UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 0-17082
 QLT INC.
 (Exact name of registrant as specified in its charter)
 British Columbia, Canada
    
    N/A(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)887 Great Northern Way, Vancouver, B.C., Canada
    
    V5T 4T5(Address of principal executive offices)
    
    (Zip code)
 (604) 707-7000
 þ o
  Large accelerated filer
o

    

  Accelerated filer
þ

    

    Non-accelerated filer o

(Do not check if a smaller reporting company)

  

    Smaller reporting company
o
 o þ




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##### 



QLT INC.
 QUARTERLY REPORT ON FORM 10-Q
June 30, 2008
 TABLE OF CONTENTS
 ITEM
    
    PAGEPART I  FINANCIAL INFORMATION1. FINANCIAL STATEMENTS
    
    
    1Unaudited Condensed Consolidated Balance Sheets as of
June 30, 2008 and December 31, 2007
    
    
    1Unaudited Condensed Consolidated Statements of Income for the three and six
months ended June 30, 2008 and June 30, 2007
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows for the three and six
months ended June 30, 2008 and June 30, 2007
    
    
    3Unaudited Condensed Consolidated Statement of Changes in Shareholders Equity and Comprehensive
Income for the three and six months ended June 30, 2008
    
    
    4Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    52. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    193. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    274. CONTROLS AND PROCEDURES
    
    
    28PART II  OTHER INFORMATION1. LEGAL PROCEEDINGS
    
    
    291A. RISK FACTORS
    
    
    292. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    404. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    416. EXHIBITS
    
    
    41




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##### 



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 QLT Inc.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 (In thousands of U.S. dollars)
    
    June 30, 2008
    
    December 31, 2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    120,890
    
    
    $
    126,731Restricted cash
    
    
    123,280
    
    
    
    123,495Accounts receivable
    
    
    30,399
    
    
    
    25,257Income taxes receivable
    
    
    54,497
    
    
    
    48,421Inventories (Note 2)
    
    
    11,454
    
    
    
    18,511Current portion of deferred income tax assets
    
    
    11,512
    
    
    
    19,392Other (Note 3)
    
    
    12,988
    
    
    
    11,930365,020
    
    
    
    373,737Property, plant and equipment
    
    
    8,245
    
    
    
    11,643Assets held for sale
    
    
    39,676
    
    
    
    41,107Deferred income tax assets
    
    
    9,695
    
    
    
    7,041Goodwill
    
    
    93,755
    
    
    
    94,903Long-term inventories and other assets (Note 4)
    
    
    21,683
    
    
    
    20,556$
    538,074
    
    
    $
    548,987LIABILITIESCurrent liabilitiesAccounts payable
    
    $
    9,105
    
    
    $
    8,486Accrued restructuring charge (Note 8)
    
    
    1,479
    
    
    
    153Accrued liabilities (Note 5)
    
    
    130,007
    
    
    
    123,294Convertible debt (Note 6)
    
    
    172,500
    
    
    
    172,500Current portion of deferred revenue
    
    
    9,001
    
    
    
    8,431Current portion of deferred income tax liabilities
    
    
    9,421
    
    
    
    11,291331,513
    
    
    
    324,155Uncertain tax position liabilities
    
    
    2,209
    
    
    
    2,070Deferred revenue
    
    
    2,204
    
    
    
    2,939335,926
    
    
    
    329,164CONTINGENCIES (Note 13)SHAREHOLDERS EQUITYShare capital (Note 9)Authorized500,000,000 common shares without par value5,000,000 first preference shares without
par value, issuable
in seriesIssued and outstandingCommon shares
    
    
    702,221
    
    
    
    702,221June 30, 2008  74,620,328 sharesDecember 31, 2007  74,620,328 sharesAdditional paid in-capital
    
    
    121,889
    
    
    
    119,779Accumulated deficit
    
    
    (732,364
    )
    
    
    (714,455
    )Accumulated other comprehensive income
    
    
    110,402
    
    
    
    112,278202,148
    
    
    
    219,823$
    538,074
    
    
    $
    548,987
  1




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##### 



QLT Inc.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
 Three months ended
    
    Six months endedJune 30,
    
    June 30,(In thousands of U.S. dollars except share and per share information)
    
    2008
    
    2007
    
    2008
    
    2007RevenuesNet product revenue (Note 10)
    
    $
    13,685
    
    
    $
    18,999
    
    
    $
    25,593
    
    
    $
    39,564Costs and expensesCost of sales
    
    
    3,232
    
    
    
    3,151
    
    
    
    5,362
    
    
    
    6,627Accrued cost of sales re: MEEI (Note 13)
    
    
    1,219
    
    
    
    
    
    
    
    2,312
    
    
    
    Research and development
    
    
    8,114
    
    
    
    8,727
    
    
    
    16,162
    
    
    
    17,155Selling, general and administrative
    
    
    4,556
    
    
    
    4,676
    
    
    
    11,097
    
    
    
    9,991Depreciation
    
    
    1,080
    
    
    
    1,283
    
    
    
    2,101
    
    
    
    2,576Litigation
    
    
    864
    
    
    
    109,897
    
    
    
    864
    
    
    
    109,897Restructuring (Note 8)
    
    
    1,656
    
    
    
    121
    
    
    
    9,090
    
    
    
    49420,721
    
    
    
    127,855
    
    
    
    46,988
    
    
    
    146,740Operating loss
    
    
    (7,036
    )
    
    
    (108,856
    )
    
    
    (21,395
    )
    
    
    (107,176
    )Investment and other income (expense)Net foreign exchange (losses) gains
    
    
    (17
    )
    
    
    (448
    )
    
    
    237
    
    
    
    (423
    )Interest income
    
    
    1,619
    
    
    
    3,442
    
    
    
    3,936
    
    
    
    7,345Interest expense
    
    
    (3,040
    )
    
    
    (1,648
    )
    
    
    (6,068
    )
    
    
    (3,230
    )Other gains
    
    
    109
    
    
    
    111
    
    
    
    263
    
    
    
    1,264(1,329
    )
    
    
    1,457
    
    
    
    (1,632
    )
    
