40-F

United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 40-F

(Check One:)

o REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

þ ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004 Commission File Number: 000-29338

CARDIOME PHARMA CORP.

(Exact name of Registrant as specified in its charter)

CANADA

(Province or other jurisdiction of incorporation or organization)

6th Floor, 6190 Agronomy Road
Vancouver, British Columbia, Canada V6T 1Z3
telephone number : (604) 677-6905

(Address and telephone number of Registrant’s principal executive offices)

PTSGE Corp.
925 Fourth Avenue, Suite 2900
Seattle, Washington 98104
telephone number : (206) 623-7580

(Name, address (including zip code) and telephone number
(including area code) of agent for service in the United States)

2834	Not Applicable
(Primary Standard Industrial	(I.R.S. Employer Identification
Classification Code (if applicable))	Number (if applicable))

Securities registered or to be registered pursuant to Section 12(b) of the Act. None.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Title	Name of Each Exchange on Which Quoted
Common Shares	Nasdaq National Market
	Toronto Stock Exchange

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None.

For annual reports, indicate by check mark the information filed with this Form:

þ Annual information form                     þ Audited annual financial statements

     Indicate number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

40,592,834 common shares as at December 31, 2004

     Indicate by check mark whether the Registrant by filing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the file number assigned to the Registrant in connection with such Rule.

Yes o                    No þ

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes þ                    No o

TABLE OF CONTENTS

	Page
Principal Documents		3
Disclosure Controls and Procedures		3
Audit Committee Financial Expert		3
Code of Ethics		3
Principal Accountant Fees and Services		4
Pre-Approval Policies		4
Off-Balance Sheet Arrangements		4
Disclosure of Contractual Obligations		5
Audit Committee		5
Undertaking		5
Consent to Service of Process		5

EXHIBITS

Exhibit	Description
1.1	Annual Information Form of the Registrant for the twelve-month period ended December 31, 2004.
1.2	Articles of Incorporation of Cardiome Pharma Corp., as amended.
1.3	Bylaws of Cardiome Pharma Corp.
2	Audited Consolidated Financial Statements of the Registrant for the twelve-month period ended December 31, 2004, including reconciliation to United States generally accepted accounting principles and Auditors’ Report to the Shareholders.
3	Management’s Discussion and Analysis of the Registrant for the twelve-month period ended December 31, 2004.
4.1	Code of Ethics for Senior Officers.
4.2	Material change report dated January 27, 2005 relating to the announcement of the appointment of Dr. Charles Fisher to the position of Chief Medical Officer and Executive Vice President, Clinical and Regulatory Affairs.
4.3	Material change report dated February 4, 2005 relating to the announcement of additional results from the Registrant’s recently completed 416 patient atrial arrhythmia clinical study.
4.4	Material change report dated February 11, 2005 relating to the announcement of results for the investigator-sponsored LaPlata clinical study for Oxypurinol in congestive heart failure patients.
4.5	Material change report dated February 23, 2005 relating to the announcement of a $6 million milestone payment from Fujisawa Healthcare, Inc.
5	Consent of Ernst & Young LLP.
99.1	Certifications of Chief Executive Officer pursuant to Rule 13a-14(a)
99.2	Certifications of Chief Financial Officer pursuant to Rule 13a-14(a)
99.3	Certifications of Chief Executive Officer pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
99.4	Certifications of Chief Financial Officer pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).

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     Except where otherwise indicated, all dollar amounts stated in this Annual Report on Form 40-F are Canadian dollars.

Principal Documents

          The following documents have been filed as part of this Annual Report on Form 40-F:

A.      Annual Information Form

          For our Annual Information Form for the twelve-month period ended December 31, 2004, see Exhibit 1.1 to this Annual Report on Form 40-F.

B.      Audited Annual Financial Statements

          For our Audited Consolidated Financial Statements for the twelve-month period ended December 31, 2004, including the report of our independent registered public accounting firm with respect thereto, see Exhibit 2 to this Annual Report on Form 40-F. For a reconciliation of important differences between Canadian and United States generally accepted accounting principles, see Note 17 of the Notes to the Audited Consolidated Financial Statements.

C.      Management’s Discussion and Analysis

          For Management’s Discussion and Analysis for the twelve-month period ended December 31, 2004, see Exhibit 3 to this Annual Report on Form 40-F.

Disclosure Controls and Procedures

          We have carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 40-F. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC reports. It should be noted that the design of any system of control is based in part on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Audit Committee Financial Expert

          Our Board of Directors has determined that Mr. Kenneth Galbraith is an audit committee financial expert serving on our audit committee (as defined in paragraph 8(b) of General Instruction B to Form 40-F), and that Mr. Galbraith meets the independence requirements of the Nasdaq Stock Market. Mr. Galbraith, a chartered accountant, is currently the President of Gigha Consulting Ltd. For a description of Mr. Galbraith’s relevant experience in financial matters, see his five-year employment history in the section “Directors and Executive Officers” in our Annual Information Form for the year ended December 31, 2004, which is filed as Exhibit 1.1 to this Annual Report on Form 40-F.

Code of Ethics

          Our code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions is disclosed in our Code of Business Conduct, which is applicable to all of our employees. The portion of our Code of Business Conduct which applies to our senior officers is filed as Exhibit 4.1 to this Annual Report on Form 40-F. In the event that we:

          (i) amend any provision of our Code of Business Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions that relates to any element of the code of ethics definition enumerated in paragraph (9)(b) of General Instruction B to Form 40-F, or

          (ii) grant a waiver, including an implicit waiver, from a provision of our Code of Business Conduct to any of our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions that

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relates to any element of the code of ethics definition as enumerated in paragraph (9)(b) of General Instruction B to Form 40-F,

we will disclose in a Form 6-K any amendment to, or waiver of, a provision of our Code of Business Conduct that relates to the items set forth above. Such disclosure will specifically describe the nature of the amendment or waiver, and will, in the case of a waiver, name the person to whom the waiver was granted.

Principal Accountant Fees and Services

          The following table provides information about the fees billed to us for professional services rendered by Ernst & Young LLP, our principal accountant, during fiscal 2004 and 2003:

	2004		2003
	(in Canadian Dollars)
Audit fees	$	79,835	$	273,300
Audit-related fees		—		—
Tax fees	$	11,290	$	4,379
All other fees		—		—
Total fees	$	91,125	$	277,679

          Audit Fees. Audit fees consist of fees for the audit of our annual financial statements or services that are normally provided in connection with statutory and regulatory filings or engagements.

          Audit-Related Fees. Audit related fees are fees for assurance and related services related to the performance of the audit or review of the annual financial statements that are not reported under “Audit Fees.” These include M&A due diligence for business acquisitions, audit and accounting consultations regarding business acquisitions, and other attest services not required by statute.

          Tax Fees. Tax fees included tax compliance, tax planning, tax advice and various taxation matters.

          All Other Fees. There were no other services provided by our principal accountant other than audit and tax services.

Pre-Approval Policies

          All audit and non-audit services performed by our auditors for the twelve-month period ended December 31, 2004, and for the thirteen-month period ended December 31, 2003, were pre-approved by our audit committee. It is our policy that all audit and non-audit services performed by our auditors will continue to be pre-approved by our audit committee.

Off-Balance Sheet Arrangements

          We have no off-balance sheet arrangements to report.

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Disclosure of Contractual Obligations

          In the normal course of business we are obligated to make future payments. These obligations represent contracts and other commitments that are known and committed.

			Payment Due by Period
	Total		less than 1 year		1 – 3 years		3 – 5 years		more than 5 years
	(In Canadian Dollars)
Capital Lease Obligations(1)	$	7,061	$	7,061	$	—	$	—		—
Other Long-Term Obligation		225,727		15,848		36,848		44,969		128,062
Operating Lease Obligations		2,998,670		255,944		558,783		682,957		1,500,986
Commitments for Clinical Research Agreements(2)		6,522,039		6,522,039		—		—		—
Commitments under License Agreement(3)		601,000		48,080		192,320		240,400		120,200
										per annum
Total	$	10,354,497	$	6,848,972	$	787,951	$	968,326	$	1,749,248

(1)	Includes interest portion.
(2)	The total commitment of $6,522,039 reflects $2,063,742 of commitments that are non-cancelable and $4,458,297 of commitments that are cancelable should we decide to discontinue the related clinical research work.
(3)	As of December 31, 2004, pursuant to four license and service agreements, we have various commitments as described in Note 12(d) of the Notes to the Consolidated Financial Statements, which are filed as Exhibit 2 to this Annual Report on Form 40-F. The majority of these commitments are contingent upon achievement of certain milestones which may or may not actually occur. The amounts disclosed in this table represent minimum annual royalties described in Note 12(d)(iii), converted in Canadian Dollars at the year-end exchange rate of 1.2020.

Audit Committee

          We have established an audit committee in accordance with section 15 U.S.C. 78c(a)(58)(A). Each of the following directors serves on the audit committee: Kenneth Galbraith, Harold Shlevin and Jackie M. Clegg. See the section entitled “Directors and Executive Officers” in our Annual Information Form for the year ended December 31, 2004, which is filed as Exhibit 1.1 to this Annual Report on Form 40-F.

Undertaking

          We undertake to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when required to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an Annual Report on Form 40-F arises; or transactions in said securities.

Consent to Service of Process

          We have previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this Annual Report on Form 40-F arises. Any change to the name and address of the agent for service for service of process shall be communicated promptly to the Securities and Exchange Commission by an amendment to the Form F-X.

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SIGNATURES

          Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F, and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereto duly authorized.

CARDIOME PHARMA CORP.

By:	/s/ ROBERT W. RIEDER
Name:	Robert W. Rieder
Title:	President and Chief Executive Officer
Date:	March 1, 2005

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EXHIBITS

Exhibit	Description
1.1	Annual Information Form of the Registrant for the twelve-month period ended December 31, 2004.
1.2	Articles of Incorporation of Cardiome Pharma Corp., as amended.
1.3	Bylaws of Cardiome Pharma Corp.
2	Audited Consolidated Financial Statements of the Registrant for the twelve-month period ended December 31, 2004, including reconciliation to United States generally accepted accounting principles and Auditors’ Report to the Shareholders.
3	Management’s Discussion and Analysis of the Registrant for the twelve-month period ended December 31, 2004.
4.1	Code of Ethics for Senior Officers.
4.2	Material change report dated January 27, 2005 relating to the announcement of the appointment of Dr. Charles Fisher to the position of Chief Medical Officer and Executive Vice President, Clinical and Regulatory Affairs.
4.3	Material change report dated February 4, 2005 relating to the announcement of additional results from the Registrant’s recently completed 416 patient atrial arrhythmia clinical study.
4.4	Material change report dated February 11, 2005 relating to the announcement of results for the investigator-sponsored LaPlata clinical study for Oxypurinol in congestive heart failure patients.
4.5	Material change report dated February 23, 2005 relating to the announcement of a $6 million milestone payment from Fujisawa Healthcare, Inc.
5	Consent of Ernst & Young LLP.
99.1	Certifications of Chief Executive Officer pursuant to Rule 13a-14(a)
99.2	Certifications of Chief Financial Officer pursuant to Rule 13a-14(a)
99.3	Certifications of Chief Executive Officer pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
99.4	Certifications of Chief Financial Officer pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).

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EX-1.1

Exhibit 1.1

CARDIOME PHARMA CORP.

ANNUAL INFORMATION FORM

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004

FEBRUARY 28, 2005

TABLE OF CONTENTS

	Page
REFERENCE INFORMATION		1
CAUTION REGARDING FORWARD LOOKING STATEMENTS		1
CORPORATE STRUCTURE		1
GENERAL DEVELOPMENT OF THE BUSINESS		2
Three Year History		2
Our Product Candidates		3
NARRATIVE DESCRIPTION OF THE BUSINESS		4
General		4
Products in Development		4
Our Strategy		11
Licenses and Collaborative Research Agreements		11
Competition		11
Patents and Proprietary Protection		12
Regulatory Environment		12
Human Resources		14
Facilities		14
RISK FACTORS		15
DIVIDENDS		28
CAPITAL STRUCTURE		28
MARKET FOR SECURITIES		28
ESCROWED SECURITIES		30
DIRECTORS AND EXECUTIVE OFFICERS		30
Directors and Executive Officers		32
Scientific Advisory Board		34
AUDIT COMMITTEE		36
LEGAL PROCEEDINGS		37
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS		37
TRANSFER AGENTS AND REGISTRARS		37
MATERIAL CONTRACTS		37
INTERESTS OF EXPERTS		37
ADDITIONAL INFORMATION		38
SCHEDULE “A” AUDIT COMMITTEE CHARTER		39

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CARDIOME PHARMA CORP.

ANNUAL INFORMATION FORM

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

February 28, 2005

REFERENCE INFORMATION

In this annual information form, a reference to the “Corporation”, “Cardiome”, “we”, “us”, “our” and similar words refer to Cardiome Pharma Corp. and its subsidiaries or any one of them as the context requires.

All references herein to “dollars” and “$” are to Canadian dollars, unless otherwise indicated. On February 28, 2005, the exchange rate for conversion of Canadian dollars into U.S. dollars was Cdn.$1.00 = U.S.$0.8121 based upon the Bank of Canada noon rate.

Unless otherwise stated, the information set forth in this annual information form is as of February 28, 2005.

CAUTION REGARDING FORWARD LOOKING STATEMENTS

This annual information form, together with the documents incorporated by reference herein, contains forward-looking statements that may not be based on historical fact, including without limitation statements containing the words “believe”, “may”, “plan”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect” and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, our stage of development, lack of product revenues, additional capital requirements, risk associated with the completion of clinical trials and obtaining regulatory approval to market our products, the ability to protect our intellectual property and dependence on collaborative partners. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. See “Risk Factors” for a more detailed discussion of these risks. We assume no obligation to update or revise the forward-looking statements contained herein. In addition to the disclosure contained in this annual information form, readers are encouraged to review the “Management’s Discussion and Analysis of Financial Condition and Operations” filed at the same time as this annual information form for an additional discussion of factors that could affect our future performance.

CORPORATE STRUCTURE

We were incorporated under the Company Act (British Columbia) on December 12, 1986 under the name Nortran Resources Ltd. In June 1992, we changed the focus of our business from mining exploration to drug research and development and changed our name to Nortran Pharmaceuticals Inc. In June 2001, we changed our name to Cardiome Pharma Corp. On March 8, 2002, we continued under the Canada Business Corporations Act and effected a four-to-one share consolidation. On May 14, 2003, we amended our articles to create a class of preferred shares, issuable in series and to create special rights and restrictions for our common shares and our preferred shares.

We have three wholly-owned subsidiaries, Rhythm-Search Developments Ltd., a company incorporated under the Company Act (British Columbia), Cardiome, Inc. (formerly Paralex, Inc.) a company incorporated under the Delaware General Corporation Law and Cardiome Research and Development (Barbados), Inc., a company incorporated under the Companies Act of Barbados in January 2004.

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Our head office and principal place of business is located at 6190 Agronomy Road, 6^th Floor, Vancouver, British Columbia, Canada, V6T 1Z3. Our address and the contact numbers of our registered office are as follows: P.O. Box 10424, Pacific Centre, Suite 1300, 777 Dunsmuir Street, Vancouver, British Columbia, Canada, V7Y 1K2; telephone number: (604) 643-7100 and fax number: (604) 643-7900.

GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

Over the past three years we have been focused on developing proprietary drugs to treat or prevent cardiovascular diseases. Our current efforts are focused on the treatment of atrial arrhythmias and congestive heart failure. Atrial fibrillation is an arrhythmia, or abnormal rhythm, of the upper chambers of the heart. The disease manifests itself as an abnormal heart rhythm as a result of irregular electrical impulses within the atria. Congestive heart failure is the failure of the heart to pump blood at a rate sufficient to support the body’s needs.

In March 2002, we closed a concurrent public offering in Canada and private placement in the U.S. raising $30.9 million of gross proceeds and acquired Cardiome, Inc. (formerly Paralex, Inc.). The acquisition of Cardiome, Inc. provided us with the technology it had licensed from The Johns Hopkins University, or Johns Hopkins, for the use of oxypurinol in the treatment of congestive heart failure, and an option from Genzyme Corp. or Genzyme (formerly ILEX, Oncology Inc.) to acquire rights to clinical trial data for oxypurinol in the treatment of allopurinol intolerant hyperuricemia (gout), which we exercised in May 2002. In April 2003, we closed a bought deal private placement for gross proceeds of approximately $8 million. In September 2003, we closed a public offering of common shares for gross proceeds of approximately $23 million, including the exercise of the over-allotment option in October 2003. Effective December 31, 2003, we changed our fiscal year-end from November 30 to December 31, so that our fiscal year-end coincides with the calendar year-end. On October 28, 2004, following the exercise of our option in accordance with our collaboration and license agreement with Fujisawa Healthcare Inc., or Fujisawa, Fujisawa invested U.S.$4 million in our common shares. In December 2004, we licensed certain of our intellectual property and assigned certain of our rights under the agreement with Fujisawa to our wholly-owned subsidiary in Barbados.

Intellectual Property License and Assignment

On December 14, 2004, we completed a reorganization of certain intellectual property rights related to RSD1235 between our parent company and our wholly-owned subsidiary in Barbados. As a result of this reorganization, the parent company in Canada continues to own this intellectual property, while the wholly owned subsidiary has been granted an exclusive license, limited to certain existing medical indications, to exploit RSD1235 within certain specified countries. This license is subject to the existing licenses we granted to Fujisawa under a collaboration and license agreement (see “Narrative Description of the Business – Products in Development – RSD1235 for Atrial Fibrillation – Fujisawa Collaboration”). We also assigned to our Barbados subsidiary, subject to certain reservations of rights, the collaboration and license agreement with Fujisawa. We obtained the consent of Fujisawa prior to the completion of this transaction.

Acquisition of Cardiome, Inc. (formerly Paralex, Inc.)

On March 8, 2002, we completed the acquisition of all of the outstanding shares of Cardiome, Inc., in exchange for 8,203,396 common shares. Also, on March 8, 2002, we completed a concurrent public offering in Canada and private placement in the U.S. of $30.9 million and issued 9,309,657 common shares along with warrants entitling the holders to purchase 2,327,414 common shares at a price of $6.64 per common share.

Prior to the acquisition, Cardiome, Inc. was a private, New York based development-stage bio-pharmaceutical company incorporated in January 2001. Since that time, it had not conducted any significant business activities other than entering into license agreements with Johns Hopkins and Genzyme. The license from Johns Hopkins is for certain intellectual property relating to the use of oxypurinol and other related compounds called xanthine oxidase inhibitors for the treatment of congestive heart failure, other cardiovascular disorders and neuromuscular disease. The license from Genzyme is for rights to oxypurinol clinical data, drug supply and know-how and an option on rights to oxypurinol for the treatment of gout, which we have exercised. Oxypurinol has been studied in humans and is utilized in a

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compassionate use program for patients who are allergic to allopurinol, a conventional treatment for gout. Prior to the acquisition, Cardiome, Inc. did not have any research and development expenditures and had no employees.

Our Product Candidates

The following chart summarizes our current product candidates, including the principal disease or indication being targeted, clinical trial status, expected milestones and marketing rights for each program.

