
    
    
    
    5,901
    
    
    
    
    
    
    
    (333
    )
    
    
    5,568Current portion of
deferred revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,847
    
    
    
    
    
    
    
    
    
    
    
    6,847Total current liabilities
    
    
    
    
    
    
    7,198
    
    
    
    
    
    
    
    (333
    )
    
    
    6,865
    
    
    
    12,748
    
    
    
    
    
    
    
    (333
    )
    
    
    12,415Non-current liabilities:Deferred revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,691
    
    
    
    
    
    
    
    
    
    
    
    13,691Total non-current liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,691
    
    
    
    
    
    
    
    
    
    
    
    13,691Total liabilities
    
    
    
    
    
    
    7,198
    
    
    
    
    
    
    
    (333
    )
    
    
    6,865
    
    
    
    26,439
    
    
    
    
    
    
    
    (333
    )
    
    
    26,106EquityShare capital
    
    
    
    
    
    
    269,219
    
    
    
    
    
    
    
    
    
    
    
    269,219
    
    
    
    279,169
    
    
    
    
    
    
    
    
    
    
    
    279,169Contributed surplus
    
    
    (b
    )
    
    
    5,585
    
    
    
    175
    
    
    
    
    
    
    
    5,760
    
    
    
    6,484
    
    
    
    273
    
    
    
    
    
    
    
    6,757Deficit
    
    
    (b
    )
    
    
    (228,829
    )
    
    
    (175
    )
    
    
    
    
    
    
    (229,004
    )
    
    
    (243,887
    )
    
    
    (273
    )
    
    
    
    
    
    
    (244,160
    )Accumulated other
comprehensive income
    
    
    
    
    
    
    372
    
    
    
    
    
    
    
    
    
    
    
    372
    
    
    
    1,282
    
    
    
    
    
    
    
    
    
    
    
    1,282Total equity
    
    
    
    
    
    
    46,347
    
    
    
    
    
    
    
    
    
    
    
    46,347
    
    
    
    43,048
    
    
    
    
    
    
    
    
    
    
    
    43,048Total liabilities and equity
    
    
    
    
    
    
    53,545
    
    
    
    
    
    
    
    (333
    )
    
    
    53,212
    
    
    
    69,487
    
    
    
    
    
    
    
    (333
    )
    
    
    69,154
 31




---



##### 



THERATECHNOLOGIES INC.
 
 8.
    
    Transition to IFRS (continued):Reconciliation of equity as at August 31, 2010 and 2009:
 August 31, 2010
    
    August 31, 2009IFRS
    
    
    IFRS
    
    
    
    
    
    
    
    
    
    
    IFRS
    
    
    IFRSCanadian
    
    
    adjust-
    
    
    reclassi-
    
    
    
    
    
    
    Canadian
    
    
    adjust-
    
    
    reclassi-Note
    
    
    GAAP
    
    
    ments
    
    
    fications
    
    
    IFRS
    
    
    GAAP
    
    
    ments
    
    
    fications
    
    
    IFRS$
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $AssetsCurrent assets:Cash
    
    
    
    
    
    
    2,370
    
    
    
    
    
    
    
    
    
    
    
    2,370
    
    
    
    12,725
    
    
    
    
    
    
    
    
    
    
    
    12,725Bonds
    
    
    
    
    
    
    1,694
    
    
    
    
    
    
    
    
    
    
    
    1,694
    
    
    
    9,562
    
    
    
    
    
    
    
    
    
    
    
    9,562Trade and other
receivables
    
    
    
    
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    131
    
    
    
    220
    
    
    
    
    
    
    
    
    
    
    
    220Tax credits and
grants receivable
    
    
    (a
    )
    
    
    514
    
    
    
    
    
    
    
    (333
    )
    
    
    181
    
    
    
    3,167
    
    
    
    
    
    
    
    (333
    )
    
    
    2,834Inventories
    
    
    
    
    
    
    4,585
    
    
    
    
    
    
    
    
    
    
    
    4,585
    
    
    
    1,594
    
    
    
    
    
    
    
    
    
    
    
    1,594Research supplies
    
    
    (a
    )
    
    
    283
    
    
    
    
    
    
    
    (283
    )
    
    
    
    
    
    
    1,029
    
    
    
    
    
    
    
    (1,029
    )
    
    
    Prepaid expenses
    
    
    (a
    )
    
    
    680
    
    
    
    
    
    
    