    
    4,956Loss from continuing operations before income taxes
    
    
    (8,365
    )
    
    
    (107,399
    )
    
    
    (23,027
    )
    
    
    (102,220
    )Recovery of income taxes
    
    
    1,494
    
    
    
    36,605
    
    
    
    3,605
    
    
    
    34,918Loss from continuing operations
    
    
    (6,871
    )
    
    
    (70,794
    )
    
    
    (19,422
    )
    
    
    (67,302
    )(Loss) income from discontinued operations, net of income taxes
(Note 11)
    (567
    )
    
    
    2,127
    
    
    
    1,513
    
    
    
    3,500Net loss
    
    $
    (7,438
    )
    
    $
    (68,667
    )
    
    $
    (17,909
    )
    
    $
    (63,802
    )Basic net loss per common shareContinuing operations
    
    $
    (0.09
    )
    
    $
    (0.94
    )
    
    $
    (0.26
    )
    
    $
    (0.90
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    0.02
    
    
    
    0.05Net loss income
    
    $
    (0.10
    )
    
    $
    (0.92
    )
    
    $
    (0.24
    )
    
    $
    (0.85
    )Diluted net loss per common shareContinuing operations
    
    $
    (0.09
    )
    
    $
    (0.94
    )
    
    $
    (0.26
    )
    
    $
    (0.90
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    0.02
    
    
    
    0.05Net loss income
    
    $
    (0.10
    )
    
    $
    (0.92
    )
    
    $
    (0.24
    )
    
    $
    (0.85
    )Weighted average number of common shares outstanding (thousands)Basic
    
    
    74,620
    
    
    
    74,982
    
    
    
    74,620
    
    
    
    75,195Diluted
    
    
    74,620
    
    
    
    74,982
    
    
    
    74,620
    
    
    
    75,195
 2




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##### 



QLT
Inc.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)
 Three months ended
    
    Six months endedJune 30,
    
    June 30,(In thousands of U.S. dollars)
    
    2008
    
    2007
    
    2008
    
    2007Cash provided by (used in) operating activitiesNet loss
    
    $
    (7,438
    )
    
    $
    (68,667
    )
    
    $
    (17,909
    )
    
    $
    (63,802
    )Adjustments to reconcile net loss to net cash
from operating activitiesDepreciation
    
    
    1,080
    
    
    
    1,646
    
    
    
    2,101
    
    
    
    3,230Write down of inventory
    
    
    7,066
    
    
    
    
    
    
    
    7,066
    
    
    
    Share based compensation
    
    
    678
    
    
    
    732
    
    
    
    2,041
    
    
    
    1,621Amortization of deferred financing expenses
    
    
    342
    
    
    
    314
    
    
    
    685
    
    
    
    608Unrealized foreign exchange loss
    
    
    (63
    )
    
    
    (8,467
    )
    
    
    3,922
    
    
    
    (7,371
    )Tax loss utilization
    
    
    
    
    
    
    1,136
    
    
    
    1,204
    
    
    
    2,552Interest earned on restricted cash
    
    
    (860
    )
    
    
    (26
    )
    
    
    (2,088
    )
    
    
    (26
    )Deferred income taxes
    
    
    5,789
    
    
    
    (35,300
    )
    
    
    3,549
    
    
    
    (35,207
    )Trading securities
    
    
    
    
    
    
    (5,924
    )
    
    
    
    
    
    
    52,433Impairment of property, plant and equipment
    
    
    92
    
    
    
    355
    
    
    
    1,691
    
    
    
    355Litigation
    
    
    
    
    
    
    109,897
    
    
    
    
    
    
    
    109,897Accrued cost of sales and interest re: MEEI
    
    
    2,630
    
    
    
    
    
    
    
    5,108
    
    
    
    Changes in non-cash operating assets and liabilitiesAccounts receivable
    
    
    (5,595
    )
    
    
    2,412
    
    
    
    (5,635
    )
    
    
    10,563Inventories
    
    
    (2,962
    )
    
    
    1,059
    
    
    
    (1,639
    )
    
    
    (1,278
    )Other current assets
    
    
    1,752
    
    
    
    (354
    )
    
    
    (2,015
    )
    
    
    (2,855
    )Accounts payable
    
    
    1,357
    
    
    
    (2,207
    )
    
    
    488
    
    
    
    (2,598
    )Income taxes receivable / payable
    
    
    (7,247
    )
    
    
    (952
    )
    
    
    (7,062
    )
    
    
    71Accrued restructuring charge
    
    
    171
    
    
    
    (534
    )
    
    
    1,346
    
    
    
    (1,595
    )Other accrued liabilities
    
    
    3,599
    
    
    
    1,407
    
    
    
    1,826
    
    
    
    (117,683
    )Deferred revenue
    
    
    480
    
    
    
    3,633
    
    
    
    (1
    )
    
    
    1,320871
    
    
    
    160
    
    
    
    (5,322
    )
    
    
    (49,765
    )Cash provided by (used in) investing activitiesShort-term investment securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,435Restricted cash
    
    
    
    
    
    
    
    
    
    
    2,307
    
    
    
    1,689Proceeds on disposal of property, plant and equipment
    
    
    86
    
    
    
    
    
    
    
    86
    
    
    
    Purchase of property, plant and equipment
    
    
    (37
    )
    
    
    (708
    )
    
    
    (219
    )
    
    
    (1,579
    )Other acquisition related costs
    
    
    (11
    )
    
    
    (15
    )
    
    
    (41
    )
    
    
    (15
    )38
    
    
    
    (723
    )
    
    
    2,133
    
    
    
    16,530Cash used in financing activitiesCommon shares repurchased
    
    
    
    
    
    
    (5,864
    )
    
    
    
    
    
    
    (5,864
    )Issuance of common shares
    
    
    
    
    
    
    320
    
    
    
    
    
    
    
    1,239
    
    
    
    (5,544
    )
    
    
    
    
    
    
    (4,625
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    14
    
    
    
    15,284
    
    
    
    (2,652
    )
    
    
    15,570Net increase (decrease) in cash and cash equivalents
    
    
    923
    
    
    
    9,177
    
    
    
    (5,841
    )
    
    
    (22,290
    )Cash and cash equivalents, beginning of period
    
    
    119,967
    
    
    
    267,586
    
    
    
    126,731
    
    
    
    299,053Cash and cash equivalents, end of period
    
    $
    120,890
    
    
    $
    276,763
    
    
    $
    120,890
    
    
    $
    276,763Supplementary cash flow information:Interest paid
    
    $
    32
    
    
    $
    135
    
    
    $
    2,620
    
    
    $
    2,888Income taxes paid
    
    
    1
    
    
    
    
    
    
    
    24
    
    
    
    
 3




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##### 



QLT Inc.
 