Program/ Trial	Indication/ Status	Next Milestone	Marketing Rights
RSD1235 (iv)	Acute Atrial Fibrillation	NDA Submission 4Q05/1Q06	Fujisawa (N. America)/ Cardiome (Rest of World)
ACT 1	Phase III complete	Top-line data received 4Q04/1Q05 and complete data expected May 2005
ACT 2	Phase III ongoing	Results expected 2H05
ACT 3	Phase III ongoing	Results expected 2Q05/3Q05
RSD1235 (oral)	Atrial Fibrillation	Initiate Phase II 2H05	Cardiome (Worldwide)
Multiple Trials	Multi-dose Phase I ongoing	Determine Phase II dosing
Oxypurinol (oral)	Congestive Heart Failure	Initiate Phase III 2006	Cardiome (Worldwide)
OPT-CHF	Phase II enrollment complete	Results expected 3Q05

RSD1235 for Atrial Fibrillation

RSD1235 is a new chemical entity designed to treat atrial fibrillation, with the potential to overcome the limitations of current drugs used to treat the disease. Its mechanism of action involves the selective blockade of multiple ion channels in the heart that are known to be active during episodes of atrial fibrillation. The drug has two potential applications, as both an intravenous pharmacological converting agent designed to terminate an atrial fibrillation episode and return the heart to normal rhythm, and as an oral maintenance therapy for the long-term prevention of atrial fibrillation recurrence. We are co-developing RSD1235 (iv) for the North American market with Fujisawa. In December 2004, we announced positive results from the first of three planned Phase III clinical trials of RSD1235 (iv) in patients with recent-onset atrial fibrillation, and expect to announce results from two additional ongoing Phase III clinical trials later this year. Upon the successful completion of our clinical trial program, we plan to file a new drug application, or NDA, with the U.S. Food and Drug Administration, or FDA, for RSD1235 (iv) in late 2005 or early 2006. We are also developing an oral formulation of RSD1235 as maintenance therapy for the long-term treatment of atrial fibrillation, and intend to initiate a Phase II clinical trial in the second half of 2005.

Oxypurinol for Congestive Heart Failure

We are developing Oxypurinol, an inhibitor of xanthine oxidase, for the treatment of congestive heart failure. According to a study conducted by the American Heart Association, this disease is one of the leading causes of morbidity and mortality in the U.S., with an estimated 970,000 hospital discharges and an estimated 264,900 deaths in 2002 (“Heart Disease and Stroke Statistics – 2005 Update”). We recently announced positive results from three different proof of concept clinical trials of Oxypurinol in congestive heart failure patients in Europe and South America. We have completed enrollment in a 405 patient Phase II clinical trial of oral Oxypurinol in congestive heart failure, and expect to announce results from this trial in the third quarter of 2005.

Oxypurinol for Gout

Pursuant to our license from Genzyme Corp., in May 2002 we exercised our option to acquire the rights to clinical trial data for Oxypurinol in the treatment of allopurinol intolerant gout. Genzyme completed a pivotal, open-label Phase II/III

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clinical study for the treatment of patients with symptomatic gout who are intolerant to allopurinol prior to our acquisition of this technology. In December 2003, we submitted a NDA to the FDA for Oxypurinol for the treatment of allopurinol intolerant gout patients. In June 2004, we received an “approvable” letter from the FDA stating that prior to final marketing approval, the FDA requires additional clinical and manufacturing data from us. We have stopped pursuing the allopurinol intolerant gout indication for Oxypurinol for the foreseeable future in order to maintain our focus on our cardiovascular assets.

NARRATIVE DESCRIPTION OF THE BUSINESS

General

We are a life sciences company focused on developing proprietary drugs to treat or prevent cardiovascular diseases. Our current efforts are focused on the treatment of atrial arrhythmias and congestive heart failure. Atrial fibrillation is an arrhythmia, or abnormal rhythm, of the upper chambers of the heart. The disease manifests itself as an abnormal heart rhythm as a result of irregular electrical impulses within the atria. Congestive heart failure is the failure of the heart to pump blood at a rate sufficient to support the body’s needs.

We recently announced positive Phase III results for our intravenous formulation of RSD1235, or RSD1235 (iv), our lead product candidate for the acute conversion of atrial fibrillation, and are currently conducting two additional Phase III trials in conjunction with Fujisawa Healthcare, Inc., or Fujisawa, our collaborative partner, to further evaluate the safety and efficacy of RSD1235 (iv). We are also developing an oral formulation of RSD1235, or RSD1235 (oral), as maintenance therapy for the long-term treatment of atrial fibrillation and intend to initiate a Phase II clinical trial in the second half of 2005. RSD1235 is designed to stop and prevent future occurrences of atrial arrhythmia by selectively blocking specific ion channels which are responsible for shaping the electrical signal in the atria.

Over the last 18 months, we have announced positive results from three proof of concept trials of Oxypurinol and have completed enrollment in a Phase II trial of oral Oxypurinol in 405 congestive heart failure patients. We expect to announce data from this trial in the third quarter of 2005. In both pre-clinical and early clinical testing, Oxypurinol appears to increase cardiac oxygen-use efficiency and cardiac output, which may be of clinical benefit to congestive heart failure patients.

In October 2003, we entered into a collaboration and license agreement with Fujisawa, a leading pharmaceutical company headquartered in Japan, to provide for the co-development and commercialization of RSD1235 (iv) for the acute treatment of atrial fibrillation and atrial flutter. Pursuant to our Fujisawa agreement, we have granted to Fujisawa an exclusive license to RSD1235 (iv) and its related technology to develop, make and sell intravenous or injectable drugs in North America, including the right to sublicense to third parties. We retain the rights to the formulation of RSD1235 (iv) for markets outside of North America and worldwide rights to RSD1235 (oral) for the long-term treatment of atrial fibrillation.

Products in Development

RSD1235 for Atrial Fibrillation

RSD1235 is a new chemical entity designed to treat atrial fibrillation, with the potential to overcome the limitations of current drugs used to treat the disease. Its mechanism of action involves the selective blockade of multiple ion channels in the heart that are known to be active during episodes of atrial fibrillation. The drug has two potential applications, as both an intravenous pharmacological converting agent designed to terminate an atrial fibrillation episode and return the heart to normal rhythm, and as an oral maintenance therapy for the long-term prevention of atrial fibrillation recurrence. We are co-developing RSD1235 (iv) for the North American market with Fujisawa. In December 2004, we announced positive results from the first of three planned Phase III clinical trials of RSD1235 (iv) in patients with recent-onset atrial fibrillation, and expect to announce results from two additional ongoing Phase III clinical trials later this year. Upon the successful completion of our clinical trial program, we plan to file a new drug application, or NDA, with

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the U.S. Food and Drug Administration, or FDA, for RSD1235 (iv) in late 2005 or early 2006. We are also developing an oral formulation of RSD1235 as maintenance therapy for the long-term treatment of atrial fibrillation, and intend to initiate a Phase II clinical trial in the second half of 2005.

Atrial Fibrillation Overview. The heart consists of four discrete chambers, the left and right atria and the left and right ventricles. The atria are the upper chambers in which blood from the circulatory system is collected. The ventricles are the lower chambers of the heart where the majority of the muscular pumping action of the heart takes place. A normal heartbeat begins as electrical activity in the upper right atrium. This electrical signal passes through the atria to the atrioventricular node, located in the ventricles, and along the way induces contraction of the atria. The electrical signal then passes into the ventricles, where it stimulates ventricular contraction. The flow of these electrical impulses from cell to cell depends on the cell membrane’s selective permeability to sodium, potassium or calcium ions via specific ion channels. Any disturbance of electrical conduction along this path can lead to an arrhythmia, or a disturbance of the heart’s normal rhythm. Arrhythmia often results when cells lose the ability to correctly carry ions across the membranes, causing a deviation from their normal sequence of initiation and conduction of electrical impulses and resulting in disturbances in heart rate and rhythm.

Atrial fibrillation is the most common cardiac arrhythmia, but unlike ventricular fibrillation, it is not immediately life threatening. It is marked by rapid, irregular electrical activity in the atria, resulting in ineffective ejection of blood into the ventricles. Blood that eddies in the atria may occasionally form clots that may travel to the brain or other organs, where they can produce stroke or ischemia. As a result atrial fibrillation is an important risk factor for stroke. It may also contribute to other diseases and conditions, including congestive heart failure, dyspnea on exertion, and syncope.

Atrial fibrillation is a progressive disease. Patients often progress over time from one or two episodes per year, to a point where eventually they are permanently in atrial fibrillation. The longer a patient remains in atrial fibrillation, the more difficult it is to cardiovert (both drug and electrical). For those patients in permanent atrial fibrillation, treatment options are mostly limited to invasive surgical procedures like catheter ablation.

Market Opportunity. Atrial fibrillation is the most common heart arrhythmia. According to industry sources, it is estimated that 2.7 million people will be affected by atrial fibrillation in the U.S. in 2005, with that number projected to grow to 3.0 million by 2009 (Morgan Stanley Report, “Anti-Thrombotics: Thinning Blood, Thickening Revenues,” 2003, or the Morgan Stanley Report). In addition, it is estimated that 2.0 million people will be affected by atrial fibrillation in Europe in 2005, with that number projected to grow to 2.3 million by 2009 (Morgan Stanley Report). Sales of therapeutics to treat atrial fibrillation in seven of the largest markets globally are projected to grow to U.S.$2.6 billion by 2009 (DialogWeb.com, “Market forecasts for arrythmia, CHD drugs,” December 4, 2004). These therapeutics include rhythm control drugs, such as potassium and sodium channel blockers, and rate control drugs, such as beta blockers and calcium control drugs. Examples of rhythm control drugs include amiodarone (Cardarone), sotalol (BETAPACE), flecainide (Tambocor), propafenone (Rythmol) and ibutilide (Covert). Examples of rate control drugs include Inderol and Cardizem.

Current Treatment. Antiarrhythmics that restore normal heart rhythm typically antagonize cardiac ion channels. Blockade of these ion channels alters the electrophysiology of the atria, resulting in a slowing of repolarization and a return of the atria to normal rhythm. However, current drugs have limited efficacy and significant side effects or interactions with other drugs. The standard of care in atrial fibrillation treatment has been to restore patients to normal rhythm using electrical cardioversion or rhythm control drugs, reducing stroke risk through the use of anticoagulants and using rate control drugs like beta-blockers, calcium channel blockers or digoxin to prevent the spread of arrhythmia to the ventricles. Marketed rhythm control drugs, which include amiodarone, sotalol, flecainide and ibutilide are moderately effective. However, the use of rhythm control drugs is limited by serious side effects, including drug-drug interactions with anticoagulants that results in significant bleeding risk, and also QTc prolongation, associated with an increased risk of Torsade de Pointes, a potentially fatal ventricular tachycardia.

The long-term treatment of atrial fibrillation is focused on maintaining normal sinus rhythm and reducing the risk of stroke. Most patients with atrial fibrillation receive anticoagulants to reduce the risk of stroke and rate control drugs to maintain heart rate. However, anticoagulant therapy increases bleeding risk and can be difficult to titrate. While rate control drugs can lower heart rate and provide symptomatic relief, they have no effect on restoring the atria back to normal rhythm. By restoring the atria back to normal rhythm both the risk of stroke and symptoms of atrial fibrillation are diminished. The most commonly used drug for the long-term maintenance of normal rhythm is amiodarone.

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Our Competitive Advantages. RSD1235 was designed and developed specifically to treat atrial arrhythmia, and unlike current drugs used to treat the disease, RSD1235 selectively targets those ion channels that are uniquely important for such arrhythmias. The drug has been shown to be a safe and effective antiarrhythmic in various animal studies modeling the arrhythmia condition. That safety and efficacy profile is believed to result from the drug’s atria selective mechanism of action. Animal studies indicate that the drug exhibits a much stronger impact on the electrical activity of the atria of the heart than on the ventricles. This may make it an effective and potentially safer atrial antiarrhythmic drug than existing and near term competition in this field. Our clinical data shows that RSD1235 is rapidly cleared from the body after intravenous dosing which may make it an ideal therapy for emergency intravenous use in hospital. Therefore we believe that RSD1235 will potentially have fewer side effects than currently utilized intravenous antiarrhythmic drugs.

Although the number of antiarrhythmic drugs has grown in the past few decades, and while antiarrhythmic drug sales are already substantial, we believe there remains a major unmet market need for safer antiarrhythmics that are more effective and easier to use than current therapies. Given the limitations of antiarrhythmic drugs currently on the market, we believe that a potentially fast acting, safe, and effective pharmacological converting agent like RSD1235 could become the first treatment choice for many physicians who treat atrial fibrillation. If the clinical results profile witnessed in our completed studies is maintained throughout the remainder of the Phase III program and eventual commercialization, RSD1235 (iv) has the potential to successfully compete with other pharmacological converting agents based on its (i) high rate of efficacy; (ii) attractive safety profile; (iii) rapid onset of action; and (iv) positive duration of response at 24 hours.

Clinical Trials. In 2002, we completed a Phase II clinical trial of intravenous RSD1235 for the treatment of atrial fibrillation. The clinical trial was conducted in North America and involved 56 recent-onset atrial fibrillation patients. Results showed that in patients who received RSD1235, atrial fibrillation terminated in 61% of patients, as compared to 5% of patients who experienced termination upon receiving the placebo within 30 minutes of the end of infusion of the drug.

Based on these results, we have initiated a pivotal clinical trial program of RSD1235 (iv). The following table summarizes our recently completed and ongoing pivotal trials of RSD1235 (iv) for acute atrial fibrillation:

						Data
Trial	Summary	Patients		Initiated		Release
ACT 1	Acute treatment of atrial fibrillation and atrial flutter		416		3Q03		4Q04
ACT 2	Treatment of transient atrial fibrillation following cardiac bypass surgery		210		1Q04		2H05
ACT 3	Acute treatment of atrial fibrillation and atrial flutter (similar to ACT 1)		240		3Q04		2Q05/3Q05

In August 2003, we initiated ACT 1, our first Phase III clinical trial of RSD1235 (iv) for the treatment of acute atrial fibrillation. This study was a placebo-controlled, double-blinded randomized clinical trial in 416 patients with atrial arrhythmia. The study included three groups of patients, including 237 patients with recent-onset atrial fibrillation (more than three hours but less than seven days), 119 patients with longer-term atrial fibrillation (more than seven days but less than 45 days) and 60 patients with atrial flutter. Atrial flutter is a small subset of the overall atrial arrythmia population. The primary endpoint in ACT 1 was conversion of recent-onset atrial fibrillation to normal heart rhythm for a period of at least one minute post-dosing within 90 minutes of the start of dosing. The study was carried out in 45 centers in the U.S., Canada and Scandinavia.

In December 2004 and February 2005, we announced top-line results from our ACT 1 trial, the first of three planned clinical trials of RSD1235 (iv). We anticipate that a full trial report will be presented in May 2005 at the Heart Rhythm Society Meetings in New Orleans. In patients with recent-onset atrial fibrillation, 52% of those receiving RSD1235 converted to normal heart rhythm, as compared to 4% of placebo patients (p0.001). In those recent-onset atrial fibrillation patients dosed with RSD1235 (iv) who converted to normal heart rhythm, the median time to conversion was 11 minutes from the initiation of dosing. Of the 75 patients who converted to normal heart rhythm within 90 minutes of the initiation of dosing, 74 (99%) of them remained in normal rhythm for at least 24 hours. In the longer-term atrial fibrillation population, 8% of patients who were dosed with RSD1235 (iv) had their atrial fibrillation converted, as compared to 0% of placebo patients. This difference was not statistically significant.

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The top-line ACT 1 study data suggests that RSD1235 (iv) is also well-tolerated in the targeted patient population. In the 30 day interval following drug administration, serious adverse events occurred in 18% of placebo patients and 13% of drug group patients. Potentially drug-related serious adverse events occurred in 0% of placebo patients and 1.4% of patients receiving RSD1235 (iv). There were no cases of drug-related Torsade de Pointes, a well-characterized ventricular tachycardia which is an occasional side effect of many current anti-arrhythmia drugs. No patients needed to discontinue the ACT 1 study due to RSD1235, and there were no deaths attributed to RSD1235 (iv).

Although the top-line data from ACT 1 showed effectiveness in the treatment of atrial fibrillation, RSD1235 (iv) seems to be ineffective in converting atrial flutter patients to normal heart rhythm. Only one of 39 patients dosed with RSD1235 (iv) converted to normal heart rhythm, while zero of 15 placebo patients converted to normal heart rhythm. In the 30 day interval following treatment administration, serious adverse events occurred in 27% of placebo patients and 18% of drug group patients. Potentially serious adverse drug-related events occurred in zero placebo patients and in two patients receiving RSD1235 (iv). Patients with atrial flutter account for approximately 8% of the 2.4 million patients with atrial arrhythmia.

We and Fujisawa are continuing to enroll patients in ACT 2 and ACT 3. ACT 2 is designed to evaluate the effect of RSD1235 (iv) treatment on transient atrial fibrillation following cardiac surgery, and if successful, has the potential to expand our label and market opportunity to include this patient base. ACT 3 is essentially a replica of ACT 1 and will enroll similar patients and measure similar endpoints. We expect to announce data from each of these trials later this year. ACT 1 and ACT 3 are the two trials which will form the basis of our NDA to the FDA which we expect to submit later this year or early in 2006.

Fujisawa Collaboration. In October 2003, we entered into a collaboration and license agreement with Fujisawa, a leading pharmaceutical company headquartered in Japan, or our Fujisawa agreement to provide for the co-development and commercialization of RSD1235 (iv) for any and all indications, including the acute treatment of atrial fibrillation and atrial flutter. Pursuant to our Fujisawa agreement, we have granted to Fujisawa an exclusive license to RSD1235 (iv) and its related technology to develop, make and sell intravenous or injectable drugs in North America, including a right to sublicense to third parties. We retain the rights to RSD1235 (iv) for markets outside of North America and worldwide rights to RSD1235 (oral) which we are developing for the long-term treatment of atrial fibrillation.

Under the terms of our Fujisawa agreement, Fujisawa paid us an up-front payment of U.S.$10.0 million, invested U.S.$4.0 million in us at a 25% premium to the then share price, and agreed to pay us milestone payments of up to U.S.$54 million based on achievement of specified development and commercialization milestones. In addition, if the product is approved for use by the applicable authorities, we are entitled to royalty payments which are expected to average approximately 25% of total North America end-user sales revenue, as well as royalties based on future net sales and sublicense revenue. Following the successful completion of ACT 1, in February 2005 we announced the collection of our first milestone payment of U.S.$6.0 million from Fujisawa. Fujisawa is also responsible for 75% of all the remaining development costs, including costs associated with the ACT 1 incurred prior to the signing of our Fujisawa agreement, and all marketing costs for the intravenous application of RSD1235 in North America. Fujisawa has also agreed to make additional milestone payments with respect to any subsequent drugs developed under the agreement. We also have the right, without payment, to use the clinical package which makes up the NDA, and use that data to seek approval for the drug outside of North America. Our Fujisawa agreement has an indefinite term but can be terminated entirely, or on a country by country basis, by either party if certain development or commercialization milestones are not met.