    324
    
    
    
    1,004
    
    
    
    723
    
    
    
    
    
    
    
    1,372
    
    
    
    2,095Total current assets
    
    
    
    
    
    
    10,257
    
    
    
    
    
    
    
    (292
    )
    
    
    9,965
    
    
    
    29,020
    
    
    
    
    
    
    
    10
    
    
    
    29,030Non-current assets:Bonds
    
    
    
    
    
    
    39,355
    
    
    
    
    
    
    
    
    
    
    
    39,355
    
    
    
    44,103
    
    
    
    
    
    
    
    
    
    
    
    44,103Property and equipment
    
    
    
    
    
    
    1,106
    
    
    
    
    
    
    
    
    
    
    
    1,106
    
    
    
    1,128
    
    
    
    
    
    
    
    
    
    
    
    1,128Other assets
    
    
    (a
    )
    
    
    41
    
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    343
    
    
    
    
    
    
    
    (343
    )
    
    
    Total non-current assets
    
    
    
    
    
    
    40,502
    
    
    
    
    
    
    
    (41
    )
    
    
    40,461
    
    
    
    45,574
    
    
    
    
    
    
    
    (343
    )
    
    
    45,231Total assets
    
    
    
    
    
    
    50,759
    
    
    
    
    
    
    
    (333
    )
    
    
    50,426
    
    
    
    74,594
    
    
    
    
    
    
    
    (333
    )
    
    
    74,261LiabilitiesCurrent liabilities:Accounts payable
and accrued liabilities
    
    
    (a
    )
    
    
    3,823
    
    
    
    
    
    
    
    (333
    )
    
    
    3,490
    
    
    
    4,580
    
    
    
    
    
    
    
    (333
    )
    
    
    4,247Current portion of
deferred revenue
    
    
    
    
    
    
    6,849
    
    
    
    
    
    
    
    
    
    
    
    6,849
    
    
    
    6,850
    
    
    
    
    
    
    
    
    
    
    
    6,850Total current liabilities
    
    
    
    
    
    
    10,672
    
    
    
    
    
    
    
    (333
    )
    
    
    10,339
    
    
    
    11,430
    
    
    
    
    
    
    
    (333
    )
    
    
    11,097Non-current liabilities:Other liabilities
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred revenue
    
    
    
    
    
    
    8,557
    
    
    
    
    
    
    
    
    
    
    
    8,557
    
    
    
    15,402
    
    
    
    
    
    
    
    
    
    
    
    15,402Total non-current liabilities
    
    
    
    
    
    
    8,724
    
    
    
    
    
    
    
    
    
    
    
    8,724
    
    
    
    15,402
    
    
    
    
    
    
    
    
    
    
    
    15,402Total liabilities
    
    
    
    
    
    
    19,396
    
    
    
    
    
    
    
    (333
    )
    
    
    19,063
    
    
    
    26,832
    
    
    
    
    
    
    
    (333
    )
    
    
    26,499EquityShare capital
    
    
    
    
    
    
    279,389
    
    
    
    
    
    
    
    
    
    
    
    279,389
    
    
    
    279,080
    
    
    
    
    
    
    
    
    
    
    
    279,080Contributed surplus
    
    
    (b
    )
    
    
    7,356
    
    
    
    275
    
    
    
    
    
    
    
    7,631
    
    
    
    6,290
    
    
    
    317
    
    
    
    
    
    
    
    6,607Deficit
    
    
    (b
    )
    
    
    (256,254
    )
    
    
    (275
    )
    
    
    
    
    
    
    (256,529
    )
    
    
    (239,189
    )
    
    
    (317
    )
    
    
    
    
    
    
    (239,506
    )Accumulated other
comprehensive income
    
    
    
    
    
    
    872
    
    
    
    
    
    
    
    
    
    
    
    872
    
    
    
    1,581
    
    
    
    
    
    
    
    
    
    
    
    1,581Total equity
    
    
    
    
    
    
    31,363
    
    
    
    
    
    
    
    
    
    
    
    31,363
    
    
    
    47,762
    
    
    
    
    
    
    
    
    
    
    
    47,762Total liabilities and equity
    
    
    
    
    
    
    50,759
    
    
    
    
    
    
    
    (333
    )
    
    
    50,426
    
    
    
    74,594
    
    
    
    
    
    
    
    (333
    )
    
    
    74,261
 32




---



##### 



THERATECHNOLOGIES INC.
 
 8.
    