 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
 (Unaudited)
 AccumulatedAdditional
    
    Other
    
    
    
    
    
    
    
    
    
    TotalCommon Shares
    
    Paid-in
    
    Comprehensive
    
    Accumulated
    
    Comprehensive
    
    ShareholdersShares
    
    Amount
    
    Capital
    
    Income (Loss)
    
    Deficit
    
    Income (Loss)
    
    Equity(All amounts except share and per share information are expressed in thousands of U.S. dollars)Balance at December 31,
2006
    
    
    75,188,980
    
    
    $
    708,206
    
    
    $
    114,724
    
    
    $
    83,535
    
    
    $
    (603,251
    )
    
    
    
    
    
    $
    303,214Adjustment for the
adoption of FASB
Interpretation No. 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,207
    )
    
    
    
    
    
    
    (1,207
    )Exercise of stock
options at prices
ranging from CAD $7.79
to CAD $9.84 per share
and U.S. $2.89 - U.S.
$9.29 per share
    
    
    181,348
    
    
    
    2,597
    
    
    
    (1,344
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,253Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    3,696
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,696Common share repurchase
    
    
    (750,000
    )
    
    
    (8,582
    )
    
    
    2,703
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,879
    )Other comprehensive loss:Cumulative translation
adjustment from
application of U.S.
dollar reporting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,728
    
    
    
    
    
    
    $
    28,728
    
    
    
    28,728Unrealized gain on
available for sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15
    
    
    
    15Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109,997
    )
    
    
    (109,997
    )
    
    
    (109,997
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (81,254
    )
    
    
    Balance at December 31,
2007
    
    
    74,620,328
    
    
    $
    702,221
    
    
    $
    119,779
    
    
    $
    112,278
    
    
    $
    (714,455
    )
    
    
    
    
    
    $
    219,823Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,355
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,355Other comprehensive loss:Cumulative translation
adjustment from
application of U.S.
dollar reporting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,268
    )
    
    
    
    
    
    $
    (2,268
    )
    
    
    (2,268
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,471
    )
    
    
    (10,471
    )
    
    
    (10,471
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,739
    )
    
    
    Balance at March 31, 2008
    
    
    74,620,328
    
    
    $
    702,221
    
    
    $
    121,134
    
    
    $
    110,010
    
    
    $
    (724,926
    )
    
    
    
    
    
    $
    208,439Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    755
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    755Other comprehensive loss:Cumulative translation
adjustment from
application of U.S.
dollar reporting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    392
    
    
    
    
    
    
    $
    392
    
    
    
    392Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,438
    )
    
    
    (7,438
    )
    
    
    (7,438
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,046
    )
    
    
    Balance at June 30, 2008
    
    
    74,620,328
    
    
    $
    702,221
    
    
    $
    121,889
    
    
    $
    110,402
    (1)
    
    $
    (732,364
    )
    
    
    
    
    
    $
    202,148
 
 (1)
    
    At June 30, 2008 our accumulated other comprehensive income is entirely related to cumulative
translation adjustments from the application of U.S. dollar reporting.  4




---



##### 



NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business
 ® ® ®
 Basis of Presentation
  ®
  Principles of Consolidation
  Use of Estimates
  Reporting Currency and Foreign Currency Translation
  5




---



##### 



Segmented Information
  Inventories
  Long-lived Assets
  Accounting for the Impairment or Disposal of Long-lived
Assets.
 Goodwill Impairment
 Goodwill and Other
Intangibles
 Revenue Recognition
 Net Product Revenues
   6




---



##### 



Net Royalties
   Assets Held for Sale and Discontinued Operations
  Accounting for the Impairment or Disposal of
Long-Lived Assets
 Contingencies
  Net Income Per Common Share
   7




---



##### 



(In thousands of U.S. dollars, except shareand per share data)
    
    Three months ended
    
    Six months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Numerator:Loss from continuing operations
    
    $
    (6,871
    )
    
    $
    (70,794
    )
    
    $
    (19,422
    )
    
    $
    (67,302
    )(Loss) Income from discontinued
operations, net of income taxes
    
    
    (567
    )
    
    
    2,127
    
    
    
    1,513
    
    
    
    3,500Net loss
    
    $
    (7,438
    )
    
    $
    (68,667
    )
    
    $
    (17,909
    )
    
    $
    (63,802
    )Effect of dilutive securities:Convertible senior notes -
interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted loss
    
    $
    (7,438
    )
    
    $
    (68,677
    )
    
    $
    (17,909
    )
    
    $
    (63,802
    )Denominator: (In thousands)Weighted average common shares
outstanding
    
    
    74,620
    
    
    
    74,982
    
    
    
    74,620
    
    
    
    75,195Effect of dilutive securities:Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Convertible senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted potential common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted weighted average common
shares outstanding
    
    
    74,620
    
    
    
    74,982
    
    
    
    74,620
    
    
    
    75,195Basic net loss per common shareContinuing operations
    
    $
    (0.09
    )
    
    $
    (0.94
    )
    
    $
    (0.26
    )
    
    $
    (0.90
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    0.02
    
    
    
    0.05Net loss
    
    $
    (0.10
    )
    
    $
    (0.92
    )
    
    $
    (0.24
    )
    
    $
    (0.85
    )Diluted net loss per common shareContinuing operations
    
    $
    (0.09
    )
    
    $
    (0.94
    )
    
    $
    (0.26
    )
    
    $
    (0.90
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    0.02
    
    
    
    0.05Net loss
    
    $
    (0.10
    )
    