All development activities are jointly managed by Fujisawa and us until the termination of our Fujisawa agreement. Fujisawa is responsible for the development plan, NDA application and registration, along with the sales, marketing and distribution of RSD1235 (iv). We managed the completed ACT 1 and are currently managing ACT 2, while Fujisawa is managing ACT 3. Fujisawa is also responsible for the commercial manufacturing of RSD1235 (iv) while we are only responsible for manufacturing clinical supplies of the compound, which we are undertaking through the use of contract manufacturers.

Oral RSD1235. In an oral dosing study in humans conducted in Europe and completed in December 2002, RSD1235 was shown to have significant oral bioavailability, suggesting it could also be used for long-term oral therapy. Based on these results, we conducted an open-label, cross-over clinical study to evaluate two controlled release formulations

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of RSD1235 in comparison to an immediate release formulation and in December 2004 we initiated a Phase Ib study involving one of the time controlled-release formulations.

The objective of this controlled-release formulation is to enable twice-daily dosing of RSD1235 for the selected atrial fibrillation patient population. The pharmacokinetic results of our Phase Ia study are consistent with that objective. This controlled-release formulation will be assessed in a series of Phase I studies in order to determine the dosing regimen to be used in a Phase II efficacy study planned for the second half of 2005. On the basis of the Phase I results, we are planning an additional multi-day dosing study to assess the pharmacokinetics and safety of repeated daily doses of controlled-release RSD1235 (oral) tablets.

Intellectual Property. RSD1235 is the subject of 13 pending U.S. provisional patent applications, ten pending U.S. utility (non-provisional) patent applications, 31 pending non-U.S. patent applications, and five granted patents in Turkey, South Africa, Singapore, Australia and under the European Patent Office covering composition of matter, use, method of making, mechanism of action, dosing and plasma levels and formulations and combination of activity. We have a granted European patent that covers classes of compounds of which RSD1235 is a member, and we are currently pursuing various claims specific to RSD1235. However, we currently have no issued patents specifically covering RSD1235 in the U.S. or any of the other major commercial markets and we have no assurance that any such species patent will ever issue.

Oxypurinol for Congestive Heart Failure

We are developing Oxypurinol, an inhibitor of xanthine oxidase, for the treatment of congestive heart failure. According to a study conducted by the American Heart Association, this disease is one of the leading causes of morbidity and mortality in the U.S., with an estimated 970,000 hospital discharges and an estimated 264,900 deaths in 2002 (“Heart Disease and Stroke Statistics – 2005 Update”). We recently announced positive results from three different proof of concept clinical trials of Oxypurinol in congestive heart failure patients in Europe and South America. We have completed enrollment in a 405 patient Phase II clinical trial of oral Oxypurinol in congestive heart failure, and expect to announce results from this trial in the third quarter of 2005.

Congestive Heart Failure Overview. Congestive heart failure is a complex, multifactorial condition which can result from many different initial cardiac problems, ultimately resulting in the failure of the heart ventricles to pump enough blood to support the demands of the body. Heart failure may affect either the left ventricle, the right ventricle or both. Symptoms depend on the underlying cause of the heart failure, but generally include fatigue and fluid retention in the lungs, resulting in shortness of breath, or in the periphery, often the legs. In most cases, congestive heart failure is a progressive condition. Often the body compensates for the decreased cardiac output by increasing heart rate and contractility and increasing blood fluid levels. This compensation increases cardiac output, but causes the weakened heart to work harder and ultimately dilate and fail. Current methods of treating heart failure often involve strengthening the ventricular contractility and stopping the compensation by removing water from the body, decreasing blood pressure or blocking direct stimulatory effects on the heart muscle cells themselves.

Market Opportunity. Congestive heart failure is the only significant cardiovascular disorder to show a marked increase in incidence over the past 40 years. According to industry sources, approximately 4.9 million people in the U.S. suffered from congestive heart failure (American Heart Association, “Heart Disease and Stroke Statistics – 2005 Update”). The American Heart Association reported that the number of hospital discharges in the U.S. rose from 377,000 in 1979 to 970,000 in 2002 with a projected direct and indirect cost of U.S.$27.9 billion in 2005. The prognosis for congestive heart failure patients is poor. Twenty percent of patients die within one year, with an 80% mortality rate by year eight for men. According to industry sources, the cost of pharmaceuticals used to treat congestive heart failure was approximately U.S.$915 million in the U.S. and in excess of U.S.$1.5 billion in the U.S., Europe and Japan in 1999.

Current Treatment. Current treatment options for this complicated disease include various combinations of these drugs:

•   diuretics such as furosemide and spironolactone and vasoactive drugs like Natrecor remove excess fluid and decrease the workload of the heart and improve symptoms and survival;

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•   cardiac glycosides, like digoxin, that increase contractility of the heart and provide an improved neuro-hormonal environment thereby reducing the workload on the heart, improving symptoms and reducing hospitalizations;

•   vasodilators like the nitrates, ACE-inhibitors, angiotensin II inhibitors, and calcium channel antagonists that reduce the workload of the heart, reduce blood pressure, improve coronary blood flow, improve symptoms and, in some studies like those with ACE-inhibitors, improve survival;

•   alpha and beta adrenergic blockers, like doxazosin and carvedilol, that reduce physiologic stressors, reduce the heart rate and allow the heart to function more efficiently and effectively and in the case of beta blockers, may increase survival; and

•   inotropic agents like dopamine and dobutamine, that are used in very severe cases to increase the contractility of the heart and improve its output for shorter periods of time.

The current standard of care for congestive heart failure consists primarily of diuretics, digoxin, angiotensin converting enzyme inhibitors, or ACE-inhibitors and, in some cases, a beta blocker. Digoxin is the only approved drug known to increase myocardial contractility with minimal increases in cardiac oxygen demand. However, digoxin has a limited therapeutic window, or range, of efficacious doses before becoming toxic, and patients must be closely monitored with regular blood tests to reduce the possibility of side effects that include potentially fatal cardiac arrhythmias. Other inotropic agents such as dopamine and dobutamine also increase myocardial contractility, but we believe that it has narrow therapeutic indices, thus minimizing their utility in the treatment of congestive heart failure.

Competitive Advantages. Oxypurinol is not expected to compete directly with any of the currently used therapies outside of the inotropic agents, but it may have the potential to produce an increase in cardiac contractility for longer periods of time while maintaining an acceptable safety profile. Adverse events observed to date with Oxypurinol include rash, which has also been associated with allopurinol, the pro-drug of Oxypurinol. Information available to date indicates that the rate of rash associated with Oxypurinol is lower than with allopurinol.

Contractility agents, such as inotropes, increase the contraction of the heart while simultaneously accelerating the heart’s consumption of oxygen. This increased oxygen consumption can be a serious problem as many, if not most, of these patients have coronary artery disease which limits blood and oxygen supply to the heart. Thus, although such medicines may make the patient feel better initially, they may not increase life expectancy. In fact, according to the Promise Study published by the New England Journal of Medicine, current medicines that increase cardiac contractility, primarily inotropes such as milrinone and digitalis actually decreased life expectancy.

At Johns Hopkins University, or Johns Hopkins, Dr. Eduardo Marbán demonstrated that the class of agents known as xanthine oxidase inhibitors (which includes Oxypurinol) has the ability to increase the contraction strength of the heart in patients with congestive heart failure without increasing the oxygen consumed by the heart to the extent caused by other medicines. In studies conducted at Johns Hopkins, Dr. Marbán has shown these effects in both animals and in humans during cardiac catheterization. Accordingly, such xanthine oxidase inhibitors may offer the possibility of a new mode of therapy for patients with congestive heart failure. We believe that xanthine oxidase inhibitors, including Oxypurinol, have significant potential in the treatment of congestive heart failure due to their ability to increase the contraction strength of the heart in patients with congestive heart failure, without increasing oxygen consumption.

Clinical Trials. The following table summarizes our recently completed and ongoing clinical trials of Oxypurinol for congestive heart failure:

				Data
Trial	Summary	Patients		Release
EXOTIC	Intravenous administration, measured coronary artery diameter in congestive heart failure patients.		18		3Q03
EXOTIC-EF	Intravenous administration, measured left-ventricle ejection fraction and cardiac oxygen consumption in congestive heart failure patients.		20		3Q04
LaPlata	Oral dosing in congestive heart failure patients, measured left-ventricle ejection fraction and exercise tolerance in congestive heart failure patients.		60		1Q05

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				Data
Trial	Summary	Patients		Release
OPT-CHF	Oral dosing in congestive heart failure patients; measures survival and other clinical outcomes.		405		3Q05

In September 2003, a proof of concept trial entitled, EXOTIC, was completed on the intravenous application of Oxypurinol for the treatment of congestive heart failure. The trial, conducted in Europe, included 18 patients with coronary heart disease. The administration of intravenous Oxypurinol (200 mg) reduced xanthine oxidase activity by 65% (p<0.05) across the broad patient group. In the subset of 13 patients in whom acetylcholine challenge produced vasoconstriction, Oxypurinol reduced the observed vasoconstriction by 33% (p<0.05), and increased coronary flow velocity by greater than 20% (p<0.05). These results indicate that Oxypurinol, by inhibiting xanthine oxidase activity, improves the impaired endothelial function in patients with coronary artery disease.

In September 2004, we announced positive interim results for an investigator-sponsored study, EXOTIC-EF. This open-label study, which was conducted in Europe, evaluated intravenous dosing of Oxypurinol in 20 catheterized congestive heart failure patients. The endpoints of this study were left-ventricle ejection fraction and cardiac oxygen consumption. The reported data covered all 14 patients dosed to date. Oxypurinol administration resulted in an average absolute increase of 3.6% (p<0.0032) in left-ventricle ejection fraction at 5.5 hours post-dosing relative to pre-dosing. This represents a 19.8% relative increase in average ejection fraction.

In February 2005, we announced positive final results for the investigator-sponsored LaPlata clinical study for Oxypurinol in congestive heart failure patients. The randomized, double-blinded, placebo controlled trial, conducted in Argentina, evaluated 28 days of oral dosing of Oxypurinol in congestive heart failure patients with left-ventricle ejection fraction of less than 40% and Class II-III congestive heart failure as rated by the New York Heart Association classification system. The trial enrolled a total of 60 patients, of whom 47 met the entry criteria. Following 28 days of oral daily dosing, left-ventricle fraction increased by 6.8% (p=0.017) relative to placebo in the 47 patients who met the prospectively-defined entry criteria. The 6.8% average absolute improvement over placebo represented an average relative increase in cardiac output of 22.6% for the patients receiving Oxypurinol. Improvement in the six minute walk was seen in both treatment groups. However, no statistically significant difference between the two groups was observed. No safety concerns were noted.

In March 2003, we initiated a Phase II clinical trial in North America, called OPT-CHF, to evaluate the safety and efficacy of oral Oxypurinol in the treatment of congestive heart failure. This Phase II clinical trial enrolled 405 patients with moderate to severe symptomatic heart failure, those rated by the New York Heart Association as class III to class IV. The primary endpoint of the trial is the overall number of patients whose condition improves, worsens or remains unchanged as a result of treatment with Oxypurinol versus placebo during a six-month course of therapy. We have completed patient recruitment and expect to report the results in the third quarter of 2005. If successful, we may initiate a Phase III clinical trial in 2006.

Intellectual Property. We have filed seven pending U.S. provisional patent applications and one international Patent Cooperation Treaty application (designating all contracting states including the U.S.) relating to Oxypurinol technology. Additionally, our license from Johns Hopkins has granted us exclusive rights under two issued U.S. patents and one U.S. and one European patent application. These owned and licensed patents and patent applications cover the use of xanthine oxidase inhibitors, formulations, compositions and methods of treatment for congestive heart failure.

Oxypurinol for Gout

Pursuant to our license from Genzyme, in May 2002 we exercised our option to acquire the rights to clinical trial data for Oxypurinol in the treatment of allopurinol intolerant gout. Genzyme completed a pivotal, open-label Phase II/III clinical study for the treatment of patients with symptomatic gout who are intolerant to allopurinol prior to our acquisition of this technology. In December 2003, we submitted a NDA to the FDA for Oxypurinol for the treatment of allopurinol intolerant gout patients. In June 2004, we received an “approvable” letter from the FDA stating that prior to final marketing approval, the FDA requires additional clinical and manufacturing data from us. We have stopped pursuing the allopurinol intolerant gout indication for Oxypurinol for the foreseeable future in order to maintain our focus on our cardiovascular assets.

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Our Strategy

Our goal is to create a leading commercial-stage biopharmaceutical company focused on cardiovascular disease. Key elements of our strategy include:

•   Developing RSD1235 and Oxypurinol, successfully. We have one completed and two ongoing Phase III clinical trials in collaboration with Fujisawa, our collaborative partner for RSD1235 (iv). We plan to initiate a Phase II clinical trial of RSD1235 (oral) in the second half of 2005. We have completed three proof of concept investigator-sponsored trials for Oxypurinol for congestive heart failure and in the fourth quarter of 2004 we completed enrollment in a Phase II study. We intend to advance all of our clinical programs as aggressively as possible.

•   Continuing to focus on our core expertise in cardiac diseases and conditions. By focusing our efforts in this way, we have been able to assemble teams of employees and external advisors with a strong knowledge and understanding of cardiology. This collective knowledge, experience and expertise helps ensure that the novel ideas pursued are of a high caliber and are therefore more likely to result in a drug which impacts a specific disease state.

•   Maintaining capabilities that span pre-clinical and clinical development. We have the operational capability to conduct both pre-clinical and clinical development of a product candidate, including late stage trials and regulatory approval filings. This capability allows us to support partnership activities, or develop in-licensed and acquired technologies at any stage of development.

•   Continuing our focused commercialization strategy. We may retain commercial rights to our products for indications and territories where we believe we can effectively market them. For all other indications and territories, we intend to pursue strategic collaborations. We may seek collaborative partners with experience in, and resources for, the late-stage development and marketing of drugs in our therapeutic areas.

•   Expanding our product pipeline through in-licensing and/or acquisitions. We are evaluating clinical candidates to add to our clinical pipeline. With the approaching completion of the RSD1235 (iv) adding clinical program, we will have the operational capacity to take on additional programs. Our focus is on adding clinical candidates or near-clinical candidates within the cardiovascular realm.

•   Leveraging external resources. We focus our resources on those activities that add or create the most value. We maintain a small, core team of scientists and staff with the necessary skill base, and contract out the specialized work required for our projects, such as pre-clinical toxicology services and commercial manufacturing.

Licenses and Collaborative Research Agreements

An important aspect of our product development strategy is the establishment of collaborations with pharmaceutical companies and research centers with resources and expertise vital to our programs and commercial objectives. In addition to our collaboration with Fujisawa, we have licenses and collaborative research agreements with a number of organizations, including the University of British Columbia, Johns Hopkins and Genzyme.

Competition

The life sciences industry is characterized by extensive research efforts, rapid technology change and intense competition. Competition in the life sciences industry is based primarily on product performance, including efficacy, safety, ease of use and adaptability to various modes of administration, patient compliance, price, acceptance by physicians, manufacturing, sales, marketing, and distribution. Barriers to entry into the market include the availability of patent protection in the U.S. and other jurisdictions of commercial interest and the ability and time needed and cost required to obtain governmental approval for testing, manufacturing, sales, marketing and distribution.

We are aware of a number of companies engaged in the development of drugs within our areas of focus. Due to the size of the cardiovascular market and the large unmet medical need, a number of the world’s largest pharmaceutical companies are developing or could potentially develop products that could compete with ours. Companies including,

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but not limited to, Boston Scientific, GlaxoSmithKline, Johnson & Johnson, Medtronic, Merck, Pfizer and Sanofi-Aventis all have products in development or in the market that could potentially compete with our RSD1235 or Oxypurinol product candidates.

Patents and Proprietary Protection

We consider our patent portfolio as one of the key value contributors to our business. Therefore, we devote a substantial amount of resources each year to maintaining and augmenting our patent portfolio. Our patent strategy is to pursue the broadest possible patent protection on our proprietary products and technology in selected jurisdictions and to achieve maximum duration of patent protection available. Accordingly, for novel compounds or therapeutic use claims for the compound, composition, manufacturing, mechanism of action, dosing, plasma levels, combination with other drugs and therapeutic use have been made or will be made and for known compounds, claims directed to novel composition and/or use will be made in the patent application. We plan to protect our technology, inventions and improvements to our inventions by filing patent applications in selected key countries according to industry standard in a timely fashion.

In addition to our patents, we also rely upon trade secrets, know-how and continuing technological innovations to develop our competitive position. It is our policy to require our directors, employees, consultants, members of our scientific advisory board and parties to collaborative agreements to execute confidentiality agreements upon the commencement of employment, consulting or collaborative relationships with us. In the case of employees and consultants, the agreements provide that all inventions resulting from work performed for us utilizing our property or relating to our business and conceived of or completed by the individual during employment are our exclusive property.

We are required to pay milestone payments and royalties of license fees for the patents and patent applications we have licensed from, or for which we have been granted commercial rights by, the University of British Columbia and Johns Hopkins. We have no royalty obligations associated with any of the remaining patents and patent applications in our portfolio.

Regulatory Environment

The research and development, manufacture, sale and marketing of pharmaceutical products are subject to extensive regulation. Drug licensing laws require licensing of manufacturing facilities, carefully controlled research and testing of products, governmental review and approval of results prior to marketing of therapeutic products, and adherence to Good Manufacturing Practices during production and compliance with comprehensive post-approval requirements. In the U.S., these activities are subject to rigorous regulation by the FDA.

Our success is ultimately dependent on obtaining marketing approval for drugs currently under development and will depend on our ability to comply with FDA regulations governing the manufacturing, quality control, pre-clinical evaluation, and clinical testing of investigational new drugs, or INDs. Depending upon the circumstances surrounding the clinical evaluation of a product, we may undertake clinical trials, contract clinical trial activities to contract research organizations or rely upon corporate partners for such development. This approach will allow us to make cost effective developmental decisions in a timely fashion.

The principal activities that must be completed after initial drug discovery, and synthesis work and before obtaining approval for marketing of a product in the U.S. are as follows:

•   pre-clinical studies, which includes pharmacological and efficacy testing in animals, toxicology testing and formulation work based on in vitro results, performed to assess the safety and potential efficacy of the product, and subject to good laboratory practice requirements;

•   submission of an IND application, which must become effective before human clinical trials commence;

•   Phase I clinical trials, the initial introduction of the product into human subjects, under which the compound is generally tested for safety, dosage, tolerance, metabolic interaction, distribution, excretion and pharmacodynamics;

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•   Phase II clinical trials involving studies in a limited patient population to: (i) determine the efficacy of the product for specific, targeted indications, (ii) determine optimal dosage, and (iii) identify possible adverse effects and safety risks;

•   Phase III clinical trials which are undertaken to further evaluate clinical efficacy of the product and to further test for its safety within an expanded patient population at geographically dispersed clinical study sites in order to support marketing authorization;

•   the submission of an NDA to the government authorities in the U.S.; and

•   FDA acceptance of the NDA for filing and ultimately approval of an NDA prior to any commercial sale or shipment of the product, including pre-approval and post-approval inspections of its manufacturing facilities.