    Transition to IFRS (continued):Reconciliation of comprehensive income for the year ended November 30, 2009:
 IFRS
    
    
    IFRSCanadian
    
    
    adjust-
    
    
    reclassi-Note
    
    
    GAAP
    
    
    ments
    
    
    fication
    
    
    IFRS$
    
    
    $
    
    
    $
    
    
    $Revenue:Research services:Milestone payments
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    10,884
    
    
    
    10,884Upfront payments and initial technology access fees
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    6,560
    
    
    
    6,560Royalties and license fees
    
    
    (c
    )
    
    
    17,468
    
    
    
    
    
    
    
    (17,444
    )
    
    
    24Interest
    
    
    (c
    )
    
    
    2,252
    
    
    
    
    
    
    
    (2,252
    )
    
    
    Total revenue
    
    
    
    
    
    
    19,720
    
    
    
    
    
    
    
    (2,252
    )
    
    
    17,468Research and development expenses, net of tax credits
    
    
    (b),
    (c)
    
    
    20,431
    
    
    
    33
    
    
    
    346
    
    
    
    20,810Selling and market development expenses
    
    
    (b),
    (c)
    
    
    2,583
    
    
    
    10
    
    
    
    4,269
    
    
    
    6,862General and administrative expenses
    
    
    (b),
    (c)
    
    
    7,149
    
    
    
    55
    
    
    
    (661
    )
    
    
    6,543Patents
    
    
    (c
    )
    
    
    346
    
    
    
    
    
    
    
    (346
    )
    
    
    Fees associated with the collaboration and licensing
agreement
    
    
    (c
    )
    
    
    4,269
    
    
    
    
    
    
    
    (4,269
    )
    
    
    Total operating expenses
    
    
    
    
    
    
    34,778
    
    
    
    98
    
    
    
    (661
    )
    
    
    34,215Results from operating activities
    
    
    
    
    
    
    (15,058
    )
    
    
    (98
    )
    
    
    (1,591
    )
    
    
    (16,747
    )Finance income
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    2,252
    
    
    
    2,252Finance costs
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    (661
    )
    
    
    (661
    )Total net finance income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,591
    
    
    
    1,591Net loss
    
    
    
    
    
    
    (15,058
    )
    
    
    (98
    )
    
    
    
    
    
    
    (15,156
    )Other comprehensive income, net of tax:Net change in fair value of available-for-sale financial assets,
net of tax
    
    
    
    
    
    
    1,039
    
    
    
    
    
    
    
    
    
    
    
    1,039Net change in fair value of available-for-sale financial assets
transferred to net loss, net of tax
    
    
    
    
    
    
    (129
    )
    
    
    
    
    
    
    
    
    
    
    (129
    )Other comprehensive income for the year
    
    
    
    
    
    
    910
    
    
    
    
    
    
    
    
    
    
    
    910Total comprehensive income for the year
    
    
    
    
    
    
    (14,148
    )
    
    
    (98
    )
    
    
    
    
    
    
    (14,246
    )
 33




---



##### 



THERATECHNOLOGIES INC.
 
 8.
    
    Transition to IFRS (continued):Reconciliation of comprehensive income for the three-month periods ended August 31, 2010 and
2009:
 August 31, 2010
    
    August 31, 2009IFRS
    
    
    IFRS
    
    
    
    
    
    
    
    
    
    
    IFRS
    
    
    IFRSCanadian
    
    
    adjust-
    
    
    reclassi-
    
    
    
    
    
    
    Canadian
    
    
    adjust-
    
    
    reclassi-Note
    
    
    GAAP
    
    
    ments
    
    
    fications
    
    
    IFRS
    
    
    GAAP
    
    
    ments
    
    
    fications
    
    
    IFRS$
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $Revenue:Research services:Milestone payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,884
    
    
    
    10,884Upfront payments
and initial
technology
access fees
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    1,711
    
    
    
    1,711
    
    
    
    
    
    
    
    
    
    
    
    1,711
    
    
    
    1,711Royalties and license
fees
    
    
    (c
    )
    
    
    1,717
    
    
    
    
    
    
    
    (1,711
    )
    
    
    6
    
    
    
    12,601
    
    
    
    
    
    
    
    (12,595
    )
    
    
    6Interest
    
    
    (c
    )
    
    
    435
    
    
    
    
    
    
    
    (435
    )
    
    
    
    
    
    
    547
    
    
    
    
    