    $
    (0.92
    )
    
    $
    (0.24
    )
    
    $
    (0.85
    )
  Fair Value of Financial Assets and Liabilities
  Recently Issued Accounting Standards
 Fair Value Measurements Effective Date of FASB Statement No. 157,
 8




---



##### 



The Fair Value Option for Financial Assets and
Financial Liabilities  including an amendment of FASB Statement No. 115
 ,
Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research
and Development Activities.
 Accounting for Collaborative
Arrangement Related to the Development and Commercialization of Intellectual Property.
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of Accounting Research Bulletin No. 51
 Accounting for Derivative Instruments and Hedging
Activities
  9




---



##### 



2. INVENTORIES
 (In thousands of U.S. dollars)
    
    June 30, 2008
    
    December 31, 2007Raw materials and supplies
    
    $
    7,454
    
    
    $
    12,653Work-in-process
    
    
    31,675
    
    
    
    33,819Finished goods
    
    
    1,108
    
    
    
    67Provision for excess inventory
    
    
    (2,952
    )
    
    
    (3,020
    )Provision for non-completion of product inventory
    
    
    (4,306
    )
    
    
    (4,613
    )$
    32,979
    
    
    $
    38,906Less: Long-term inventory, net of provisions
    
    
    (21,525
    )
    
    
    (20,395
    )$
    11,454
    
    
    $
    18,511
    3. OTHER CURRENT ASSETS
 (In thousands of U.S. dollars)
    
    June 30, 2008
    
    December 31, 2007Inventory in transit held by Novartis
    
    $
    7,478
    
    
    $
    7,995Foreign exchange contracts
    
    
    3,006
    
    
    
    1,236Deferred financing expenses
    
    
    169
    
    
    
    863Prepaid expenses and other
    
    
    2,335
    
    
    
    1,836$
    12,988
    
    
    $
    11,930
   10




---



##### 



4. LONG-TERM INVENTORIES AND OTHER ASSETS
 (In thousands of U.S. dollars)
    
    June 30, 2008
    
    
    December 31, 2007Inventory, net of provisions
    
    $
    21,525
    
    
    $
    20,395Other
    
    
    158
    
    
    
    161$
    21,683
    
    
    $
    20,556
 5. ACCRUED LIABILITIES
 (In thousands of U.S. dollars)
    
    June 30, 2008
    
    
    December 31, 2007Royalties
    
    $
    923
    
    
    $
    1,033Compensation
    
    
    3,447
    
    
    
    5,263Interest
    
    
    1,804
    
    
    
    1,560Litigation charge  MEEI judgment and
ongoing related accruals (Note 13)
    
    
    120,141
    
    
    
    115,027Provision for Eligard sales pricing rebate
    
    
    3,460
    
    
    
    Other
    
    
    232
    
    
    
    411$
    130,007
    
    
    $
    123,294
 6. CONVERTIBLE DEBT
  7. FOREIGN EXCHANGE FACILITIES
   8. RESTRUCTURING CHARGE
  11




---



##### 



EmployeeTermination
    
    Asset(In thousands of U. S. dollars)
    
    costs(1)
    
    Write-downs
    
    TotalBalance at December 31, 2007(2)
    
    $
    153
    
    
    $
    
    
    
    $
    153Restructuring charge
    
    
    5,948
    
    
    
    1,486
    
    
    
    7,434Foreign exchange
    
    
    (24
    )
    
    
    
    
    
    
    (24
    )Cash payments
    
    
    (4,240
    )
    
    
    
    
    
    
    (4,240
    )Non-cash portion(3)
    
    
    (537
    )
    
    
    (1,486
    )
    
    
    (2,023
    )Balance at March 31, 2008
    
    $
    1,300
    
    
    $
    
    
    
    $
    1,300Restructuring charge
    
    
    1,603
    
    
    
    53
    
    
    
    1,656Restructuring charge in discontinued operations
    
    
    216
    
    
    
    
    
    
    
    216Foreign exchange
    
    
    6
    
    
    
    
    
    
    
    6Cash payments
    
    
    (1,663
    )
    
    
    
    
    
    
    (1,663
    )Non-cash portion(3)
    
    
    17
    
    
    
    (53
    )
    
    
    (36
    )Balance at June 30, 2008
    
    $
    1,479
    
    
    $
    
    
    
    $
    1,479
 
 (1)
    
    Costs include severance, termination benefits, and outplacement support.(2)
    
    Opening balance represents remaining balance from previous restructurings.(3)
    
    Non-cash portion of employee termination costs relates to stock-based compensation. 9. SHARE CAPITAL
     Three months ended
    
    Six months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Annualized volatility
    
    
    42.1
    %
    
    
    37.0
    %
    
    
    42.1
    %
    
    
    37.0
    %Risk-free interest rate
    
    
    2.9
    %
    
    
    4.4
    %
    
    
    2.9
    %
    
    
    4.4
    %Expected life (years)
    
    
    3.9
    
    
    
    3.3
    
    
    
    3.9
    
    
    
    3.3
  12




---



##### 



(In thousands of U.S. dollar)
    
    Three months ended
    
    Six months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Cost of sales
    
    $
    4
    
    
    $
    
    
    
    $
    11
    
    
    $
    Research and development
    
    
    248
    
    
    
    432
    
    
    
    576
    
    
    
    902Selling, general and administrative
    
    
    377
    
    
    
    236
    
    
    
    808
    
    
    
    501Restructuring charge
    
    
    (17
    )
    
    
    
    
    
    
    520
    
    
    
    Discontinued operations
    
    
    66
    
    
    
    64
    
    
    
    126
    
    
    
    218Stock-based compensation expense
before income taxes
    
    
    678
    
    
    
    732
    
    
    
    2,041
    
    
    
    1,621Related income tax benefits
    
    
    (22
    )
    
    
    (23
    )
    
    
    (48
    )
    
    
    (81
    )Stock-based compensation, net of
income taxes
    
    $
    656
    
    
    $
    709
    
    
    $
    1,993
    
    
    $
    1,540
  10. NET PRODUCT REVENUE
  For the three months ended
    
    For the six months endedJune 30,
    
    June 30,(In thousands of U.S. dollars)
    