Two key factors influencing the rate of progression of clinical trials are the rate at which patients are available to participate in the research project and whether effective treatments are currently available for the disease that the drug is intended to treat.

An IND must be filed and accepted by the FDA before each phase of human clinical trials may begin. The IND application must contain specified information including the results of the pre-clinical studies or clinical tests completed at the time of the IND application. In addition, since the method of manufacture may affect the safety and efficacy of a drug, information on manufacturing methods and standards and the stability of the drug substance and the dosage form must be presented so that the FDA can ensure that the product that may eventually be sold to the public has the same composition as that determined to be effective and safe in the clinical trials. Production methods and quality control procedures must be in place to ensure a relatively pure compound, essentially free of contamination and uniform with respect to all quality aspects.

U.S. law requires that studies conducted to support approval for product marketing be adequate and well controlled. In general, this means that either a placebo or a product already approved for the treatment of the disease or condition under study must be used as a reference control. Studies must also be conducted in compliance with good clinical practice requirements, and informed consent must be obtained from all study subjects.

The FDA may prevent clinical trials from beginning or may place clinical trials on hold at any point in this process if, among other reasons, it concludes that clinical subjects are being exposed to an unacceptable health risk. Trials may also be prevented from beginning or may be terminated by institutional review boards, who must review and approve all research involving human subjects. Side effect or adverse events that are reported during clinical trials can delay, impede, or prevent marketing authorization.

Upon completion of all clinical studies the data are analyzed to determine whether the trials successfully demonstrated safety and effectiveness, and whether a product approval application may be submitted. For products regulated as drugs, as opposed to biologics, the results are submitted to the FDA as part of an NDA to obtain approval to commence marketing the product. The NDA must include a substantial amount of data and other information concerning the safety and effectiveness of the compound from laboratory, animal and clinical testing, as well as data and information on manufacturing, product stability, and proposed product labeling. Each domestic and foreign manufacturing establishment, including any contract manufacturers we may decide to use, must be listed in the NDA and must be registered with the FDA. The application will likely not be approved until the FDA conducts a manufacturing inspection, approves the applicable manufacturing process for the drug product, and determines that the facility is in compliance with current good manufacturing practice, or GMP, requirements. If the manufacturing facilities and processes fail to pass the FDA inspection, we will not receive approval to market these products. We may partner later stage development of our drug candidates with companies that have experience in manufacturing in accordance with GMP requirements.

Under the U.S. Prescription Drug User Fee Act, as amended, applicants must pay a substantial fee to the FDA for an NDA and any supplements thereto, as well as annual fees for commercial manufacturing establishments and for approved products. The NDA review fee alone now exceeds U.S.$0.67 million, although certain limited deferrals, waivers and reductions may be available.

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Under applicable laws and FDA regulations, each NDA submitted for FDA approval is usually reviewed for administrative completeness and reviewability within 45 to 60 days following submission of the application. If deemed complete, the FDA will file the NDA, thereby triggering substantive review of the application. The FDA can refuse to file any NDA that it deems incomplete or not properly reviewable. If the FDA refuses to file an application, the FDA will retain 25% of the user fee as a penalty. The FDA has established performance goals for the review of NDAs — six months for priority applications and 10 months for regular applications. However, the FDA is not legally required to complete its review within these periods and these performance goals may change over time. Moreover, the outcome of the review, even if generally favourable, typically is not an actual approval but an action letter that describes additional work that must be done before the application can be approved. The FDA’s review of an application may involve review and recommendations by an independent FDA advisory committee.

Even if the FDA approves a product, it may limit the approved therapeutic uses for the product as described in the product labeling, require that warning statements be included in the product labeling, require that further studies be conducted as a condition of approval (sometimes called Phase IV studies), impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval. Post-market studies may provide additional data on safety and efficacy necessary to gain approval for the use of a product as a treatment for clinical indications other than those for which the product was initially tested and approved.

Significant legal and regulatory requirements also apply after FDA approval to market under an NDA. These include, among other things, requirements related to adverse event and other reporting, product advertising and promotion, and ongoing adherence to GMPs, as well as the need to submit appropriate new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. The FDA also enforces the requirements of the U.S. Prescription Drug Marketing Act, or PDMA, which, among other things, imposes various requirements in connection with the distribution of product samples to physicians.

In the U.S., the research, manufacturing, distribution, sale, and promotion of drug and biological products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), other divisions of the U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice and individual U.S. Attorney offices within the Department of Justice, and state and local governments. For example, sales, marketing and scientific/educational grant programs must comply with the U.S. Medicare-Medicaid Anti-Fraud and Abuse Act, as amended, the U.S. False Claims Act, also as amended, the privacy provisions of the U.S. Health Insurance Portability and Accountability Act and similar state laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the U.S. Omnibus Budget Reconciliation Act of 1990, as amended, and the U.S. Veterans Health Care Act of 1992, as amended. If products are made available to authorized users of the U.S. Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws.

Human Resources

As of February 28, 2005, we employed or retained 63 persons, 33 of whom hold advanced degrees in science or business, including 17 who hold PhD or MD degrees. Our employees are not unionized. We believe that relations with our employees are good.

Facilities

Our principal office and main laboratory is located at 6190 Agronomy Road, 6th Floor, Vancouver, British Columbia, V6T 1Z3, Canada. On September 3, 2003, we entered into a lease agreement for such premises which consists of 15,852 square feet of office and laboratory space. The term of the lease is 10 years commencing on March 15, 2004. Annual lease payments will be $301,000 per annum in the first year, increasing by $8,000 each year until the fifth year at which time the annual lease payments will be $333,000 per annum. For each remaining year of the term after the fifth year, the annual lease payments will be $357,000 per annum. We may, at our option, extend the term of the lease for three additional two-year periods at then market rates.

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RISK FACTORS

You should consider carefully the following risks and other information included in this annual information form, including our historical consolidated financial statements and related notes, before you decide to purchase our common shares. If any of the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result, the trading price of our common shares could decline and you could lose part or all of your investment.

We have a history of significant losses and a significant accumulated deficit and we have not generated any product revenues to date. We may never achieve or maintain profitability.

We have had no revenue from product sales to date. Although we have been involved in the life sciences industry since 1992, we have been engaged only in research and development. We incurred significant operating losses, including net losses of approximately $27.8 million for the twelve month period ended December 31, 2004, and $19.9 million and $14.0 million for the thirteen month period ended December 31, 2003 and for the twelve month period ended November 30, 2002, respectively. Since incorporation, our accumulated deficit is $92.1 million, as of December 31, 2004. We anticipate that we will incur substantial operating expenses in connection with the research, development, testing and approval of our proposed products and we expect these expenses to result in continuing and significant operating losses for the foreseeable future. Our losses have resulted in large part from the significant research and development expenditures we have made in seeking to identify and validate new drug targets and compounds that could become marketed drugs.

If we are unable to develop, obtain regulatory approval for, and successfully commercialize our product candidates, we will not be able to significantly increase revenues or achieve profitable operations. We currently do not have any commercial products. It takes many years and potentially hundreds of millions of dollars to successfully develop a pre-clinical or early clinical compound into a marketed drug. Additional financing may not be available to us or may not be available on terms that are favourable to us.

We are establishing a pharmaceutical development business and have no developed or approved products.

We are in the drug development stage and are subject to all of the risks associated with the establishment of a pharmaceutical development business. As a result, our business must be evaluated in light of the problems, delays, uncertainties and complications encountered in connection with establishing a pharmaceutical development business.

Our proposed products are currently in the research and development stage and we have not generated any revenues from product sales, nor do we expect to generate any significant product sales for at least two years. In addition, none of our product candidates has received regulatory approval for commercial sales from any jurisdiction. Substantial pre-clinical safety and toxicology work and clinical development testing for our product candidates remains ongoing, as intravenous RSD1235, or RSD1235 (iv), is in Phase III clinical testing, oral RSD1235, or RSD1235 (oral), is in Phase I clinical testing and Oxypurinol is in Phase II clinical testing. Accordingly, it remains uncertain as to whether our research and development efforts will be successful. There is a possibility that none of our potential products will be found to be safe and effective, that we will be unable to receive necessary regulatory approvals in order to commercialize them, or that we will obtain regulatory approvals that are too narrow to be commercially viable.

Our failure to successfully develop and obtain regulatory approval for our products that are under development would have a material adverse effect on our business, financial condition and results of operations.

The results of pre-clinical studies and initial clinical trials are not necessarily predictive of future results, and our current product candidates may not have favourable results in later testing or trials.

Pre-clinical tests and Phase I and Phase II clinical trials are primarily designed to test safety, to study pharmacokinetics and pharmacodynamics and to understand the side effects of our product candidates at various doses and schedules. Success in pre-clinical or animal studies and early clinical trials does not ensure that later large-scale efficacy trials will be successful nor does it predict final results. Favourable results in early trials may not be repeated in later trials.

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A number of companies in the life sciences industry have suffered significant setbacks in advanced clinical trials, even after positive results in earlier trials. Clinical results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory approvals. Negative or inconclusive results or adverse medical events during a clinical trial could cause a clinical trial to be delayed, repeated or terminated. In addition, failure to construct appropriate clinical trial protocols could result in the test or control group experiencing a disproportionate number of adverse events and could cause a clinical trial to be repeated or terminated. Pre-clinical data and the clinical results we have obtained for RSD1235 and Oxypurinol may not predict results from studies in larger numbers of subjects drawn from more diverse populations, and also may not predict the ability of our products to achieve their intended goals, or to do so safely.

We will be required to demonstrate through larger scale clinical trials that our product candidates are safe and effective for use in a diverse population before we can seek regulatory approvals for their commercial sale. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. To date, long-term safety and efficacy have not yet been demonstrated in clinical trials for any of our product candidates. If RSD1235 or Oxypurinol fail to demonstrate sufficient safety and efficacy in ongoing clinical trials, we will experience potentially significant delays in, or be required to abandon development of, those product candidates. In particular, our business and future revenues will depend on the detailed results of our ACT 1 trial for RSD1235 (iv) supporting the top-line results available to date, and on the favourable results being replicated in the ACT 2 and ACT 3 trials for RSD1235 (iv).

We expect to announce results for two additional ongoing Phase III clinical trials of RSD1235 (iv) in patients with atrial fibrillation and expect to announce results from a Phase II trial of Oxypurinol in 2005. Our share price could decline significantly if those clinical results are not favourable, are delayed or are perceived negatively.

We expect to announce the results of two additional Phase III clinical trials, ACT 2 and ACT 3, for RSD1235 (iv) later in 2005. We also expect to announce clinical results from our Phase II trial of Oxypurinol in the third quarter of 2005. These results may not be favourable or viewed favorably by us or third parties, including investors, equity research analysts and potential collaborators. Share prices for life sciences companies have declined significantly in certain instances where clinical results were not favourable, were perceived negatively or otherwise did not meet expectations. Unfavourable results or negative perceptions regarding the results of clinical trials for any of our product candidates could cause our share price to decline significantly.

We rely on proprietary technology, the protection of which can be unpredictable and costly.

Our success will depend in part upon our ability to obtain patent protection or patent licenses for our technology and products.

Currently, we have 13 pending U.S. provisional patent applications, ten pending U.S. utility patent applications, 31 pending foreign patent applications, and 5 granted foreign patents in Turkey, South Africa, Singapore and Australia and under the European Patent Office, related to RSD1235. While we are currently pursuing various claims, we currently have no issued patents specifically covering RSD1235 in the U.S. or any of the other major commercial markets, and we have no assurance that any such patents will ever issue. We have licensed certain rights under additional patents and patent applications relating to two other families of compounds for antiarrhythmia and local anaesthesia applications.

Currently, we have filed seven pending U.S. provisional patent applications and one international Patent Convention Treaty application (designating all contracting states including the U.S.) relating to Oxypurinol technology. Additionally, we have a license from Johns Hopkins University, or Johns Hopkins, which grants us exclusive patent rights as they relate to the commercial use of xanthine oxidase inhibitors for cardiovascular disease. Our current commercialization strategy focuses upon our license of issued use patents pertaining to xanthine oxidase inhibitors to treat congestive heart failure. In order to obtain additional patent protection surrounding our Oxypurinol technology, we will be required to file patent applications relating to novel processes for manufacturing, delivery, use, new formulations or other aspects of Oxypurinol and use of xanthine oxidase inhibitors in managing cardiovascular disease. We have no assurance that any such patents will be issued.

We intend to file, when appropriate, additional patent applications with respect to inventions. However, because the patent positions of life sciences companies are highly uncertain and involve complex legal and factual questions, it is uncertain that any patents will be issued or that, if issued, they will be of commercial value. It is impossible to anticipate the breadth or degree of protection that patents will afford products developed by us or their underlying technology.

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There is also a risk that any patents issued relating to our RSD1235 products or Oxypurinol technology or any patents licensed to us may be successfully challenged or that the practice of our RSD1235 products or Oxypurinol technology might infringe the patents of third parties. If the practice of our RSD1235 products or Oxypurinol technology infringe the patents of third parties, we may be required to design around such patents, potentially causing increased costs and delays in product development and introduction or precluding us from developing, manufacturing, or selling our planned products. The scope and validity of patents which may be obtained by third parties, the extent to which we may wish or need to obtain patent licenses, and the cost and availability of such licenses are currently unknown. If such licenses are obtained, it is likely they would be royalty-bearing which could reduce our income. If licenses cannot be obtained on an economical basis, delays in market introduction of our planned products could occur or introduction could be prevented, in some cases after the expenditure of substantial funds. If we defend or contest the validity of patents relating to our products or technology or the products or technology of a third party, we could incur substantial legal expenses with no assurance of success.

In certain instances, we may elect not to seek patent protection but instead rely on the protection of our technology through confidentiality agreements or trade secrets. The value of our assets could also be reduced to the extent that third parties are able to obtain patent protection with respect to aspects of our technology or products or if confidential measures we have in place to protect our proprietary technology are breached or become unenforceable. However, third parties may independently develop or obtain similar technology and such third parties may be able to market competing products and obtain regulatory approval through a showing of equivalency to one of our products which has obtained regulatory approval, without being required to undertake the same lengthy and expensive clinical studies that we would have already completed.

Litigation may also be necessary to enforce patents issued or licensed to us or to determine the scope and validity of a third party’s proprietary rights. We could incur substantial costs if we are required to defend ourselves in patent suits brought by third parties, if we participate in patent suits brought against or initiated by our corporate collaborators or if we initiate such suits. Currently, we may not have the necessary resources to participate in or defend any such activities or litigation. Even if we did have the resources to vigorously pursue our interests in litigation, because of the complexity of the subject matter, it is impossible to predict at this point whether we would prevail in any such action. An adverse outcome in litigation or an interference to determine priority or other proceeding in a court or patent office could subject us to significant liabilities, require disputed rights to be licensed from third parties or require us to cease using certain technology or products, any of which may have a material adverse effect on our business, financial condition and results of operations.

Clinical trials for our product candidates are expensive, time consuming and their outcome is uncertain.

Clinical trials are very expensive and difficult to design and implement, which is especially true for trials involving cardiovascular diseases, including the treatment of atrial arrhythmia and the chronic treatment of congestive heart failure. The clinical trial process is also time consuming. We estimate that the clinical trials for our RSD1235(iv), RSD1235 (oral) and Oxypurinol product candidates will continue for several years, but they may take significantly longer to complete. Before we can obtain regulatory approval for the commercial sale of any product candidate, we are required to complete extensive clinical trials to demonstrate its safety and efficacy. The timing of the commencement, continuation and completion of clinical trials may be subject to significant delays relating to various causes, including:

•   our inability to manufacture or obtain sufficient quantities of materials for use in clinical trials;

•   delays arising from our collaborative partnerships;

•   delays in obtaining regulatory approvals to commence a study, or government intervention to suspend or terminate a study;

•   delays, suspension, or termination of the clinical trials due to the institutional review board or independent ethics board responsible for overseeing the study to protect research subjects at a particular study site;

•   delays in identifying and reaching agreement on acceptable terms with prospective clinical trial sites;

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•   slower than expected rates of patient recruitment and enrollment;

•   uncertain dosing issues;

•   inability or unwillingness of medical investigators to follow our clinical protocols;

•   variability in the number and types of subjects available for each study and resulting difficulties in identifying and enrolling subjects who meet trial eligibility criteria;

•   scheduling conflicts with participating clinicians and clinical institutions;

•   difficulty in maintaining contact with subjects after treatment, resulting in incomplete data;

•   unforeseen safety issues or side effects;

•   lack of efficacy during the clinical trials;

•   our reliance on clinical research organizations to conduct clinical trials, which may not conduct those trials with good clinical or laboratory practices; or

•   other regulatory delays.

If we encounter difficulties enrolling patients in our clinical trials, our trials could be delayed or otherwise adversely affected.

Clinical trials for our product candidates require that we identify and enroll a large number of patients with the disorder under investigation. We may not be able to enroll a sufficient number of patients to complete our clinical trials in a timely manner. Patient enrollment is a function of many factors including:

•   design of the protocol;

•   the size of the patient population;

•   eligibility criteria for the study in question;

•   perceived risks and benefits of the drug under study;

•   availability of competing therapies;

•   efforts to facilitate timely enrollment in clinical trials;

•   patient referral practices of physicians; and

•   availability of clinical trial sites.

If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay or terminate ongoing clinical trials.

We will have additional future capital needs and there are uncertainties as to our ability to raise additional funding.

We will require substantial additional capital resources to further develop our product candidates, obtain regulatory approvals and ultimately to commercialize our products. We believe that our current capital resources, including our anticipated milestone payments from Fujisawa Healthcare, Inc., or Fujisawa, under the terms of the collaboration and

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license agreement we entered into with Fujisawa in October 2003, and the proceeds of any offering, will be sufficient to fund our operations as currently anticipated for the next two fiscal years, and should allow us to commercialize RSD1235 (iv) in North America. However, advancing our other product candidates or any new product candidates, through to commercialization will require considerable resources and additional access to capital markets.

In addition, our future cash requirements may vary materially from those now expected. For example, our future capital requirements may increase if:

•   we experience scientific progress sooner than expected in our discovery, research and development projects, if we expand the magnitude and scope of these activities, or if we modify our focus as a result of our discoveries;

•   we experience set backs in our progress with pre-clinical studies and clinical trials are delayed;

•   we experience delays or unexpected increased costs in connection with obtaining regulatory approvals;

•   we experience unexpected or increased costs relating to preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; or

•   we elect to develop, acquire or license new technologies and products.

We could potentially seek additional funding through corporate collaborations and licensing arrangements and/or public or private equity or debt financing. However, if our research and development activities do not show positive progress, or if capital market conditions in general, or with respect to life sciences or development stage companies such as ours are unfavourable, our ability to obtain additional funding on acceptable terms, if at all, will be negatively affected. Additional equity financing could result in significant dilution to our shareholders.

If sufficient capital is not available, we may be required to delay, reduce the scope of, eliminate or divest of one or more of our research or development projects, any of which could have a material adverse effect on our business, financial condition, prospects or results of operations.

Even if any of our product candidates receives regulatory approval, our product candidates will still be subject to extensive post-market regulation.