    
    
    (547
    )
    
    
    Total revenue
    
    
    
    
    
    
    2,152
    
    
    
    
    
    
    
    (435
    )
    
    
    1,717
    
    
    
    13,148
    
    
    
    
    
    
    
    (547
    )
    
    
    12,601Cost of sales
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Research and
development
expenses, net of
tax credits
    
    
    (b),(c
    )
    
    
    2,482
    
    
    
    28
    
    
    
    81
    
    
    
    2,591
    
    
    
    5,387
    
    
    
    31
    
    
    
    105
    
    
    
    5,523Selling and market
development
expenses
    
    
    (b),(c
    )
    
    
    521
    
    
    
    3
    
    
    
    
    
    
    
    524
    
    
    
    495
    
    
    
    3
    
    
    
    
    
    
    
    498General and
administrative
expenses
    
    
    (b),(c
    )
    
    
    2,225
    
    
    
    49
    
    
    
    (12
    )
    
    
    2,262
    
    
    
    1,337
    
    
    
    11
    
    
    
    140
    
    
    
    1,488Patents
    
    
    (c
    )
    
    
    81
    
    
    
    
    
    
    
    (81
    )
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    (105
    )
    
    
    Total operating expenses
    
    
    
    
    
    
    5,429
    
    
    
    80
    
    
    
    (12
    )
    
    
    5,497
    
    
    
    7,324
    
    
    
    45
    
    
    
    140
    
    
    
    7,509Results from operating
activities
    
    
    
    
    
    
    (3,277
    )
    
    
    (80
    )
    
    
    (423
    )
    
    
    (3,780
    )
    
    
    5,824
    
    
    
    (45
    )
    
    
    (687
    )
    
    
    5,092Finance income
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    435
    
    
    
    435
    
    
    
    
    
    
    
    
    
    
    
    547
    
    
    
    547Finance costs
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    140
    
    
    
    140Total net finance income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    423
    
    
    
    423
    
    
    
    
    
    
    
    
    
    
    
    687
    
    
    
    687Net loss
    
    
    
    
    
    
    (3,277
    )
    
    
    (80
    )
    
    
    
    
    
    
    (3,357
    )
    
    
    5,824
    
    
    
    (45
    )
    
    
    
    
    
    
    5,779Other comprehensive income,
net of tax:Net change in fair value
of available-for-sale
financial assets, net of tax
    
    
    
    
    
    
    586
    
    
    
    
    
    
    
    
    
    
    
    586
    
    
    
    342
    
    
    
    
    
    
    
    
    
    
    
    342Net change in fair value
of available-for-sale
financial assets
transferred to net loss,
net of tax
    
    
    
    
    
    
    (65
    )
    
    
    
    
    
    
    
    
    
    
    (65
    )
    
    
    (48
    )
    
    
    
    
    
    
    
    
    
    
    (48
    )Other comprehensive income
for the period
    
    
    
    
    
    
    521
    
    
    
    
    
    
    
    
    
    
    
    521
    
    
    
    294
    
    
    
    
    
    
    
    
    
    
    
    294Total comprehensive income
for the period
    
    
    
    
    
    
    (2,756
    )
    
    
    (80
    )
    
    
    
    
    
    
    (2,836
    )
    
    
    6,118
    
    
    
    (45
    )
    
    
    
    
    
    
    6,073
 34




---



##### 



THERATECHNOLOGIES INC.
 
 8.
    
    Transition to IFRS (continued):Reconciliation of comprehensive income for the nine-month periods ended August 31, 2010 and
2009:
 August 31, 2010
    
    
    August 31, 2009IFRS
    
    
    IFRS
    
    
    
    
    
    
    
    
    
    
    IFRS
    
    
    IFRSCanadian
    
    
    adjust-
    
    
    reclassi-
    
    
    
    
    
    
    Canadian
    
    
    adjust-
    
    
    reclassi-Note
    
    
    GAAP
    
    
    ments
    
    
    fications
    
    
    IFRS
    
    
    GAAP
    
    
    ments
    
    
    fications
    
    
    IFRS$
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $Revenue:Research services:Milestone payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,884
    
    
    
    10,884Upfront payments
and initial
technology
access fees
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    5,134
    
    
    
    5,134
    
    
    
    
    
    
    
    
    
    
    
    4,848
    
    
    
    4,848Royalties and license
fees
    
    
    (c
    )
    
    
    5,151
    
    
    