    2008
    
    2007
    
    2008
    
    2007Visudyne® sales by Novartis
    
    $
    40,677
    
    
    $
    59,346
    
    
    $
    77,156
    
    
    $
    120,581Less: Marketing and distribution
costs
    
    
    (17,900
    )
    
    
    (26,449
    )
    
    
    (35,932
    )
    
    
    (53,282
    )Less: Inventory costs
    
    
    (3,073
    )
    
    
    (2,870
    )
    
    
    (5,062
    )
    
    
    (5,956
    )Less: Royalties to third parties
    
    
    (869
    )
    
    
    (1,256
    )
    
    
    (1,647
    )
    
    
    (2,539
    )$
    18,835
    
    
    $
    28,771
    
    
    $
    34,515
    
    
    $
    58,804QLTs 50% share of Novartis net
proceeds from Visudyne® sales
    
    $
    9,418
    
    
    $
    14,386
    
    
    $
    17,257
    
    
    $
    29,402Add: Advance on inventory costs from
Novartis
    
    
    2,398
    
    
    
    2,092
    
    
    
    3,752
    
    
    
    4,174Add: Royalties reimbursed to QLT
    
    
    879
    
    
    
    1,258
    
    
    
    1,676
    
    
    
    2,542Add: Other costs reimbursed to QLT
    
    
    990
    
    
    
    1,263
    
    
    
    2,908
    
    
    
    3,446Revenue from Visudyne® sales
    
    $
    13,685
    
    
    $
    18,999
    
    
    $
    25,593
    
    
    $
    39,564
   13




---



##### 



11. DISCONTINUED OPERATIONS
   June 30,
    
    December 31,(In thousands of U.S. dollars)
    
    2008
    
    2007Building
    
    $
    29,073
    
    
    $
    29,735Land
    
    
    7,026
    
    
    
    7,187Equipment
    
    
    3,577
    
    
    
    4,185$
    39,676
    
    
    $
    41,107
  For the three months ended
    
    For the six months endedJune 30,
    
    June 30,(In thousands of U.S. dollars)
    
    2008
    
    2007
    
    2008
    
    2007Net revenue
    
    $
    16,935
    
    
    $
    16,659
    
    
    $
    31,721
    
    
    $
    28,797Pre-tax (loss) income
    
    
    (928
    )
    
    
    3,607
    
    
    
    2,219
    
    
    
    5,827Income tax recovery (expense)
    
    
    361
    
    
    
    (1,480
    )
    
    
    (706
    )
    
    
    (2,327
    )Net (loss) income from
discontinued operations
    
    $
    (567
    )
    
    $
    2,127
    
    
    $
    1,513
    
    
    $
    3,500
  12. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
   14




---



##### 



Fair Value Measurements at June 30, 2008Carrying ValueJune 30, 2008
    
    Level 1
    
    Level 2
    
    Level 3Assets:Cash and cash equivalents
    
    $
    120,890
    
    
    $
    25,473
    
    
    $
    95,417
    
    
    $
    Forward currency contracts
    
    
    3,006
    
    
    
    
    
    
    
    3,006
    
    
    
    Total
    
    $
    123,896
    
    
    $
    25,473
    
    
    $
    98,423
    
    
    $
    Liabilities:Convertible senior notes
    
    $
    172,500
    
    
    $
    
    
    
    $
    170,344
    
    
    $
    
 .
 Maturity Period
    
    
    Quantity (millions)

    
    Average PriceCanadian / U.S. dollar
forward contracts to buy USD
    

    2008
    
    
    USD 76.0
    
    0.98155 per USD
   13. CONTINGENCIES
   15




---



##### 



(a) Eligard Patent Litigation
       (b) Patent Litigation with MEEI; MGH Matters
 ®
    16




---



##### 



(c) Litigation with Biolitec, Inc.
  17




---



##### 



14.
SUBSEQUENT EVENTS
   18




---



##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
 ® ® ®
  ®
  
    
    the sale of QLT USA, Inc. (QLT USA), our wholly-owned U.S. subsidiary, or its assets,
which at the time included: the Eligard product line for prostate cancer, the Atrigel drug
delivery system and Aczone® (a dermatology product for the treatment of acne vulgaris);
 
    
    the sale of the land and building associated with and surrounding our corporate head-office
in Vancouver; and
 
    
    the reduction in headcount of approximately 115 employees with planned reductions in the
future as assets are divested.
    19




---



##### 



RECENT DEVELOPMENTS
  RESULTS OF OPERATIONS
  Revenues
 Net Product Revenue
  For the three months
    
    For the six months endedended June 30,
    
    June 30,(In thousands of U.S. dollars)
    
    2008
    
    2007
    
    2008
    
    2007Visudyne® sales by Novartis
    
    $
    40,677
    
    
    $
    59,346
    
    
    $
    77,156
    
    
    $
    120,581Less: Marketing and distribution
costs(1)
    
    
    (17,900
    )
    
    
    (26,449
    )
    
    
    (35,932
    )
    
    
    (53,282
    )Less: Inventory costs(2)
    
    
    (3,073
    )
    
    
    (2,870
    )
    
    
    (5,062
    )
    
    
    (5,956
    )Less: Royalties to third parties(3)
    
    
    (869
    )
    
    
    (1,256
    )
    
    
    (1,647
    )
    
    
    (2,539
    )$
    18,835
    
    
    $
    28,771
    
    
    $
    34,515
    
    
    $
    58,804QLTs 50% share of Novartis net proceeds from
Visudyne® sales
    
    $
    9,418
    
    
    $
    14,386
    
    
    $
    17,257
    
    
    $
    29,402Add: Advance on inventory costs from
Novartis(4)
    
    
    2,398
    
    
    
    2,092
    
    
    
    3,752
    
    
    
    4,174Add: Royalties reimbursed to QLT(5)
    
    
    879
    
    
    
    1,258
    
    
    
    1,676
    
    
    
    2,542Add: Other costs reimbursed to QLT(6)
    
    
    990
    
    
    
    1,263
    
    
    