If we or our collaborators receive regulatory approval for our drug candidates, we will also be subject to ongoing U.S. Food and Drug Administration, or FDA, obligations and continued regulatory review, such as continued safety reporting requirements, and we may also be subject to additional FDA post-marketing study monitoring and reporting obligations, all of which may result in significant expense and limit our ability to commercialize our product.

If any of our product candidates receive U.S. regulatory approval, the FDA may still impose significant restrictions on the indicated uses for which the product may be marketed, impose other restrictions on the distribution or sale of the product, or impose ongoing requirements for potentially costly post-approval studies. In the U.S., advertising and promotional materials must comply with FDA rules in addition to other potentially applicable federal and state laws. The distribution of product samples to physicians in the U.S. must comply with the requirements of the U.S. Prescription Drug Marketing Act. In addition, regulatory agencies subject a product, its manufacturer and the manufacturer’s facilities to continual review and periodic inspections, and require ongoing compliance with detailed regulations governing current Good Manufacturing Practices, or GMP. The subsequent discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, may result in restrictions on the marketing of that product or suspension of manufacturing operations, and could force withdrawal of the product from the market. Holders of approved applications must obtain approval from regulatory authorities for product, manufacturing, and labeling changes, depending on the nature of the change. In the U.S., sales, marketing, and scientific/educational grant programs must comply with the U.S. Medicare-Medicaid Anti-Fraud and Abuse Act, as amended, the U.S. False Claims Act, also as amended, and similar state laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the U.S. Omnibus Budget Reconciliation Act of 1990, as amended, and the U.S. Veteran’s Health Care Act of 1992, as amended. If products are made available to authorized

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users of the U.S. Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws. Failure to comply with applicable legal and regulatory requirements may result in:

•   issuance of warning letters by the FDA or other regulatory authorities;

•   fines and other civil penalties;

•   criminal prosecutions;

•   injunctions, suspensions or revocations of marketing licenses;

•   suspension of any ongoing clinical trials;

•   suspension of manufacturing;

•   delays in commercialization;

•   refusal by the FDA or other regulators to approve pending applications or supplements to approved applications filed by us or our collaborators;

•   refusals to permit products to be imported or exported to or from the U.S.;

•   restrictions on operations, including costly new manufacturing requirements; and

•   product recalls or seizures.

The policies of the FDA and other regulatory authorities may change and additional government regulations may be enacted that could prevent or delay regulatory approval of our drug candidates or further restrict or regulate post-approval activities. We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative action, either in the U.S. or abroad. If we are not able to maintain regulatory compliance, we might not be permitted to market our drugs and our business could suffer.

In order to market any products outside of the U.S., we and our collaborators must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy. Approval procedures vary among countries and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks associated with FDA approval as well as additional presently unanticipated risks. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others. Failure to obtain regulatory approval in other countries or any delay or setback in obtaining such approval could have the same adverse effects associated with regulatory approval in the U.S., including the risk that our product candidates may not be approved for all indications requested and that such approval may be subject to limitations on the indicated uses for which the product may be marketed.

Failure to comply with applicable regulatory requirements can result in, among other things, warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, refusal of the government to renew marketing applications and criminal prosecution.

If we do successfully develop our products, they may not achieve market acceptance and we may not be able to sell them.

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Even if we do develop a safe and effective product and obtain the necessary regulatory approvals, the process will take years, and by the time this occurs, because of the competitive and dynamic nature of the drug development industry, there is a risk that at such time, any such product:

•   will not be economical to market, reimbursable by third party payors, or marketable at prices that will allow us to achieve profitability;

•   will not be successfully marketed or achieve market acceptance;

•   will not be preferable to existing or newly developed products marketed by third parties; or

•   will infringe proprietary rights held by third parties now or in the future that would preclude us from marketing any such product.

The degree of market acceptance of products developed by us, if any, will depend on a number of factors, including the establishment and demonstration in the medical community of the clinical efficacy and safety of our products and their potential advantage over alternative treatment methods, and similar acceptance by public and private third party payors. There is no assurance that physicians, patients, the medical community in general or payors will accept and utilize or reimburse any products that may be developed by us.

In addition, by the time our products, if any, are ready to be commercialized, what we believe to be the market for these products may have changed. Any estimates referenced herein of the number of patients who have received or might have been candidates to use a specific product may not accurately reflect the true market or market prices for such products or the extent to which such products, if successfully developed, will actually be used by patients.

Our failure to successfully introduce and market our products that are under development would have a material adverse effect on our business, financial condition and results of operations.

We do not have the marketing expertise needed to commercialize our potential products.

We do not currently have the resources to market any of our potential products. Marketing of new products presents greater risks than are posed by the continued marketing of proven products. Pursuant to our Fujisawa agreement, we licensed to Fujisawa the rights to market the intravenous formulation of RSD1235 in North America, if and when approved for marketing by the applicable regulatory authorities, and we intend to rely on them for this activity. Should our arrangement with Fujisawa be terminated for any reason, we would need to find a new collaborative partner or undertake this marketing on our own. Furthermore, we have no similar arrangement for our oral formulation of RSD1235 or Oxypurinol. Accordingly, if we are able to commercialize any of our other product candidates, we would either have to develop a marketing capability (including a sales force) or attempt to enter into a joint venture, license, or other arrangement with third parties to provide the financial and other resources needed to market such products. We currently do not employ any sales personnel and we have no experience in hiring and managing such personnel. Our ability to develop our own marketing capability is untested. Our ability to negotiate favourable terms in connection with additional arrangements to market our product candidates, if and when approved, through joint venture, license or other arrangements is unknown at this time.

If we develop products with commercial potential, we have no experience in commercial manufacturing.

We have no experience manufacturing commercial quantities of products and do not currently have the resources to manufacture commercially any products that we may develop. Accordingly, if we were able to develop any products with commercial potential, we would either be required to develop the facilities to manufacture such products independently, or secure a contract manufacturer or enter into another arrangement with third parties to manufacture such products. If we are unable to develop such capabilities or enter into any such arrangement on favourable terms, we may be unable to compete effectively in the marketplace.

Under the terms of our Fujisawa agreement, Fujisawa is responsible for the commercial manufacture of RSD1235 (iv). We are currently using several third parties for the manufacture of the amounts of RSD1235 (iv), RSD1235 (oral) and

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Oxypurinol being used in our clinical trials. Should regulatory approval of the RSD1235 (oral) and Oxypurinol compounds be obtained, we may need to contract with additional third party manufacturers in order to be able to manufacture sufficient quantities of these compounds for commercial sale. Because of the high degree of expertise necessary to produce chemical products, and applicable legal and regulatory requirements such as current GMP requirements, it is a time consuming process to arrange for an alternative manufacturer. We may not be able to identify and qualify any such manufacturers on a timely basis, which may cause significant delay in our development process. Even if we are able to identify and qualify an alternative manufacturer, we may not be able to obtain favourable terms on any manufacturing agreement we enter into with them. We have and will rely on contract manufacturers for the foreseeable future to produce quantities of products and substances necessary for research and development, pre-clinical trials, human clinical trials and product commercialization. It will be important to us that such products can be manufactured at a cost and in quantities necessary to make them commercially viable. At this point in time, we have not attempted to identify, and do not know whether there will be, any third party manufacturers which will be able to meet our needs with respect to timing, quantity and quality for commercial production. In addition, if we are unable to contract for a sufficient supply of required products and substances on acceptable terms, or if we should encounter delays or difficulties in our relationships with manufacturers, our research and development, pre-clinical and clinical testing would be delayed, thereby delaying the submission of products for regulatory approval or the market introduction and subsequent sales of such products. Any such delay may have a material adverse effect on our business, financial condition and results of operations.

Our inability to manage our future growth could impair our business, financial condition, and results of operations.

Our future growth, if any, may cause a significant strain on our management, and our operational, financial and other resources. Our ability to manage our growth effectively will require us to implement and improve our operational, financial, manufacturing and management information systems and to expand, train, manage and motivate our employees. These demands may require the hiring of additional management personnel and the development of additional expertise by management. Any increase in resources devoted to research, product development and sales, marketing and distribution efforts without a corresponding increase in our operational, financial and management information systems could have a material adverse effect on our business, financial condition and results of operations.

Our product candidates are subject to extensive regulation, which can be costly and time consuming, cause unanticipated delays, or prevent the receipt of the required approvals to commercialize products.

The pre-clinical studies and clinical trials of any products developed by us and the manufacturing, labeling, sale, distribution, export or import, marketing, advertising and promotion of any of those products are subject to regulation by federal, provincial, state and local governmental authorities, in the U.S. principally by the FDA, in Canada by the Therapeutic Products Directorate, or TPD, and by other similar regulatory authorities in the European Union, Japan and other jurisdictions. Government regulation substantially increases the cost and risk of researching, developing, manufacturing and selling products. Any product developed by us, if any, must receive all relevant regulatory approvals or clearances from the applicable regulatory authorities before it may be marketed and sold in a particular country.

Currently, in connection with our pre-clinical studies and clinical trials for RSD1235 and Oxypurinol, we are required to adhere to guidelines established by the applicable regulatory authorities. These regulatory authorities and the regulatory process in general require us to conduct extensive pre-clinical studies and clinical trials of each of our product candidates in order to establish its safety and efficacy. These pre-clinical studies and clinical trials can take many years, are highly uncertain, and require the expenditure of substantial resources. We or our collaborative partners must obtain and maintain regulatory authorization to conduct clinical trials. Our pre-clinical research is subject to good laboratory practice and other requirements, and our clinical research to good clinical practice and other requirements. Failure to adhere to these requirements could invalidate our data and lead to other adverse consequences.

In addition to the risk of unfavourable results of our research, because the data obtained from our pre-clinical and clinical activities are susceptible to varying interpretations, our successful completion of the regulatory process is uncertain. We may encounter delays, have limits imposed on us or our product candidates, receive refusals from regulatory authorities to accept our marketing applications for review, or fail to obtain the regulatory approval required from the applicable regulatory authorities to commercialize our product candidates. In addition, delays or rejections may be encountered based upon changes in regulatory policy during the period of product development and/or the period of review of any

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application for regulatory approval or clearance for a product. Delays in obtaining regulatory approvals would adversely affect the marketing of any products developed by us, if any, impose significant additional costs on us, diminish any competitive advantages that we may otherwise have attained and adversely affect our ability to receive royalties and generate revenues and profits. For example, after a request from the FDA for additional clinical and manufacturing data on the use of allopurinol intolerant gout indication for Oxypurinol, we decided to stop pursuing the development of this product for the foreseeable future. Accordingly, despite our expenditures and investment of time and effort, we may never receive any required regulatory approvals for any product candidates developed by us.

We are also subject to numerous federal, provincial, state and local laws, regulations and recommendations relating to safe working conditions, laboratory and manufacturing practices, the experimental use of animals, the environment and the use and disposal of hazardous substances, used in connection with our discovery, research and development work. Although we have not yet been required to expend identifiable additional resources to comply with these regulations, the extent of government regulations may change in a manner which could have an adverse effect on the discovery, development, production, manufacturing, sales, marketing and distribution of our products, and we may be required to incur significant additional costs to comply with future laws or regulations.

We cannot predict whether or not regulatory approval will be obtained for any product we develop. Compounds developed by us, alone or with other parties, may not prove to be safe and effective in clinical trials and may not meet all of the applicable regulatory requirements needed to receive marketing approval. Administering any of our product candidates to humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical trials of our product candidates and could result in the applicable regulatory authorities denying approval of our product candidates for any or all of the targeted indications. If regulatory approval for a product is granted, the approval will be limited to those disease states and conditions for which the product is demonstrated through clinical trials to be safe and effective, and any approval granted may be too narrow to be commercially viable.

We have substantial competition in the life sciences industry and with respect to products we are developing.

The life sciences industry is highly competitive. Many companies, as well as research organizations, currently engage in, or have in the past engaged, in efforts related to the development of products in the same therapeutic areas as we do. Due to the size of the cardiovascular market and the large unmet medical need for products that treat cardiovascular illnesses, a number of the world’s largest pharmaceutical companies are developing, or could potentially develop, products that could compete with ours. Companies including, but not limited to, Boston Scientific, GlaxoSmithKline, Johnson & Johnson, Medtronic, Merck, Pfizer and Sanofi-Aventis all have products in development or in the market that could potentially compete with our RSD1235 or Oxypurinol product candidates.

Many of the companies developing competing technologies and products have significantly greater financial resources and expertise in discovery, research and development, manufacturing, pre-clinical studies and clinical testing, obtaining regulatory approvals and marketing than we do. Other smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Academic institutions, government agencies and other public and private research organizations may also conduct research, seek patent protection and establish collaborative arrangements for discovery, research, clinical development and marketing of products similar to ours. There is a risk that one or more of our competitors may develop more effective or more affordable products than us, or may achieve earlier patent protection or product commercialization than us, or that such competitors will commercialize products that will render our product candidates obsolete, possibly before we are able to commercialize them. Currently, these companies and institutions also compete with us in recruiting and retaining qualified scientific and management personnel as well as in acquiring technologies complementary to our projects. Once we develop a marketable product, in addition to the foregoing, we will face competition with respect to product efficacy and safety, ease of use and adaptability to various modes of administration, acceptance by physicians, the timing and scope of regulatory approvals, availability of resources, reimbursement coverage, price and patent position, including potentially dominant patent positions of others.

Some of our products rely on licenses of proprietary technology owned by third parties.

The manufacture and sale of some of the products we hope to develop may involve the use of processes, products, or information, the rights to which are owned by third parties. At this time, our rights to the use of Oxypurinol arise from our licenses from Johns Hopkins and Genzyme. Our license from Johns Hopkins is an exclusive worldwide license to

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certain patents and patent applications. In addition to license fees already paid, our license from Johns Hopkins requires us to make royalty payments on the net sales of any product we develop with the licensed technology. The license granted by Johns Hopkins and our obligation to make royalty payments terminate on April 17, 2021. Our license from Genzyme is an exclusive worldwide sublicense under an exclusive license Genzyme has obtained from Burroughs Wellcome Co. and The Wellcome Foundation. In addition to initial fees and option fees already paid, our license from Genzyme, as it relates to Oxypurinol for congestive heart failure requires us to make aggregate milestone payments of up to U.S.$3.0 million based on certain clinical events. We are also obligated to pay royalties based on net sales of any products we commercialize from the licensed technology. Although we have obtained these licenses and rights, because of the uncertainty regarding the length of time it may take for us to develop any marketable products with this technology, it is possible these licenses or rights might be terminated or expire during critical periods. Furthermore, because we are at an early stage of product development, we cannot determine if additional licenses or other rights may be required in order to produce a marketable product. If such additional licenses or other rights are crucial for marketing purposes, and we are not able to obtain them on favourable terms, or at all, the commercial value of our products will be significantly impaired. Some of these licenses provide for limited periods of exclusivity that may be extended only with the consent of the licensor. If we experience delays in developing our products and extensions are not granted on any or all of such licenses, our opportunity to realize the benefits of our efforts may be limited.

Our success is dependent upon our ability to enter into, and successfully manage, corporate collaborations with third parties in connection with services we will need for the development and commercialization of our products.

The success of our business is largely dependent on our ability to enter into corporate collaborations regarding the development, clinical testing, the regulatory approval and commercialization of our current product candidates. Fujisawa is responsible for the co-development and commercialization of RSD1235 (iv) in North America pursuant to our Fujisawa agreement. In addition, we are currently exploring additional corporate collaborations or partnerships for RSD1235 (iv) outside of North America and other current projects. There can be no assurance, however, that we will be able to establish any such corporate collaborations or partnerships on favourable terms, or at all, within any projected time frame. Even if we are successful in establishing such relationships, these collaborations may not result in the successful development of our product candidates or the generation of revenue.

In May 2004, Yamanouchi Pharmaceutical Inc. and Fujisawa Pharmaceutical Co., Ltd., the parent of Fujisawa, announced a merger that is to take effect April 1, 2005 to create a new company, Astellas Pharma Inc., or Astellas. Although we believe our relationship with Astellas will be good, there can be no assurance that we will be able to maintain this relationship in a manner as favourable as our current relationship with Fujisawa. In addition, there can be no assurance that the merger will result in the synergies intended, which may also impact negatively on our relationship with Astellas and on our Fujisawa agreement.

Our success is highly dependent upon the performance of Fujisawa and future corporate collaborators, if any. The amount and timing of resources to be devoted to activities by Fujisawa and future corporate collaborators, if any, are not within our direct control and, as a result, there can be no assurance that Fujisawa or any future corporate collaborators, will commit sufficient resources to our research and development projects or the commercialization of our products. Fujisawa, or any future corporate collaborators, might not perform their obligations as expected and might pursue existing or other development-stage products or alternative technologies in preference to those being developed in collaboration with us. Operationally, Fujisawa is responsible for the management of our ACT 3 Phase III trial and for filing any new drug applications, or NDAs, in respect of RSD1235 (iv). Disputes may arise with respect to ownership of technology developed under any such corporate collaborations.

The success of our business is largely dependent upon our ability to enter into corporate collaborations and to effectively manage issues that arise from such collaborations. Management of these relationships will require significant time and effort from our management team and effective allocation of our resources. Our ability to simultaneously manage a number of corporate collaborations is untested.

We are subject to the risks associated with the use of hazardous materials in research and development conducted by us.

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Our research and development activities involve the use of hazardous materials and chemicals. We are subject to federal, provincial, state, local and foreign laws and regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste products. Although we believe that our safety procedures for handling and disposing of such materials will comply with the standards prescribed by federal, provincial, state, local and/or foreign regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we could be held liable for any damages that result and any such liability could exceed our resources. We have secured a blanket property insurance policy to cover costs related to accidental damage to our properties and interruption of our business. If we are required to institute additional safety procedures because we are found not to be in compliance or if more stringent or additional regulations are adopted, we may be required to incur significant costs to comply with environmental laws and regulations, which might have a material adverse effect on our business, financial condition and results of operations.

If we manufacture pharmaceutical products, the products will need to comply with Good Manufacturing Practices in the U.S., Canada and/or other jurisdictions.

The manufacturer of our pharmaceutical products, if any, will be subject to current GMP or similar regulations prescribed by the applicable regulatory authorities prior to the commercial manufacture of any such products in the countries in which the products are manufactured, and on an ongoing basis. As we will be dependent on third parties, our ability to ensure that any entity manufacturing products on our behalf is able to comply with GMP or satisfy certain regulatory inspections in connection with the manufacture of our proposed products will be limited. Failure or delay by any manufacturer of our products to comply with GMP or similar regulations or satisfy regulatory inspections would have a material adverse effect on us, including potentially by preventing us from being able to supply products, for clinical trials or commercial sales.

Our business may be materially adversely affected by existing legislation and the continuing efforts of governmental and third party payors to contain or reduce the costs of health care through various means.

In recent years, federal, provincial, state and local officials and legislators have proposed, or are reportedly considering proposing, a variety of price-based reforms to the healthcare systems in the U.S. and other countries. Some proposals include measures that would limit or eliminate payments for certain medical procedures and treatments or subject the pricing of pharmaceuticals to government controls. Furthermore, in certain foreign markets the pricing or profitability of healthcare products is subject to government control and other measures that have been prepared by legislators and government officials. While we cannot predict whether any such legislative or regulatory proposals or reforms will be adopted, the adoption of any such proposals or reforms could adversely affect the commercial viability of our potential products. Significant changes in the healthcare system in the U.S., Canada and abroad may have a substantial impact on the manner in which we conduct our business. Such changes also could have a material adverse effect on our ability to raise capital. Moreover, our ability to commercialize products may be adversely affected to the extent that such proposals have a material adverse effect on our business, financial condition and results of operations.