    
    
    
    
    (5,134
    )
    
    
    17
    
    
    
    15,750
    
    
    
    
    
    
    
    (15,732
    )
    
    
    18Interest
    
    
    (c
    )
    
    
    1,522
    
    
    
    
    
    
    
    (1,522
    )
    
    
    
    
    
    
    1,724
    
    
    
    
    
    
    
    (1,724
    )
    
    
    Total revenue
    
    
    
    
    
    
    6,673
    
    
    
    
    
    
    
    (1,522
    )
    
    
    5,151
    
    
    
    17,474
    
    
    
    
    
    
    
    (1,724
    )
    
    
    15,750Cost of sales
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Research and
development
expenses, net of
tax credits
    
    
    (b),(c
    )
    
    
    10,515
    
    
    
    (44
    )
    
    
    421
    
    
    
    10,892
    
    
    
    16,308
    
    
    
    64
    
    
    
    226
    
    
    
    16,598Selling and market
development
expenses
    
    
    (b),(c
    )
    
    
    1,901
    
    
    
    8
    
    
    
    
    
    
    
    1,909
    
    
    
    1,516
    
    
    
    8
    
    
    
    4,269
    
    
    
    5,793General and
administrative
expenses
    
    
    (b),(c
    )
    
    
    6,083
    
    
    
    38
    
    
    
    (155
    )
    
    
    5,966
    
    
    
    5,515
    
    
    
    70
    
    
    
    (605
    )
    
    
    4,980Patents
    
    
    (c
    )
    
    
    421
    
    
    
    
    
    
    
    (421
    )
    
    
    
    
    
    
    226
    
    
    
    
    
    
    
    (226
    )
    
    
    Other expenses
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,269
    
    
    
    
    
    
    
    (4,269
    )
    
    
    Total operating expenses
    
    
    
    
    
    
    19,040
    
    
    
    2
    
    
    
    (155
    )
    
    
    18,887
    
    
    
    27,834
    
    
    
    142
    
    
    
    (605
    )
    
    
    27,371Results from operating
activities
    
    
    
    
    
    
    (12,367
    )
    
    
    (2
    )
    
    
    (1,367
    )
    
    
    (13,736
    )
    
    
    (10,360
    )
    
    
    (142
    )
    
    
    (1,120
    )
    
    
    (11,621
    )Finance income
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    1,522
    
    
    
    1,522
    
    
    
    
    
    
    
    
    
    
    
    1,724
    
    
    
    1,724Finance costs
    
    
    (c
    )
    
    
    
    
    
    
    
    
    
    
    (155
    )
    
    
    (155
    )
    
    
    
    
    
    
    
    
    
    
    (605
    )
    
    
    (605
    )Total net finance income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,367
    
    
    
    1,367
    
    
    
    
    
    
    
    
    
    
    
    1,119
    
    
    
    1,119Net loss
    
    
    
    
    
    
    (12,367
    )
    
    
    (2
    )
    
    
    
    
    
    
    (12,369
    )
    
    
    (10,360
    )
    
    
    (142
    )
    
    
    
    
    
    
    (10,502
    )Other comprehensive income,
net of tax:Net change in fair value
of available-for-sale
financial assets, net of tax
    
    
    
    
    
    
    (151
    )
    
    
    
    
    
    
    
    
    
    
    (151
    )
    
    
    1,327
    
    
    
    
    
    
    
    
    
    
    
    1,327Net change in fair value
of available-for-sale
financial assets transferred
to net loss, net of tax
    
    
    
    
    
    
    (259
    )
    
    
    
    
    
    
    
    
    
    
    (259
    )
    
    
    (118
    )
    
    
    
    
    
    
    
    
    
    
    (118
    )Other comprehensive income
for the period
    
    
    
    
    
    
    (410
    )
    
    
    
    
    
    
    
    
    
    
    (410
    )
    
    
    1,209
    
    
    
    
    
    
    
    
    
    
    
    1,209Total comprehensive income
for the period
    
    
    
    
    
    
    (12,777
    )
    
    
    (2
    )
    
    
    
    
    
    
    (12,779
    )
    
    
    (9,151
    )
    
    
    (142
    )
    
    
    
    
    
    
    (9,293
    )
 35




---



##### 



THERATECHNOLOGIES INC.
 
 8.
    