    2,908
    
    
    
    3,446Revenue from Visudyne® sales
    
    $
    13,685
    
    
    $
    18,999
    
    
    $
    25,593
    
    
    $
    39,564
 
 (1)
    
    Less: Marketing and distribution costsThis represents Novartis cost of marketing, promoting, and distributing Visudyne, as well as
certain specified costs incurred and paid for by QLT, determined in accordance with the PDT
Product Development, Manufacturing, and Distribution Agreement between QLT and Novartis. The
costs incurred by Novartis are related to its sales force, advertising expenses, marketing,
and certain administrative overhead costs. The costs incurred by us include marketing
support, legal and administrative expenses that we incur in support of Visudyne sales. 20




---



##### 



(2)
    
    Less: Inventory costsThis represents Novartis cost of goods sold related to Visudyne. It includes the cost of
bulk Visudyne we ship to Novartis and our provisions for excess or obsolete inventory, plus
Novartis packaging and labelling costs, freight, custom duties and inventory obsolescence.(3)
    
    Less: Royalties to third partiesThis represents the royalty expenses we incur and charge to Novartis pursuant to the PDT
Product Development, Manufacturing and Distribution Agreement between QLT and Novartis. The
amounts are calculated by us based on specified royalty rates from existing license agreements
with our licensors of certain Visudyne patent rights.(4)
    
    Add: Advance on inventory costs from NovartisThis represents the amount that Novartis advances to us for shipments of bulk Visudyne and
reimbursement for inventory obsolescence. The price of the Visudyne shipments is determined
based on the existing agreement between QLT and Novartis and represents our actual costs of
producing Visudyne.(5)
    
    Add: Royalties reimbursed to QLTThis is related to item (3) above and represents the amounts we receive from Novartis in
reimbursement for the actual royalty expenses we owe to third party licensors.(6)
    
    Add: Other costs reimbursed to QLTThis represents reimbursement by Novartis to us of our portion of the marketing and
distribution costs described in (1) above. Our marketing and distribution costs include
marketing support, legal and administrative expenses that we incur in support of Visudyne
sales.   Costs and Expenses
 Cost of Sales
  Accrued Cost of Sales re: MEEI
  21




---



##### 



Research and Development
   
    
    changes in the regulatory environment,
    
    introduction of competing technologies and treatments,
    
    unexpected safety issues,
    
    patent application, maintenance and enforcement issues,
    
    changes in the commercial marketplace,
    
    difficulties in enrolling patients,
    
    delays in study progression, including regulatory delays,
    
    inability to develop cost effective manufacturing methods that comply with regulatory
standards,
    
    uncertainties related to collaborative arrangements,
    
    environmental risks, and
    
    other factors discussed under Item 1A, Risk Factors.
  For the three months
    
    For the six monthsended June 30,
    
    ended June 30,(In thousands of U.S. dollars)
    
    2008
    
    2007
    
    2008
    
    2007Ocular
    
    $
    7,093
    
    
    $
    6,067
    
    
    $
    13,802
    
    
    $
    11,736Dermatology
    
    
    966
    
    
    
    2,222
    
    
    
    2,240
    
    
    
    4,749Other
    
    
    55
    
    
    
    438
    
    
    
    120
    
    
    
    670$
    8,114
    
    
    $
    8,727
    
    
    $
    16,162
    
    
    $
    17,155
 Selling, General and Administrative Expenses
  Litigation
  Restructuring Charge
  22




---



##### 



Investment and Other Income (Expense)
 Net Foreign Exchange (Losses) Gains
   For the three months ended
    
    For the six months endedJune 30,
    
    June 30,(In thousands of U.S. dollars)
    
    2008
    
    2007
    
    2008
    
    2007Cash and cash equivalents and short-term
investments
    
    $
    (370
    )
    
    $
    (13,212
    )
    
    $
    4,777
    
    
    $
    (14,764
    )U.S. dollar long-term debt
    
    
    649
    
    
    
    13,933
    
    
    
    (3,936
    )
    
    
    15,685Foreign exchange contracts
    
    
    (231
    )
    
    
    1,575
    
    
    
    1,829
    
    
    
    1,989Foreign currency receivables and payables
    
    
    (65
    )
    
    
    (2,744
    )
    
    
    (2,433
    )
    
    
    (3,333
    )Net foreign exchange (losses) gains
    
    $
    (17
    )
    
    $
    (448
    )
    
    $
    237
    
    
    $
    (423
    )
 Interest Income
  Interest Expense
  (Loss) income from Discontinued Operations
  23




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
    
    
    A positive cash flow variance from lower operating and inventory related expenditures of
$13.6 million;
    
    A positive cash flow variance from lower purchase of trading securities of $5.9 million;
    
    A negative cash flow variance from lower interest income and higher foreign exchange
losses of $3.9 million; and
    
    A negative cash flow variance from lower cash receipts from product sales, royalties and
milestones of $14.9 million.
    
    
    A positive cash flow variance from lower litigation payment as 2007 included the TAP
litigation payment of $112.5 million;
    
    A positive cash flow variance from lower operating and inventory related expenditures of
$16.0 million;
    
    A negative cash flow variance from higher restructuring costs of $3.6 million;
    
    A negative cash flow variance from lower investment and other income of $3.7 million;
    
    A negative cash flow variance from lower cash receipts from product sales, royalties and
milestones of $25.7 million; and
    
    A negative cash flow variance from lower cash receipts from the sale of trading
securities of $52.4 million.
  24




---



##### 



Interest and Foreign Exchange Rates
     Maturity Period
    
    Quantity (millions)
    
    Average PriceCanadian / U.S. dollar
forward contracts to buy USD
    
    
    2008
    
    
    USD 76.0
    
    0.98155 per USD
 
 Contractual Obligations
   Off-Balance Sheet Arrangements
   General
 ®
 25




---



##### 



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  Recently Issued and Recently Adopted Accounting Standards
  SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  26