In addition, in the U.S. and other countries, sales of healthcare products are dependent in part on the availability of reimbursement to the consumer from third party payors, such as government and private insurance plans. Third party payors are increasingly challenging the prices charged for medical products and services, and therefore uncertainty exists as to the reimbursement of existing and newly approved healthcare products. If we succeed in bringing one or more products to market, there can be no assurance that these products will be considered cost effective and that reimbursement to the consumer will be available or will be sufficient to allow us to sell our products on a competitive basis. Finally, given the potential market constraints on pricing, the availability of competitive products in these markets may further limit our flexibility in pricing and in obtaining adequate reimbursement for our potential products. If adequate coverage and reimbursement levels are not provided by government and third party payors for uses of our products, the market acceptance of our products would be adversely affected.

Recently enacted U.S. federal legislation could adversely impact our ability to economically price our potential products.

In many of the markets where we or our collaborative partners would commercialize a product following regulatory approval, the prices of pharmaceutical products are subject to direct price controls (by law) and to drug reimbursement programs with varying price control mechanisms. In the U.S., there has been an increased focus on drug pricing in recent

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years. Although there are currently no direct government price controls over private sector purchases in the U.S., federal legislation requires pharmaceutical manufacturers to pay prescribed rebates on certain drugs to enable them to be eligible for reimbursement under certain public health care programs such as Medicaid. Various states have adopted further mechanisms under Medicaid and otherwise that seek to control drug prices, including by disfavoring certain higher priced drugs and by seeking supplemental rebates from manufacturers. Managed care has also become a potent force in the market place that increases downward pressure on the prices of pharmaceutical products.

U.S. federal legislation, enacted in December 2003, has altered the way in which physician-administered drugs covered by Medicare are reimbursed. Under the new reimbursement methodology, physicians are reimbursed based on a product’s average sales price. This new reimbursement methodology has generally led to lower reimbursement levels, although experience with the new reimbursement methodology is limited, and could be subject to change in the future. The new U.S. federal legislation also has added an outpatient prescription drug benefit to Medicare, effective January 2006. In the interim, the U.S. Congress has established a discount drug card program for Medicare beneficiaries. Both benefits will be provided primarily through private entities, which will attempt to negotiate price concessions from pharmaceutical manufacturers. These negotiations may increase pressures to lower prices. While the new law specifically prohibits the U.S. government from interfering in price negotiations between manufacturers and Medicare drug plan sponsors, some members of Congress are pursuing legislation that would permit the U.S. government to use its enormous purchasing power to demand discounts from pharmaceutical companies, thereby creating de facto price controls on prescription drugs. In addition, the new U.S. law contains triggers for U.S. Congressional consideration of cost containment measures for Medicare in the event Medicare cost increases exceed a certain level. These cost containment measures could include some sorts of limitations on prescription drug prices. The viability of our products and our results of operations could be materially harmed by the different features of the Medicare prescription drug coverage legislation, by the potential effect of such legislation on amounts that private insurers will pay for our products and by related healthcare reforms that may be enacted or adopted in the future.

The use of pharmaceutical products may expose us to product liability claims.

The products we are developing, and will attempt to develop, will, in most cases, undergo extensive clinical testing and will require regulated approval from the applicable regulatory authorities prior to sale in the U.S., Canada, the European Union and other countries or regions, respectively. However, despite all reasonable efforts to ensure safety, it is possible that we or our partners will sell products which are defective, to which patients react in an unexpected manner, or which are alleged to have harmful side effects. The sale of such products may expose us to potential liability. Additionally, we may be exposed to product liability claims in the development of the products through administration of the drug candidates to volunteers and patients in clinical trials. Such liability might result from claims made directly by consumers or by life sciences companies or others selling such products. It is impossible to predict the scope of injury or liability from such defects or unexpected reactions, or the impact on the market for such products of any allegations of these claims (even if unsupported), or the measure of damages which might be imposed as a result of any claims or the cost of defending such claims. Although our shareholders would not have personal liability for such damages, the expenses of litigation and/or settlements in connection with any such injuries or alleged injuries and the amount of any award imposed on us in excess of existing insurance coverage, if any, may have a material adverse impact on us and on the price of our common shares. In addition, any liability that we may have as a result of the manufacture of any products could have a material adverse effect on our financial condition, business and results of operations, to the extent insurance coverage for such liability is not available. At present, we have secured limited product liability coverage in an amount equal to what we believe are industry norms for our current stage of development, which may or may not cover all potential liability claims if any arose. Obtaining insurance of all kinds has recently become increasingly more costly and difficult and, as a result, such insurance may not be available at all, may not be available on commercial terms or, if obtained, may be insufficient to satisfy asserted claims.

We are dependent upon our key personnel to achieve our scientific and business objectives.

As a technology-driven company, intellectual input from key management and scientists is critical to achieve our scientific and business objectives. Consequently, our ability to retain these individuals and attract other qualified individuals is critical to our success. The loss of the services of key individuals might significantly delay or prevent achievement of our scientific or business objectives. In addition, because of a relative scarcity of individuals with the high degree of education and scientific achievement required for our business, competition among life sciences companies for qualified employees is intense and, as a result, we may not be able to attract and retain such individuals

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on acceptable terms, or at all. In addition, because we do not maintain “key person” life insurance on any of our officers, employees or consultants, any delay in replacing such persons, or an inability to replace them with persons of similar expertise, would have a material adverse effect on our business, financial condition and results of operations.

We also have relationships with scientific collaborators at academic and other institutions, some of whom conduct research at our request or assist us in formulating our research and development strategies. These scientific collaborators are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. In addition, these collaborators may have arrangements with other companies to assist such other companies in developing technologies that may prove competitive to us.

We have employment contracts of varying lengths with all of our key executives, which include incentive provisions for the granting of stock options which vest over time, designed to encourage such individuals, to stay with us. However, a declining share price, whether as a result of disappointing progress in our development programs or as a result of market conditions generally, could render such agreements of little value to our key executives. In such event, our key executives could be susceptible to being hired away by our competitors who could offer a better compensation package.

Legislative actions, potential new accounting pronouncements and higher insurance costs are likely to impact our future financial position or results of operations.

Future changes in financial accounting standards may cause adverse, unexpected revenue fluctuations and affect our financial position or results of operations. New pronouncements and varying interpretations of pronouncements have occurred with greater frequency and are expected to occur in the future, and we may make or be required to make changes in our accounting policies in the future. Compliance with changing regulations of corporate governance and public disclosure may result in additional expenses. Changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for companies such as ours, and insurance costs are increasing as a result of this uncertainty.

We have licensed certain of our intellectual property to our Barbados subsidiary. There is no assurance these arrangements will be respected by the applicable authorities or that the relevant regulations will not be changed.

In December 2004, we entered into an agreement with our wholly-owned subsidiary in Barbados under which our Barbados subsidiary was granted an exclusive license, limited to certain existing medical indications, to exploit RSD1235 within certain specified countries. This license is subject to the existing licenses we granted to Fujisawa under our Fujisawa agreement. We also assigned to our Barbados subsidiary, subject to certain reservations of rights thereunder, all of our rights and interests to our Fujisawa agreement and our Barbados subsidiary assumed all of our liabilities and obligations under that agreement.

We have effected these transactions and organized our foreign operations in part based on assumptions about various tax laws, foreign currency exchange and capital repatriation laws and other relevant laws of a number of jurisdictions. While we believe that such assumptions are reasonable, we cannot assure that taxing or other authorities will reach the same conclusion. Furthermore, if such jurisdictions were to change or modify such laws, we could suffer adverse tax and financial consequences.

We may face exposure to adverse movements in foreign currency exchange rates when our products are commercialized, if at all.

We intend to generate revenue and expenses internationally which are likely to be denominated in U.S. and other foreign currencies. Our intended international business will be subject to risks typical of an international business including, but not limited to, differing tax structures, a myriad of regulations and restrictions, and general foreign exchange rate volatility. A decrease in the value of such foreign currencies relative to the Canadian dollar could result in losses from currency exchange rate fluctuations. To date we have not generated sufficient revenues to warrant the necessity of hedging against risks associated with foreign exchange rate exposure. Although we may do so in the future, we cannot be sure that any hedging techniques we may implement will be successful or that our business, results of operations, financial condition and cash flows will not be materially adversely affected by exchange rate fluctuations.

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DIVIDENDS

We have not declared or paid any dividends on our common shares since our incorporation. We currently anticipate that we will retain any earnings to finance expansion and development of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon our results of operations, financial condition, current and anticipated cash needs, contractual restrictions, restrictions imposed by applicable law and other factors that our board of directors deem relevant.

CAPITAL STRUCTURE

Our authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series. As at February 25, 2005, 41,010,750 common shares and no preferred shares were issued and outstanding. In addition, as of February 25, 2005, there were 4,866,493 common shares issuable upon the exercise of outstanding stock options at a weighted average exercise price of $5.12 per share, 303,166 common shares reserved for future grant or issuance under our stock option plan and 176,500 common shares issuable upon the exercise of outstanding warrants at a weighted-average exercise price of $4.10 per share. All of the common shares are of the same class and, once issued, rank equally as to entitlement to dividends, voting powers (one vote per share) and participation in assets upon dissolution or winding-up. No common shares have been issued subject to call or assessment. The common shares contain no pre-emptive or conversion rights and have no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds. Provisions as to the modification, amendment or variation of such rights or provisions are contained in the our articles and bylaws and in the Canada Business Corporations Act.

The preferred shares may be issued from time to time in one or more series. The terms of each series of preferred shares, including the number of shares, the designation, rights, preferences, privileges, priorities, restrictions, conditions and limitations will be determined at the time of creation of each such series by our board of directors, without shareholder approval, provided that all preferred shares will rank equally within their class as to dividends and distributions in the event of our dissolution, liquidation or winding-up.

Our by-laws provide that at any meeting of our shareholders a quorum shall be shareholders present in person or represented by proxy holding shares representing not less than 20% of the votes entitled to be cast at the meeting. If there is only one shareholder the quorum is one person present and being, or representing by proxy, such shareholder. Nasdaq’s listing standards require a quorum for shareholder meetings to be not less than 33 1/3% of a corporation’s outstanding voting shares. As a foreign private issuer and because our quorum requirements are consistent with generally accepted business practices in Canada, our country of domicile, we have been exempted from Nasdaq’s quorum requirement.

MARKET FOR SECURITIES

Our common shares are listed on the Toronto Stock Exchange in Canada (trading symbol: COM) and in the United States on the NASDAQ National Market (trading symbol: CRME).

The following table sets forth, for the periods indicated, the reported high and low prices (in Canadian dollars) and volume traded on the TSX.

Month	High	Low	Close	Volume
Jan-04	$5.39	$4.35	$5.04	3,761,579
Feb-04	$6.19	$4.91	$5.35	5,731,469
Mar-04	$5.94	$5.26	$5.90	5,316,392
Apr-04	$7.34	$5.90	$6.78	7,208,443
May-04	$7.15	$6.26	$6.75	3,193,405
Jun-04	$7.74	$6.50	$7.67	5,002,340
Jul-04	$8.00	$5.81	$5.90	2,182,044

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Month	High	Low	Close	Volume
Aug-04	$6.30	$4.50	$6.29	1,372,789
Sep-04	$6.85	$5.80	$6.28	1,618,459
Oct-04	$6.45	$5.40	$5.44	1,295,695
Nov-04	$7.45	$5.41	$7.05	4,154,151
Dec-04	$10.50	$6.40	$9.09	9,191,961

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The following table sets forth, for the periods indicated, the reported high and low prices (in United States dollars) and volume traded on NASDAQ.

Month	High	Low	Close	Volume
Jul-04	$5.90	$4.00	$4.44	503,509
(commencing July 6)
Aug-04	$4.86	$3.50	$4.85	167,222
Sep-04	$5.39	$4.56	$5.00	197,370
Oct-04	$5.06	$4.36	$4.48	243,366
Nov-04	$6.70	$4.41	$5.93	523,006
Dec-04	$8.75	$5.25	$7.64	6,912,463

ESCROWED SECURITIES

To our knowledge, none of our securities are held in escrow.

DIRECTORS AND EXECUTIVE OFFICERS

The following sets forth the names and province or state and country of residence of our directors and executive officers, the offices held by them in the Corporation, their current principal occupations, their principal occupations during the last five years and the month and year in which they became directors or officers. The term of each director expires on the date of our next annual general meeting.

Name, Province/State and Country of
Residence and Present	Date Became a	Principal Occupation
Position with the Corporation	Director/Officer	Last Five Years
Mark C. Rogers(1)(2) Florida, United States Chairman of the Board and Director	March 8, 2002	July 2003 to present – Principal, Bradmer Ventures; August 2002 to July 2003 – Chief Executive Officer, Innovative Drug Delivery Systems, Inc; June 1998 to September 2002 – President and Chief Executive Officer, Paramount Capital, Inc.
Robert W. Rieder(2) British Columbia, Canada President and Chief Executive Officer and Director	April 21, 1997 as Director and April 16, 1998 as Officer	April 1998 to present – President and Chief Executive Officer, Cardiome Pharma Corp.
Jackie M. Clegg(3)(4) Washington, DC, United States Director	September 2, 2004	September 2001 to the present – Founder and Managing Partner, Clegg International Consultants, L.L.C.; June 1997 to July 2001 – Vice Chair Export-Import Bank of the United States

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Name, Province/State and Country of
Residence and Present	Date Became a	Principal Occupation
Position with the Corporation	Director/Officer	Last Five Years
Alan Mark Ezrin Florida, United States Chief Scientific Officer and Director	January 15, 2001	January 2001 to present – Chief Scientific Officer, Cardiome Pharma Corp.; June 2000 to January 2001 – Chief Scientific Officer, ConjuChem Inc.
Kenneth H. Galbraith(3)(4) British Columbia, Canada Director	May 12, 2003	October 2000 to present – President, Gigha Consulting Ltd.; February 1988 to October 2000 – Executive Vice President and Chief Financial Officer, QLT, Inc.
Fred H. Mermelstein(1) New Jersey, United States Director	March 8, 2002	July 2003 to present – Chief Executive Officer, Innovative Drug Delivery Systems, Inc. (“IDDS”); 1998 to present – President, IDDS; 1996 to July 2003 – Director of Venture Capital, Paramount Capital Investments, Inc.
Harold H. Shlevin(3)(4) Georgia, United States Director	October 14, 2004	July 2000 to present – President and CEO, Solvay Pharmaceuticals, Inc. (“Solvay”); Sept. 1998 to July 2000 – Senior Vice President – Business Development and Scientific Affairs, Solvay
Ralph Snyderman(1)(2) North Carolina, United States Director	March 11, 2002	1998 to present – President and Chief Executive Officer, Duke University Health System; 1989 to Present – Chancellor for Health Affairs, Duke University Medical Center
Douglas G. Janzen British Columbia, Canada Chief Financial Officer	January 6, 2003	January 2003 to present – Chief Financial Officer, Cardiome Pharma Corp.; January 2002 to January 2003 – Managing Director, Sprott Securities Inc.; July 1999 to September 2001 – Head of Research and Senior Analyst, Loewen Ondaatje McCutcheon Limited
Charles J. Fisher Indiana, United States Chief Medical Officer and Executive Vice President, Clinical and Regulatory Affairs	January 17, 2005	January 2005 to present – Executive Vice President, Clinical Development and Regulatory Affairs and Chief Medical Officer, Cardiome Pharma Corp.; January 2002 to August 2004 – Divisional Vice President of Global Pharmaceutical Development, Abbott Laboratories; January 1998 to January 2002 – Executive Director and Clinical Research Fellow, Eli Lilly & Co.

(1)	Member of the Compensation Committee.
(2)	Member of the Nomination Committee.
(3)	Member of the Audit Committee.
(4)	Member of the Corporate Governance Committee.

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As at February 28, 2005 our directors and executive officers owned, directly or indirectly, or exercised control of or direction over, less than 5% of our outstanding common shares.

Directors and Executive Officers

The following are short biographies of our directors and executive officers:

Mark C. Rogers, MD, Chairman of the Board and Director. Dr. Rogers has been our Chairman of the Board since March 11, 2002. Dr. Rogers is currently Principal of Bradmer Ventures. Previously, Dr. Rogers served as President of Paramount Capital, Inc., Paramount Capital Investments, LLC and Paramount Capital Asset Management, Inc. Dr. Rogers is a physician trained in four medical specialties, including cardiology. He was appointed Professor and Chairman of the Department of Anesthesiology and Critical Care Medicine at The Johns Hopkins University, is the author of 150 publications and 11 books and is a member of the National Academy of Sciences’ Institute of Medicine. Dr. Rogers is the Chair of our Nomination Committee and a member of our Compensation Committee.

Robert W. Rieder, MBA, President, Chief Executive Officer and Director. Mr. Rieder has been our President and Chief Executive Officer since April 1998. Mr. Rieder has extensive experience in venture capital investing and in operational management. He was Vice-President at MDS Ventures Pacific Inc., the Vancouver-based affiliate of MDS Capital Corp., and has served as a director for nine public and private technology companies. Mr. Rieder is a member of our Nomination Committee.

Jackie M. Clegg, Director. Ms. Jackie Clegg currently serves as a Founder and Managing Partner of Clegg International Consultants, LLC, or CIC. CIC is a consulting firm focusing on strategic advice, crisis management and Washington representation, especially for businesses with an international interest. In July 2003, Ms. Clegg joined the board of directors of Blockbuster Inc., where she serves as an independent member on the Audit Committee, the Corporate Governance and Nominating Committee, and Chair of the Special Committee for Divestiture. Ms. Clegg also is a member of the board of directors for the Chicago Board of Trade and on the board of directors for Innovative Drug Delivery systems. Previous to CIC, Ms. Clegg served as Vice Chair of the Board of Directors, First Vice President and Chief Operating Officer of the Export-Import Bank of the U.S, or Ex-Im Bank. Prior to joining Ex-Im Bank, she served as a staff member on the U.S. Senate Committee on Banking and as an associate staff member to the U.S. Senate Committee on Appropriations. Ms. Clegg is a member of our Corporate Governance Committee and Audit Committee. Ms. Clegg’s experience related to her responsibilities as an audit committee member include her tenure with the Ex-Im Bank where she was called upon to analyze financial statements and documents to determine creditworthiness for a large number of transactions and as Chief Operating Officer with direct oversight over all internal budgeting decisions and responsibility for all documentation presented to and from the external auditors and to the Office of Management and Budget.