    Transition to IFRS (continued):Material adjustments to the consolidated statement of cash flows for 2010 and 2009:There are no material differences between the consolidated statement of cash flows presented
under IFRS and the consolidated statement of cash flows presented under previous Canadian GAAP.Notes to the reconciliations:
 (a)
    
    Reclassification in the consolidated statement of financial position:Certain corresponding figures as at December 1, 2008, November 30, 2009, August 31, 2009
and 2010 have been reclassified to conform to the new presentation under IFRS.(b)
    
    Share-based compensation:In certain situations, stock options granted vest in installments over a specified vesting
period. When the only vesting condition is service from the grant date to the vesting date
of each tranche awarded, then each installment should be accounted for as a separate
share-based payment arrangement under IFRS, otherwise known as graded vesting. Canadian
GAAP permits an entity the accounting policy choice with respect to graded vesting awards.
Each installment can be considered as a separate award, each with a different vesting
period, consistent with IFRS, or the arrangement can be treated as a single award with a
vesting period based on the average vesting period of the installments depending on the
policy elected.
 36




---



##### 



THERATECHNOLOGIES INC.
 
 8.
    
    Transition to IFRS (continued):
 (b)
    
    Share-based compensation (continued):The Companys policy under Canadian GAAP was to treat graded vesting awards under the
latter method and, as a result, an adjustment of $175 was required on the application of
IFRS 2 at the transition date and an adjustment of $98 was required for the restated
November 30, 2009, $142 for August 31, 2009 and ($2) for August 31, 2010 comparative
balances as shown below:
 December 1,
    
    
    November 30,
    
    
    August 31,
    
    
    August 31,2008
    
    
    2009
    
    
    2009
    
    
    2010$
    
    
    $
    
    
    $
    
    
    $Consolidated statement of comprehensive income:Increase in research and development expenses
    
    
    
    
    
    
    33
    
    
    
    64
    
    
    
    (44
    )Increase in selling and market development expenses
    
    
    
    
    
    
    10
    
    
    
    8
    
    
    
    8Increase in general and administrative expenses
    
    
    
    
    
    
    55
    
    
    
    70
    
    
    
    38Adjustment to net loss and total comprehensive loss
    
    
    
    
    
    
    98
    
    
    
    142
    
    
    
    2Deficit
    
    
    (175
    )
    
    
    (273
    )
    
    
    (317
    )
    
    
    (275
    )Increase in contributed surplus
    
    
    175
    
    
    
    273
    
    
    
    317
    
    
    
    275
 (c)
    
    Reclassification in the consolidated statement of comprehensive income:Under IFRS, the Company elected to present expenses using a classification based on their
function and presents net finance income separately. The effect of these changes is
summarized below:
 November 30,
    
    
    August 31,
    
    
    August 31,2009
    
    
    2010
    
    
    2009$
    
    
    $
    
    
    $Decrease in interest
    
    
    (2,252
    )
    
    
    (1,522
    )
    
    
    (1,724
    )Increase in finance income
    
    
    2,252
    
    
    
    1,522
    
    
    
    1,724Increase in research and development expenses
    
    
    346
    
    
    
    421
    
    
    
    226Decrease in patent fees
    
    
    (346
    )
    
    
    (421
    )
    
    
    (226
    )Decrease in general and administrative expenses
    
    
    (661
    )
    
    
    (155
    )
    
    
    (605
    )Increase in finance costs
    
    
    661
    
    
    
    155
    
    
    
    605Increase in selling and market development activities
    
    
    4,269
    
    
    
    
    
    
    
    4,269Decrease in other expenses
    
    
    (4,269
    )
    
    
    
    
    
    
    (4,269
    )
    
    
    
    
    
    
    
    
 37




---



##### 



THERATECHNOLOGIES INC.
 
 8.
    
    Transition to IFRS (continued):
 (c)
    
    Reclassification in the consolidated statement of comprehensive income (continued):Changes in presentation were also made to the revenue caption in order to conform with the
new presentation under IFRS as noted below:
 November 30,
    
    
    August 31,
    
    
    August 31,2009
    
    
    2010
    
    
    2009$
    
    
    $
    
    
    $Decrease in royalties and license fees
    
    
    (17,444
    )
    
    
    (5,134
    )
    
    
    (15,732
    )Increase in upfront payments and initial technology access fees
    
    
        6,560
    
    
    
    5,134
    
    
    
    4,848Increase in milestone payments
    
    
    10,884
    
    
    
    
    
    
    
    10,884
    
    
    
    
    
    
    
    
 38