---



##### 




    
    anticipated levels of future sales of our products;
    
    our expectations regarding European Visudyne label changes, reimbursement and sales;
    
    anticipated future operating results;
    
    our expectations as to the outcome of the appeal of the judgment in the MEEI litigation
against us and the effect of an adverse judgment on the MGH license agreement;
    
    our expectations as to the outcome of the German Eligard patent litigation commenced
against QLT USA, Inc.s German licensees by Takeda Chemical Industries Ltd. and Takeda
Pharma GmbH;
    
    our dependency on contract manufacturers and suppliers to manufacture our products at
competitive prices and in accordance with FDA and other local and foreign regulatory
requirements as well as our product specifications;
    
    our expectations regarding future tax liability as a result of changes in estimates of
prior years tax items and results of tax audits by tax authorities;
    
    our expectations regarding our timing and ability to sell certain core and non-core
assets at prices acceptable to us or at all;
    
    our expectations regarding the amount of annual operating savings we could derive as a
result of our corporate restructure;
    
    the anticipated timing, cost and progress of the development of our technology
(including our punctal plug delivery system and our photodynamic therapy dermatology
technology) and clinical trials;
    
    the anticipated timing of regulatory submissions for our products;
    
    the anticipated timing for receipt of, and our ability to maintain, regulatory approvals
for our products; and
    
    the anticipated timing for receipt of, and our ability to maintain, reimbursement
approvals for our products in development.
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  27




---



##### 



ITEM 4. CONTROLS AND PROCEDURES
       28




---



##### 



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  We may not be able to negotiate the sale of defined assets, including QLT USA or its assets, on
terms acceptable to us or at all, and our Board of Directors may determine during and as a result
of the process that we should not continue with the present strategy.
  Even if we are able to negotiate and enter into definitive agreements for the sale of defined
assets, including QLT USA or its assets, we may not be able to consummate the transactions
contemplated by the definitive agreements.
  The process of pursuing multiple strategic transactions and initiatives simultaneously diverts the
attention of our management and employees, increases our professional services expenses and may
disrupt our operations.
   29




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We are undertaking significant strategic and organizational changes. Failure to manage disruption
to our business or the loss of key personnel could have a material adverse effect on our business.
   We face intense competition, which may limit our commercial opportunities and our ability to
generate revenues.
    If we do not sustain profitability, shareholders may lose their investment.
  If there is an adverse
outcome in our litigation or other legal actions, our business may
be harmed.
 30




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We derive a significant portion of our revenue from sales of Visudyne and Eligard. If our planned
sale of QLT USA and/or the Eligard product line is completed, Visudyne will be our primary source
of revenue. Accordingly, any decrease in sales of Visudyne would harm our business.
  
    
    failure of ongoing clinical trials,
    
    product manufacturing or supply interruptions,
    
    the development of competitive products by other companies,
    
    marketing or pricing actions by our competitors or regulatory authorities,
    
    changes in the reimbursement or substitution policies of third-party payors,
    
    changes in or withdrawal of regulatory approval for or the labeling of our products,
    
    the outcome of disputes relating to patents,
    
    disputes with our licensees, and
    
    changes in laws that adversely affect our ability to market our products.
 Our commercial success depends in part on the success of third parties to market our products.
  31




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##### 



Our revenues depend on payment and reimbursement from third party payers and pricing, and if third
party payers reduce or refuse payment, or reimbursement or if prices are reduced, the use and sales
of our products will suffer, we may not increase our market share, and our revenues and
profitability will suffer.
   ®
 32




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##### 



If we do not successfully develop and launch replacements for our products that lose patent
protection, our revenues may decline and we may not be able to compete effectively.
  Our products in clinical trials may not achieve favorable results, may fail to achieve or maintain
regulatory approvals or market acceptance, or may encounter difficulties with proprietary rights or
manufacturing, any of which could adversely affect our prospects for future revenue growth.
   If we do not achieve our projected development goals in the time frames we announce and expect, the
commercialization of our products may be delayed and, as a result, our business could be materially
harmed.
  Our commercial success depends in part on our ability and the ability of our licensors to obtain
and maintain patent protection on technologies, to preserve trade secrets, and to operate without
infringing the proprietary rights of others.
  33




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##### 



The incidence of wet AMD might be reduced if therapies currently in development or currently
available prevent or reduce the risk of development of wet AMD which could adversely impact the
sales of Visudyne.
  We rely on third-party manufacturers, and difficulties with such third parties could delay future
revenues from our products sales.
     34




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If our contract manufacturers fail to comply with FDA and other foreign regulatory requirements or
with our product specifications, we may be unable to meet demand for our products and may lose
potential revenue and be subject to claims from our licensees.
    In the field of Photodynamic Therapy, or PDT, we are dependent on the success and continued supply
of third-party medical device companies with complementary light source and light delivery devices
by third party suppliers.
   35




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##### 



If our supply of Visudyne or Eligard is interrupted, our ability to maintain our inventory levels
could suffer and our future revenues may be reduced.
  Inherent uncertainties associated with forecasting product demand and future product launch and
other factors could result in our inventory becoming obsolete or reduced, possibly materially, in
market value.
  If the facilities storing our inventory are damaged or destroyed, our ability to meet market demand
for our products could be significantly affected.
  The future growth of our business may depend in part on our ability to successfully identify,
acquire on favorable terms, and assimilate technologies, products or businesses.
  
    
    difficulties in and costs associated with assimilating the operations, technologies,
personnel and products of an acquired business,
    
    assumption of known or unknown liabilities or other unanticipated events or
circumstances,
    
    the potential disruption to our ongoing business, and
    
    the potential negative impact on our earnings.
  We rely on our employees and consultants to keep our trade secrets confidential.
 36




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Visudyne, Eligard or our other products may exhibit adverse side effects that prevent their
widespread use or that necessitate withdrawal from the market.
  If we fail to comply with ongoing regulatory requirements it will materially harm our business.
     37




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##### 



Our use of hazardous materials exposes us to the risk of environmental liabilities, and we may
incur substantial additional costs to comply with environmental laws.
  Our provision for income taxes and effective income tax rate may vary significantly and may
adversely affect our results of operations and cash resources.
   We may need additional capital in the future, and our prospects for obtaining it are uncertain
  38