Alan M. Ezrin, PhD, Chief Scientific Officer and Director. Dr. Ezrin has been a director and our Chief Scientific Officer since January 2001. Dr. Ezrin has extensive research and development and business experience in both the large pharmaceutical industry and in the biotechnology sector in the U.S. and Canada. Dr. Ezrin was with Sterling-Winthrop Research Group from 1982 to 1993. In 1993, Dr. Ezrin joined Glycomed Inc. as Assistant Vice-President of Experimental Therapeutics focusing on carbohydrate-based therapeutics. Following the successful merger of Glycomed Inc. into Ligand Pharmaceuticals Inc., he joined RedCell Inc. as Vice President of Pre-Clinical Development in 1995. In 1997, he led the restructuring of RedCell Inc. through creating ConjuChem Inc. in Montreal. At ConjuChem, Dr. Ezrin was acting Chief Operating Officer and then Chief Scientific Officer. He has published numerous scientific articles and holds numerous patents for inventions in the pharmaceutical industry.

Kenneth H. Galbraith, CA, Director. Mr. Galbraith has been our director since May 12, 2003. Mr. Galbraith is currently the President of Gigha Consulting Ltd., a technology consulting and investment management company formed in October 2000. Previously, he was employed by QLT Inc., a biotechnology company where he progressed to the position of Executive Vice President and Chief Financial Officer during his 13 year tenure. Mr. Galbraith received his Bachelor of Commerce (Honours) from the University of British Columbia in 1985 and was admitted as a Chartered Accountant in B.C. in 1988. He has chaired the audit committee for 6 other publicly traded companies in the past and has been a lecturer for the Institute of Chartered Accountants of British Columbia in financial accounting and auditing. Mr. Galbraith is the Chair of both of our Corporate Governance Committee and Audit Committee.

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Fred H. Mermelstein, PhD, Director. Dr. Mermelstein has been our director since March 2002. Dr. Mermelstein currently serves as President and Chief Executive Officer of Innovative Drug Delivery Systems, Inc. Dr. Mermelstein was Director of Venture Capital at Paramount Capital Investments, LLC., and is a member of the Orion Biomedical GP, LLC. He currently serves as a director of Adherex Technologies, Inc., Innovative Drug Delivery Systems, and the Jordan Heart Foundation. He also served as director and Chief Scientific Officer of PolaRx Biopharmaceuticals and President of Androgenics Technologies, Inc. Dr. Mermelstein has served as advisor to both the New York Emerging Industries Fund and Technology Transfer Fund of the New York Economic Development Organization. Dr. Mermelstein received a PhD joint degree in both pharmacology and toxicology at Rutgers University and University of Medicine and Dentistry of New Jersey-Robert Wood Johnson Medical School, or UMDNJ-RWJ. He completed his post-doctoral training in transcription/gene regulation as a research fellow of the Howard Hughes Medical Institute located in the Department of Biochemistry at UMDNJ-RWJ. Dr. Mermelstein is the author of 14 publications in peer reviewed scientific journals, three patents, and recipient of several research grants from both the U.S. Army and National Institutes of Health. Dr. Mermelstein is the Chair of our Compensation Committee and a member of our Scientific Advisory Board.

Harold H. Shlevin, PhD, Director. Dr. Shlevin joined Solvay Pharmaceuticals, Inc. as Senior Vice-President of business development and scientific affairs in August 1998 and became President and Chief Executive Officer on June 1, 2000. He has over two decades of diverse healthcare business-related experience, involving every aspect of the pharmaceutical business from research and development to commercial operations. He is a member of Solvay Pharmaceuticals, Inc.’s board of directors and management committee, an officer of the corporation, and Chairman of the board of directors of its independently owned and operated subsidiary Unimed Pharmaceuticals, Inc. Dr. Shlevin is a member of the global pharmaceutical management committee for Solvay Pharmaceuticals Inc., the consortium of Solvay S.A.’s worldwide pharmaceutical business, and a member of the board of Solvay Draka. His past industry experience includes leadership roles at G.D. Searle and Co., Ciba-Geigy Corp. and Ciba Vision. Dr. Shlevin is a member of our Corporate Governance Committee and Audit Committee. Dr. Shlevin’s experience related to his responsibilities as an audit committee member include his tenure as CEO of Solvay and as Senior Vice President where he was regularly involved in assessments and analysis of financial statements and projections and acquisitions of companies of products. Dr. Shlevin has also taken courses in financial strategies.

Ralph Snyderman, MD, Director. Dr. Snyderman is Chancellor Emeritus, Duke University and James B. Duke Professor of Medicine in the Duke University School of Medicine, and is currently a Visiting Professor in the Department of Medicine at the University of California, San Francisco. He served as Chancellor for Health Affairs and Dean of the School of Medicine from 1989 to July 2004. His bibliography exceeds 350 manuscripts as well as numerous books. In 1987, Dr. Snyderman left Duke University to join Genentech, Inc. as Senior Vice President for medical research and development and a member of its senior leadership team. Dr. Snyderman is a member of our Nomination Committee and Compensation Committee.

Douglas G. Janzen, Chief Financial Officer. Mr. Janzen joined us as Chief Financial Officer in January of 2003. He has extensive experience in corporate banking and financing within the biotech sector. Most recently, Mr. Janzen served as Managing Director – Health Sciences, and Partner, at Sprott Securities Inc., a Toronto based investment bank. Prior to Sprott Securities Inc., Mr. Janzen was Head of Research, and Senior Health Sciences Analyst at Loewen, Ondaatje, McCutcheon Limited, another Toronto based investment bank.

Charles J. Fisher, MD, Chief Medical Officer, Executive Vice-President, Clinical Development & Regulatory Affairs. Dr. Fisher has over 20 years of experience in clinical research trials and Phase I to IV drug development. He was most recently Divisional Vice President of Global Pharmaceutical Development at Abbott Laboratories Limited, responsible for the global development of pharmaceuticals, biologics and drug coated medical devices. Prior to Abbott Laboratories Limited, he was an Executive Director and Clinical Research Fellow at Eli Lilly & Co. During his time with Eli Lilly & Co., he was responsible for developing business strategy for critical care, cardiovascular, inflammation and bio-products, therapeutics areas, identification of disease state targets, and business development. Prior to joining industry, Dr. Fisher had a distinguished career as Professor and Head, Critical Care Medicine at the Cleveland Clinic Foundation. He has personally designed, conducted and executed over 20 clinical trials as Principal Investigator. From 1977-1997 Dr. Fisher held various professor and director positions at the University of Manitoba, the University of California at Davis Medical Center, Case Western Reserve University and The Cleveland Clinic Foundation.

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Scientific Advisory Board

We have formed a Scientific Advisory Board composed of scientists having professional experience and valuable expertise in various therapeutic or research fields that relate to our research and development programs. At our request, these scientific advisors review and provide us with advice regarding individual research and development projects. Advisors have all executed confidentiality agreements. The Scientific Advisory Board meets at least annually and makes its recommendations directly to management. Members of the Scientific Advisory Board are paid a fee for each meeting attended plus travel expenses and each member has been awarded options under our incentive stock option plan. The following are brief biographies of the members of this advisory board:

Dr. Mermelstein, one of our directors, is also a member of our Scientific Advisory Board. Please refer to his biography under the section entitled “Directors and Executive Officers” above.

Eduardo Marbán, M.D., Ph.D.

Dr. Marbán is a member of our Scientific Advisory Board and our consultant Dr. Marbán currently serves as Professor of Medicine, Physiology and Biomedical Engineering at Johns Hopkins. In addition, Dr. Marbán is the founder and Director of the Institute of Molecular Cardiobiology, is the Michel Mirowski, M.D. Professor of Cardiology and is Chief of Cardiology, all at Johns Hopkins. Dr. Marbán is an active full-time staff member of the Department of Medicine and is attending physician, Coronary Care Unit, The Johns Hopkins Hospital.

Dr. Marbán has received numerous awards and honours to this point in his career including the Research Achievement Award, International Society for Heart Research, the Basic Research Prize, American Heart Association, the Louis and Artur Lucian Award for Research in Cardiovascular Diseases and a MERIT Award from the National Heart, Lung and Blood Institute. He is currently Director of the Johns Hopkins Center for Cardiovascular Clinical Research funded by the Donald W. Reynolds Foundation, a member of the Association of American Physicians, a member of the Association of University Cardiologists, a member of the American Society for Clinical Investigation and is a Fellow of both the American College of Cardiology and the American Heart Association. He is past chairman of the Basic Cardiovascular Sciences Council of the American Heart Association and past-President of the Cardiac Muscle Society.

Dr. Marbán has published or currently has in press a total of 256 scientific articles and is currently the Editor in Chief, Circulation Research, a Consulting Editor of Circulation and the Journal of Molecular and Cellular Cardiology and is on the International Advisory Board, Japanese Circulation Journal. In addition, he is the invited referee for over 20 research journals including New England Journal of Medicine, Nature, and Science.

Dr. Marbán was a member of the Cardiac Research Advisory Panel, Procter and Gamble Pharmaceuticals, was a consultant and founder of Physiome Sciences, Inc., a consultant to Otsuka Pharmaceutical Co., Inc. and is a founder of Cardiome, Inc., our wholly-owned subsidiary.

Four patents have been issued and eight patents are pending by Dr. Marbán.

Dr. Marbán received his B.S. in Mathematics, summa cum laude from Wilkes College, M.D. from Yale University in 1980 and his Ph.D from Yale University in Physiology in 1981. Dr. Marbán received his board certification from the American Board of Internal Medicine in 1984 and Cardiovascular Subspecialty in 1987.

Dr. Denis Roy, M.D.

Dr. Roy is Professor and Chair of the Department of Medicine at the University of Montreal, Quebec, Canada. He did his training in medicine and cardiology in Montreal and his fellowship in cardiac electrophysiology at the University of Limburg, Maastrich, Netherlands and at the Hospital of the University of Pennsylvania in Philadelphia. Dr. Roy has been at the Montreal Heart Institute since 1982 where he has served as Chief of Electrophysiology and Head of Cardiology/Medicine. Dr. Roy has published over 100 papers in his areas of special interest, including mechanisms and management of arrhythmias, sudden cardiac death, catheter ablation, pacemakers, implantable defibrillators and antiarrhythmic drugs. He was the principal investigator for the Canadian Trial of Atrial Fibrillation (CTAF) study, and is the Chairman of the ongoing Atrial Fibrillation and Congestive Heart Failure (AF-CHF) multicenter international trial,

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which is funded by the Canadian Institutes of Health Research. Dr. Roy is the President of the Canadian Cardiovascular Society. He chaired our Recent Onset AF Trial (CRAFT). Dr. Roy is currently President of the Canadian Cardiovascular Society.

Craig M. Pratt, M.D.

Craig M. Pratt is Professor of Medicine in the Department of Medicine, Section of Cardiology at Baylor College of Medicine. He is the Director of Research for the Methodist DeBakey Heart Centre and Director of the Coronary Intensive Care Unit for The Methodist Hospital, Houston, Texas. His research has focused on the development of new drug and device therapies for the treatment of arrhythmias, heart failure, ischemia and hypertension. He has been the principal investigator of numerous NHLBI trials including BHAT, TIMI, CAPS, CAST, ESVEM, SOLVD, and the recently published AFFIRM trial. He has published over 200 scientific journal articles, books and book chapters. He is a consultant for the U.S. Food and Drug Administration (FDA) and served as Chairman of the Cardio-Renal Advisory Board for seven years.

Joshua M. Hare, M.D.

Dr. Hare, Professor of Medicine and Biomedical Engineering, is Director of the Cardiac Transplant/Heart Failure Program and the Cardiobiology Section of the Institute for Cell Engineering at Johns Hopkins University School of Medicine. He received his medical degree from the Johns Hopkins University School of Medicine in 1988. He subsequently served an internship, residency and fellowship in Internal Medicine at the Johns Hopkins Hospital (1991) followed by a fellowship in Cardiovascular Medicine at the Brigham and Women’s Hospital (1994). Dr. Hare has an extensive track-record of translational research, performing studies in both experimental systems and in humans with congestive heart failure and diseases of the heart muscle. He is the Principal Investigator and Chairman of the Steering Committee of the OPT-CHF study. In addition, Dr. Hare is actively involved in clinical trials of new therapies for heart muscle disease, including spearheading the application of new stem-cell based therapies to patients with diseases of the heart. Dr. Hare holds multiple NIH grants, has authored or co-authored over 100 original articles, book chapters, review articles and editorials, and has received the Paul Beeson Physician Scientist Scholars in Aging Research Award.

Wilson S. Colucci, M.D.

Dr. Colucci is the Thomas J. Ryan Professor of Medicine, Chief of Cardiovascular Medicine at Boston University School of Medicine, and Co-Director of the Cardiovascular Center at Boston University Medical Center. He is also Director of the Myocardial Biology Unit at Boston University School of Medicine. He is the author of over 170 peer-review publications, as well as numerous reviews, chapters and books dealing with the pathophysiology of myocardial failure. He has received the Clinician-Scientist and Established Investigator Awards of the American Heart Association, the Medal of Merit from the International Society of Heart Research, and was elected to the American Society of Clinical Investigation. He is a member of several American Heart Association Councils including, Basic Science, High Blood Pressure and Circulation, and is a Fellow of the American College of Cardiology and a member of the Association of University Cardiologists. He is a member of the Executive Council of the Heart Failure Society of America, an organization of which he is a founding member. He has been a member of numerous peer-review groups and currently is the Chairman of the American Heart Association, Northeast Affiliate, Scientific Peer Review Committee, and a member of the National Institutes of Health Cardiovascular and Renal Study Section.

Peter R. Kowey, M.D.

Dr. Peter Kowey is a graduate of St. Joseph’s University and the University of Pennsylvania School of Medicine, Philadelphia, Pennsylvania. He completed his residency training in Internal Medicine at Penn State University and was a Fellow in cardiovascular medicine and research at the Harvard University School of Public Health, the Peter Bent Brigham Hospital and the West Roxbury VA Hospital. After this training, he joined the faculty at the Medical College of Pennsylvania, as Director of the CCU and Arrhythmia Program, and rose to the rank of full Professor. He went on to become Chief of the Division of Cardiovascular Diseases at the Lankenau Hospital Main Line Health System and is President of the Main Line Health Heart Center. He is also Professor of Medicine and Clinical Pharmacology at Jefferson Medical College. He also holds professorships at MCP/Hahnemann University.

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Dr. Kowey is a Fellow of several professional organizations including the Clinical Council of the American Heart Association, the American College of Cardiology, the American College of Physicians, the College of Physicians of Philadelphia, the American College of Chest Physicians, and the American College of Clinical Pharmacology. He was a founding member of the Philadelphia Arrhythmia Group and a charter member of the North American Society of Pacing and Electrophysiology. He has served on numerous committees for each of these organizations including program and abstract review committees for national and international programs. He spent nine years as a member of the Cardiorenal Drug Advisory Committee, four years on the Cardiovascular Devices Committee of the Food and Drug Administration, and is on the Expert Advisory Panel of the US Pharmacopeial convention.

Dr. Kowey’s principal area of interest has been cardiac rhythm disturbances. He has been the recipient of over 100 grants and has authored or co-authored over 300 papers and scientific reports. He is the co-editor of the definitive textbook in his field, now in its second edition. He is a referee for manuscript review for 18 journals and an ad hoc grant reviewer for the VA system. While working with industry, he has pioneered the development of many antiarrhythmic drugs and antitachycardia devices that are used around the world for the treatment of patients with life-threatening cardiac rhythm problems. Dr. Kowey also maintains a consultative arrhythmia practice and has been recognized as a leader in his field in several publications.

AUDIT COMMITTEE

Audit Committee Mandate

The charter of the Audit Committee is attached as Schedule “A”.

Composition and Relevant Education and Experience

The audit committee is comprised of three independent directors: Jacquie M. Clegg, Kenneth H. Galbraith and Harold H. Shlevin. A description of the education and experience of each audit committee member that is relevant to the performance of his or her responsibilities as an audit committee member may be found above under the heading “Directors and Executive Officers.”

Pre-Approval of Non-Audit Services

All audit and non-audit services performed by our auditors for the twelve-month period ended December 31, 2004 were pre-approved by our Audit Committee. It is our policy that all audit and non-audit services performed by our auditors will continue to be pre-approved by our Audit Committee.

External Auditor Service Fees (By Category)

The following table sets out the fees billed to us by Ernst & Young LLP for professional services in each of the years ended December 31, 2003 and 2004. During these years, Ernst & Young LLP was our only external auditor.

	December 31, 2004		December 31, 2003
Audit Fees(1)		79,835		273,300
Audit-Related Fees(2)		—		—
Tax Fees(3)		11,290		4,379
All Other Fees(4)		—		—

(1)   Audit fees consist of fees for the audit of our annual financial statements or services that are normally provided in connection with statutory and regulatory filings or engagements.

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(2)	Audit related fees are fees for assurance and related services related to the performance of the audit or review of the annual financial statements that are not reported under “Audit Fees.” These include due diligence for business acquisitions, audit and accounting consultations regarding business acquisitions, and other attest services not required by statute.
(3)	Tax fees included tax compliance, tax planning, tax advice and various taxation matters.
(4)	There were no other services provided by our principal accountant, other than audit and tax services.

Under the SEC rules implementing the Sarbanes-Oxley Act of 2002, Canadian issuers filing reports in the United States must disclose whether their audit committees have at least one “audit committee financial expert”. The Board has determined that Kenneth Galbraith qualifies as a financial expert under such rules. In addition, all members of the Audit Committee are considered financially literate under applicable Canadian laws.

LEGAL PROCEEDINGS

There are no outstanding legal proceedings to which we are party, nor, to our knowledge, are any such proceedings contemplated.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

None of our directors, senior officers or principal shareholders, or any associate or affiliate of the foregoing, has had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year prior to the date of this AIF that has materially affected or will materially affect us.

TRANSFER AGENTS AND REGISTRARS

Our transfer agent and registrar is Pacific Corporate Trust Company located at 625 Howe Street, 10^th Floor, Vancouver, British Columbia, V6C 3B8 and Commerce Court West, Suite 1926, P.O. Box 56, Toronto, Ontario, M5L 1B9.

MATERIAL CONTRACTS

We have not, during our financial year ending December 31, 2004, entered into any material contracts other than contracts in the ordinary course of business.

INTERESTS OF EXPERTS

Our auditor is Ernst & Young LLP, Chartered Accountants, 700 West Georgia Street, Vancouver, British Columbia, V7Y 1C7. Ernst & Young LLP has reported on our fiscal 2004 audited consolidated financial statements, which have been filed with the securities regulatory authorities. As of February 28, 2005, Ernst & Young LLP does not hold any registered or beneficial interest, directly or indirectly, in our, or any of our associates’ or affiliates’ securities.

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ADDITIONAL INFORMATION

Additional information relating to us may be found on SEDAR at www.sedar.com.

Executive Compensation

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of our securities, options to purchase securities and interests of insiders in material transactions, if applicable, is contained in the information circular for our annual and special general meeting held on May 25, 2004.

Undertaking to Provide Documents

We will, upon request to our Assistant Secretary, 6^th Floor 6190 Agronomy Road, Vancouver, British Columbia, Canada V6T 1Z3, provide to any person or company, the documents specified below:

(a)   when our securities are in the course of a distribution under a preliminary short-form prospectus or a short-form prospectus:

(i)	one copy of our latest Annual Information Form, together with one copy of any document, or the pertinent pages of any document, incorporated therein by reference;
(ii)	one copy of our comparative financial statements for the most recently completed financial year for which financial statements have been filed, together with the auditors’ report thereon, and one copy of any of our interim financial statements for any period after its most recently completed financial year;
(iii)	one copy of our Information Circular in respect of its most recent annual general meeting; and
(iv)	one copy of any other documents that are incorporated by reference into the preliminary short-form prospectus or the short-form prospectus and are not required to be provided under (i) to (iii) above; or

(b)   at any other time, one copy of any of the documents referred to in (a)(i), (ii) and (iii) above, provided that we may require the payment of a reasonable charge if the request is made by a person or company who is not our security holder.