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##### 



We
plan to redeem our $172.5 million of convertible debt on
September 15, 2008, which will reduce our liquidity.
  Our operating results may fluctuate, which may cause our financial results to be below expectations
and the market price of our securities to decline.
  
    
    lower than expected revenues from sales of Visudyne or Eligard,
    
    changes in pricing, pricing strategies or reimbursement levels for Visudyne or Eligard,
    
    seasonal fluctuations, particularly in the third quarter due to decreased demand for
Visudyne in the summer months,
    
    high levels of marketing expenses for Visudyne or the launch of additional competitors
to Visudyne or Eligard,
    
    fluctuations in currency exchange rates,
    
    unfavorable outcome of the German Eligard patent litigation commenced against QLT USA,
Inc.s German licensees by Takeda Chemical Industries Ltd. and Takeda Pharma Gmbh,
    
    unfavorable outcome in the appeal of the judgment of the District Court in the
litigation commenced by MEEI against us,
    
    higher than expected operating expenses as a result of increased costs associated with
the development or commercialization of Visudyne, Eligard, and our other products and
candidates,
    
    increased operating expenses as a result of product, technology or other acquisitions or
business combinations, and
    
    divestment of Eligard and other revenue producing assets.
  The market price of our common shares is extremely volatile and the value of your investment could
decline.
  39




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##### 




    
    announcements of technological innovations or new products by us or our competitors,
    
    developments or outcome of litigation, including litigation regarding proprietary and
patent rights,
    
    regulatory developments or delays concerning our products,
    
    quarterly variations in our financial results,
    
    business and product market cycles,
    
    fluctuations in customer requirements,
    
    the availability and utilization of manufacturing capacity and our ability to continue
to supply Visudyne, Eligard and our other products,
    
    the timing and amounts of royalties paid to us by third parties, and
    
    issues with the safety or effectiveness of our products.
  Various provisions of our charter may impede a change in control that is beneficial to our
shareholders.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   Issuer Purchases of Equity SecuritiesTotal Number of
    
    Maximum NumberTotal
    
    
    
    
    
    Shares Purchased as
    
    of Shares that MayNumber of
    
    Average
    
    Part of Publicly
    
    Yet Be PurchasedShares
    
    Price Paid
    
    Announced Plans or
    
    Under the Plans orPeriod
    
    Purchased
    
    per Share
    
    Programs
    
    ProgramsApril 1, 2008 throughApril 30,
2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,961,993 sharesMay 1, 2008 throughMay 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,961,993 sharesJune 1, 2008 throughJune 30,
2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 40




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##### 



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Directors
    
    Shares For
    
    Shares Withheld
    
    Abstentions and Broker Non-VotesRobert L. Butchofsky
    
    
    38,444,074
    
    
    
    330,160
    
    
    
    2Bruce L.A. Carter
    
    
    38,132,657
    
    
    
    641,577
    
    
    
    2C. Boyd Clarke
    
    
    38,469,075
    
    
    
    305,159
    
    
    
    2Peter A. Crossgrove
    
    
    38,227,574
    
    
    
    546,660
    
    
    
    2Ian J. Massey
    
    
    38,479,668
    
    
    
    294,566
    
    
    
    2L. Jack Wood
    
    
    38,480,930
    
    
    
    147,852
    
    
    
    2
  Shares For
    
    Shares Withheld
    
    Abstentions and Broker Non-Votes38,626,383
    
    147,852
    
    1
 
 ITEM 6. EXHIBITS
  41




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##### 



SIGNATURES
  QLT Inc.
(Registrant)Date: August 8, 2008
    By:
    /s/ Robert L. ButchofskyRobert L. ButchofskyPresident and  Chief Executive Officer
(Principal Executive Officer)Date: August 8, 2008
    By:
    /s/ Cameron R. NelsonCameron R. NelsonVice President, Finance and Chief Financial Officer
(Principal Financial and Accounting Officer) 42




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##### 



EXHIBIT INDEX
 Exhibit
    
    Description
    
    Location10.45
    
    Sale and Purchase Agreement dated May 15, 2008 by and among QLT Inc., 560677 B.C. Ltd.,
630321 B.C. Ltd. and Discovery Parks Holdings Inc. as amended by each of:
an Amending Agreement dated July 4, 2008 by and among QLT Inc., 560677 B.C. Ltd., 630321 B.C. Ltd.
and Discovery Parks Holdings Inc., an Amended and Restated Sale and Purchase Agreement dated July 11,
2008 by and among QLT Inc., 560677 B.C. Ltd., 630321 B.C. Ltd. and Discovery Parks Holdings Inc.,
a Third Amending Agreement dated July 16, 2008 by and among QLT Inc., 560677 B.C. Ltd., 630321 B.C.
Ltd. and Discovery Parks Holdings Inc., a Fourth Amending Agreement dated July 18, 2008 by and among
QLT Inc., 560677 B.C. Ltd., 630321 B.C. Ltd. and Discovery Parks Holdings Inc., a Fifth Amending
Agreement dated July 23, 2008 by and among QLT Inc., 560677 B.C. Ltd., 630321 B.C. Ltd. and Discovery
Parks Holdings Inc., a Sixth Amending Agreement dated July 25, 2008 by and among QLT Inc., 560677 B.C.
Ltd., 630321 B.C. Ltd. and Discovery Parks Holdings Inc., a Second Amended and Restated Sale and Purchase
Agreement dated July 30, 2008 by and among QLT Inc., 560677 B.C. Ltd., 630321 B.C. Ltd. and Discovery
Parks Holdings Inc. and an Eighth Amending Agreement dated August 7, 2008 by and among QLT Inc., 560677
B.C. Ltd., 630321 B.C. Ltd. and Discovery Parks Holdings Ltd.
    
    Filed herewith.31.1
    
    Rule 13a-14 (a) Certification of the Chief Executive Officer.
    
    Filed herewith.31.2
    
    Rule 13a-14(a) Certification of the Chief Financial Officer.
    
    Filed herewith.32.1
    
    Section 1350 Certification of the Chief Executive Officer.
    
    Filed herewith.32.2
    
    Section 1350 Certification of the Chief Financial Officer.
    
    Filed herewith.
 43