Additional Financial Information

Additional financial information is provided in our consolidated financial statements and MD&A for the twelve months ended December 31, 2004.

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SCHEDULE “A”
AUDIT COMMITTEE CHARTER

Date of Adoption: August 16, 2004

Purpose

The Audit Committee (the “Committee”) is responsible for ensuring accounting integrity and solvency. It is also responsible for ensuring the appropriateness of insurance, investment of liquid funds, information security, contracts, and liability. The audit committee is to assist the Board of Directors in fulfilling its oversight responsibilities by:

•   Reviewing the integrity of the consolidated financial statements of the Corporation;

•   Recommending to the Board of Directors the appointment of the independent auditor and reviewing the independent auditor’s qualifications and independence;

•   Reviewing the performance of the Corporation’s independent auditors;

•   Reviewing the timely compliance by the Corporation with all legal and regulatory requirements for audit and related financial functions of the Corporation;

•   Reviewing financial information contained in public filings of the Corporation prior to filing;

•   Reviewing earnings announcements of the Corporation prior to release to the public;

•   Reviewing the Corporation’s systems of and compliance with internal financial controls;

•   Reviewing the Corporation’s auditing, accounting and financial reporting processes; and

•   Dealing with all complaints regarding accounting, internal accounting controls and auditing matters.

Membership and Reporting

1.   The Committee will include only independent directors and will consist of three members, all of whom shall have a working familiarity with basic finance and accounting practices and shall be able to read and understand financial statements. The current membership of the Committee is:

Ken Galbraith, CA
Jackie Clegg
Harold Shlevin Chair
Member
Member

2.	Appointments to the Committee will be reviewed on an annual basis and made by the Board and will provide for continuity of membership, while at the same time allowing fresh perspectives to be added.
3.	The Chair of the Committee will be rotated among its members every three years.
4.	The Committee will report to the full board of the Corporation.
5.	At least one member of the Committee shall be a “financial expert”, as such term is defined by applicable legislation.

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Terms of Reference

1.	The Committee will meet as required, but at least once quarterly (to review the quarterly statements before the statements are presented to the Board); special meetings will be authorized at the request of any member of the Committee or at the request of the Corporation’s external auditors. The external auditors will be informed about, and can attend, meetings of the Committee as deemed appropriate by the Chairman of the Committee. Provision will be made to meet privately with external auditors on a quarterly basis and to meet privately with management at least once per annum.
2.	The Committee will review, with the external auditors, the results of the external audit and any changes in accounting practices or policies and the financial statements impact thereof. In addition, the Committee will review any accruals, provisions, or estimates that have a significant effect upon the financial statements as well as other sensitive matters such as disclosure of related party transactions.
3.	The Committee will review and approve interim financial statements on behalf of the board of directors and sign a resolution to that effect.
4.	In addition, the Committee will review other published financial statements which require approval by the board of directors. These will include year-end audited statements, statements in prospectus and other offering memoranda and statements required by regulatory authorities. To sign a resolution to the effect that the financial statements that are being presented to the Board are satisfactory, and recommend their approval.
5.	The Committee will review the adequacy and effectiveness of internal controls over the accounting and financial reporting systems within the Corporation, either directly, or through the external auditors and obtain and review a report from the independent auditor, at least annually, regarding same.
6.	The Committee will review policies and practices concerning regular examination of officers’ expenses and perquisites, including the use of Corporation assets.
7.	The Committee will review the basis and amount of the external auditors’ fees and pre-approve all auditing services and permitted non-audit services.
8.	The Committee will consider whether the external auditors should be re-appointed and recommend accordingly to the board of directors. At least on an annual basis, the Committee shall evaluate the qualifications, performance and independence of the independent auditor and the senior audit partners having primary responsibility for the audit, including considering whether the auditor’s quality controls are adequate.
9.	The Committee shall have procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters and for the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.
10.	The Committee shall review and reassess the adequacy of this Charter annually. The Committee shall annually review the Committee’s own performance.
11.	The Committee shall have the authority, to the extent it deems necessary or appropriate, to retain independent legal, accounting or other advisors. The Corporation shall provide for appropriate funding, as determined by the Committee, for payment of compensation to the independent auditor for the purpose of rendering or issuing an audit report and to any advisors employed by the Committee.
12.	The Committee should issue the reports required of the Committee to be included in the Corporation’s annual proxy statement. The Committee shall review and recommend to the Board the approval of all documents filed with securities regulatory authorities.

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EX-1.2

Exhibit 1.2

Industry Canada	Industrie Canada
Certificate of Continuance	Certificat de prorogation
Canada Business Corporations Act	Loi canadienne sur les sociétés par actions
CARDIOME PHARMA CORP.	402208-4
Name of corporation-Dénomination de la société	Corporation number-Numéro de la société
I hereby certify that the above-named corporation was continued under section 187 of the Canada Business Corporations Act, as set out in the attached articles of continuance.	Je certifie que la société susmentionnée a été prorogée en vertu de l’article 187 de la Loi canadienne sur les sociétés par actions, tel qu’il est indiqué dans les clauses de prorogation ci-jointes.
	March 8, 2002 / le 8 mars 2002
Director - Directeur	Date of Continuance - Date de la prorogation

Industry Canada	Industrie Canada	FORM 11 ARTICLES OF CONTINUANCE	FORMULE 11 CLAUSES DE PROROGATION
Canada Business Corporations Act	Loi canadienne sur les societes par actions	(SECTION 187)	(ARTICLE 187)

I - Name of the Corporation	Denomination sociale de la societe
CARDIOME PHARMA CORP.
2 — The province or territory in Canada where the registered office is to be situated	La province ou le territoire au Canada ou se situera le siege socia
BRITISH COLUMBIA
3 — The classes and the maximum number of shares that the corporation is authorized to issue	Categories et le nombre maximal d’actions que la societe est autorisee a emettre
The Corporation is authorized to issue an unlimited number of Common shares without par value.
4 — Restrictions, if any, on share transfers	Restrictions sur le transfert des actions, sill y a lieu
None
5 — Number (or minimum and maximum number) of directors Minimum of three and a maximum of twenty	Nombre (ou nombre minimal et maximal) d’administrateurs
6 — Restrictions, if any, on business the corporation may carry on	Limites imposees a I’activite commerciale de la societe, s’il y a lieu
None
7 — (1) If change of name effected, previous name	(1) S’il y a changement de denomination sociale, indiquer la denomination sociale anterieure
Name not changed
(2) Details of incorporation	(2) Details de la constitution
Incorporated in British Columbia on December 12, 1986 under number 318841
8 — Other provisions, if any	Autres dispositions, s’iI y a lieu

The directors may, within the maximum number permitted by the Articles, appoint one or more directors, who shall hold office for a term expiring not later than the close of the next annual general meeting of the shareholders, but the total number of directors so appointed may not exceed one-third of the number of directors elected at the previous annual general meeting of the shareholders.

Meetings of the shareholders may be held anywhere in Canada or in New York, New York, Seattle, Washington, San Francisco, California, Los Angeles, California, San Diego, California or Boston, Massachusetts.

Date	Signature	7 — Capacity of — En qualite de
March 8, 2002		Corporate Secretary
For Departmental Use Only A l’usage du ministere seulement	Printed Name — Nom en letters moulees
Corporation No. 402208-4 N’ de la societe	Christina Yip

Industry Canada	Industrie Canada
Certificate of Amendment	Certificat de modification
Canada Business Corporations Act	Loi canadienne sur les sociétés par actions

CARDIOME PHARMA CORP.		402208-4
Name of corporation-Dénomination de la société		Corporation number-Numéro de la société
I hereby certify that the articles of the above-named corporation were amended:		Je certifie que les statuts de la société susmentionnée ont été modifiés:
a) under section 13 of the Canada Business Corporations Act in accordance with the attached notice;	o	a) en vertu de l’article 13 de la Loi canadienne sur les sociétés par actions, conformémént à l’avis ci-joint;
b) under section 27 of the Canada Business Corporations Act as set out in the attached articles of amendment designating a series of shares;	o	b) en vertu de l’article 27 de la Loi canadienne sur les sociétés par actions, tel qu’il est indiqué dans les clauses modificatrices ci-jointes désignant une série d’actions;
c) under section 179 of the Canada Business Corporations Act as set out in the attached articles of amendment;	þ	c) en vertu de l’article 179 de la Loi canadienne sur les sociétés par actions, tel qu’il est indiqué dans les clauses modificatrices ci-jointes;
d) under section 191 of the Canada Business Corporations Act as set out in the attached articles of reorganization;	o	d) en vertu de l’article 191 de la Loi canadienne sur l’ les sociétés par actions, tel qu’il est indiqué dans les clauses de réorganisation ci-jointes;
		May 14, 2003 / le 14 mai 2003
Director - Directeur		Date of Amendment - Date de modification

Industry Canada

Canada Business
Corporations Act Industrie Canada

Loi canadienne sur
les sociétés par actions FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 177) FORMULE 4
CLAUSES MODIFICATRICES
(ARTICLES 27 OU 177)

1 – Name of the Corporation – Dénomination de la société	2 – Corporation No. - N* de la société
Cardiome Pharma Corp.	402208-4
3 – The articles of the above-named corporation are amended as       follows:	Les statuts de la société mentionnée ci-dessus sont modifiés de la façon suivante :

BE IT RESOLVED, AS A SPECIAL RESOLUTION, THAT:

1.	the Articles of Continuance of the Company be amended to create an unlimited number of Preferred shares without par value;
2.	to effect the foregoing amendment, the Articles of Continuance of the Company be amended by deleting section 3 thereof and in its place substituting the following:

“3. The Corporation is authorized to issue:

(a)	an unlimited number of Common shares without par value; and
(b)	an unlimited number of Preferred shares without par value.

The Common shares and the Preferred shares shall have the rights, privileges,
restrictions and conditions attached hereto.”

Date	Signature	4 – Capacity of – En qualité de
May 12, 2003		Secretary
For Departmental Use Only Á I’usage du ministère seulement	Printed Name – Nom en letters moulées
May 16, 2003
Filed Déposée

Schedule “A”

Rights and Restrictions Attaching to Preferred Shares and Common Shares

1.    PROVISIONS ATTACHING TO THE PREFERRED SHARES

The Preferred shares, as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1.1    Directors’ Authority to Issue in One or More Series

The board of directors of the Corporation may issue the Preferred shares at any time and from time to time in one or more series. Before the first shares of a particular series are issued, the board of directors of the Corporation shall fix the number of shares in such series and shall determine, subject to the limitations set out in the articles, the designation, rights, privileges, restrictions and conditions to be attached to the shares of such series including, without limitation, the rate or rates, amount or method or methods of calculation of dividends thereon, the time and place of payment of dividends, whether cumulative or non-cumulative or partially cumulative and whether such rate, amount or method of calculation shall be subject to change or adjustment in the future, the currency or currencies of payment of dividends, the consideration and the terms and conditions of any purchase for cancellation, retraction or redemption rights (if any), the conversion or exchange rights attached thereto (if any), the voting rights attached thereto (if any), and the terms and conditions of any share purchase plan or sinking fund with respect thereto. Before the issue of the first shares of a series, the board of directors of the Corporation shall send to the Director (as defined in the Canada Business Corporations Act) articles of amendment containing a description of such series including the designation, rights, privileges, restrictions and conditions determined by the board of directors of the Corporation.

1.2    Ranking of Preferred Shares

The Preferred shares of any series may be given such preferences, not inconsistent with sections 1.1 to 1.3 hereof, over the Common shares and over any other shares ranking junior to the Preferred shares as may be determined in the case of such series of Preferred shares. No rights, privileges, restrictions or conditions attached to a series of Preferred shares shall confer upon a series a priority in respect of dividends or return of capital over any other series of Preferred shares then outstanding. If any cumulative dividends or amounts payable on a return of capital in respect of a series of Preferred shares are not paid in full, the Preferred shares of all series shall participate rateably in respect of such dividends, including accumulations, if any, in accordance with the sums that would be payable on such shares if all such dividends were declared and paid in full, and in respect of any repayment of capital in accordance with the sums that would be payable on such repayment of capital if all sums so payable were paid in full; provided however, that in the event of there being insufficient assets to satisfy in full all such claims to dividends and return of capital, the claims of the holders of the Preferred shares with respect to repayment of capital shall first be paid and satisfied and any assets remaining thereafter shall be applied towards the payment and satisfaction of claims in respect of dividends.

1.3    Voting Rights

Except as hereinafter referred to or as otherwise required by law or in accordance with any voting rights which may from time to time be attached to any series of Preferred shares, the holders of the Preferred shares as a class shall not be entitled as such to receive notice of, to attend or to vote at any meeting of the shareholders of the Corporation.

2.    PROVISIONS ATTACHING TO THE COMMON SHARES

The Common shares of the Corporation shall have attached thereto the following rights, privileges, restrictions and
conditions:

2.1    Dividends

Subject to the prior rights (if any) of the holders of the Preferred shares and any other shares ranking senior to the Common shares with respect to priority in the payment of dividends, the holders of Common shares shall be entitled to receive dividends and the Corporation shall pay dividends thereon, as and when declared by the board of directors of the Corporation out of monies properly applicable to the payment of dividends, in such amount and in such form as the board of directors of the Corporation may from time to time determine and all dividends which the board of directors of the Corporation may declare on the Common shares shall be declared and paid in equal amounts per share on all Common shares at the time outstanding.

2.2    Dissolution

In the event of the dissolution, liquidation or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs, subject to the prior rights (if any) of the holders of the Preferred shares and any other shares ranking senior to the Common shares with respect to priority in the distribution of assets upon dissolution, liquidation, winding-up or distribution for the purpose of winding-up, the holders of the Common shares shall be entitled to receive the remaining property and assets of the Corporation.

2.3    Voting Rights

The holders of the Common shares shall be entitled to receive notice of and to attend all meetings of the shareholders of the Corporation and shall have one vote for each Common share held at all meetings of the shareholders of the Corporation, except meetings at which only holders of another specified class or series of shares of the Corporation are entitled to vote separately as a class or series.

EX-1.3

Exhibit 1.3

CARDIOME PHARMA CORP.
(the “Corporation”)

Extract from a Directors’ Resolution passed on April 19, 2004

AMENDMENT OF BY-LAWS

    RESOLVED that By-Law No. 1 is amended (“Amendment No. 1”) by deleting Sections
9.32 and 9.33 of Article 9 and inserting the following in their place:

“9.32 Quorum. Save as herein otherwise provided, a quorum for the transaction of business at any meeting of shareholders of the Corporation shall be shareholders present in person or represented by proxy, holding not less than 20% of the shares of the Corporation entitled to be voted at such meeting. If there is only one shareholder the quorum is one person present and being, or representing by proxy, such shareholder. The directors, the Secretary, or, in his absence, an Assistant Secretary, and the solicitor of the Corporation shall be entitled to attend at any meeting of shareholders but no such person shall be counted in the quorum or be entitled to vote at any meeting of shareholders unless he shall be a shareholder or proxyholder entitled to vote thereat.

9.33 Quorum. If a quorum is not present within thirty minutes after the time appointed for a meeting of shareholders, the meeting, if convened upon requisition by the shareholders shall be dissolved. In any other case, if a quorum is not present within thirty minutes after the time appointed for a meeting, then the meeting shall be adjourned to such date being not less than seven days later. At such adjourned meeting the holders of shares carrying voting rights of not less than 10% of the shares of the Corporation who are present in person or represented by proxy shall constitute a quorum thereat and may transact the business for which the meeting was originally called notwithstanding that such quorum is not present throughout the meeting.”

The undersigned, being the Corporate Secretary of the Corporation, hereby certifies on behalf of the Corporation that the foregoing is a true and correct extract of resolutions in writing signed by all of the directors of the Corporation and confirmed at a meeting of the shareholders of the Corporation held on May 25, 2004.

DATED the 10th day of June, 2004.

CARIOME PHARMA CORP.

By:
	Joseph A. Garcia
	Corporate Secretary

BY-LAW NO. 1
OF
CARDIOME PHARMA CORP.

TABLE OF CONTENTS

Part	Page
1.   INTERPRETATION		1
2.   DIRECTORS		2
3.   MEETING OF DIRECTORS		4
4.   REMUNERATION OF DIRECTORS		5
5.   SUBMISSION OF CONTRACTS OR TRANSACTIONS TO SHAREHOLDERS FOR APPROVAL		6
6.   FOR THE PROTECTION OF DIRECTORS AND OFFICERS		6
7.   INDEMNITIES TO DIRECTORS AND OFFICERS		6
8.   OFFICERS		7
9.   SHAREHOLDERS’ MEETINGS		9
10. SHARES		14
11. TRANSFER OF SECURITIES		16
12. DIVIDENDS		18
13. VOTING SHARES AND SECURITIES IN OTHER COMPANIES		19
14. INFORMATION AVAILABLE TO SHAREHOLDERS		19
15. NOTICES		20
16. CHEQUES, DRAFTS AND NOTES		21
17. CUSTODY OF SECURITIES		21
18. EXECUTION OF INSTRUMENTS		21
19. FINANCIAL YEAR		23
20. BORROWING		23
21. DISCLOSURE OF INTEREST OF DIRECTORS		24

BY-LAW NO. 1

A by-law relating generally to the conduct of
the affairs of Cardiome Pharma Corp.

BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of Cardiome Pharma Corp. (hereinafter called the “Corporation”) as follows:

1.      INTERPRETATION

1.1    Definitions. In this by-law and all other by-laws of the Corporation, unless the context otherwise specifies or requires:

(a)	“Act” means the Canada Business Corporations Act, R.S.C. 1985, c. C-44 as from time to time amended and every statute that may be substituted therefor and, in the case of such substitution, any references in the by-laws of the Corporation to provisions of the Act shall be read as references to the substituted provisions therefor in the new statute or statutes;
(b)	“Regulations” means the Regulations under the Act as published or from time to time amended and every regulation that may be substituted therefor and, in the case of such substitution, any references in the by-laws of the Corporation to provisions of the Regulations shall be read as references to the substituted provisions therefor in the new regulations;
(c)	“by-law” means any by-law of the Corporation from time to time in force and effect;
(d)	“registered owner” or “registered holder” when used with respect to a share in the authorized capital of the Corporation means the person registered in the register of shareholders or a branch register of shareholders in respect of such share;
(e)	“shareholder” means those persons defined as such in the Act and includes any person who owns shares in the capital of the Corporation and whose name is entered in the register of shareholders or a branch register of shareholders;
(f)	“writing”, “in writing” and like expressions include all modes of representing, or reproducing and recording words in visible form, including: printing; lithographing; typewriting; and photostatic, electrostatic and mechanical copying;
(g)	all terms which are contained in the by-laws of the Corporation and which are defined in the Act or the Regulations shall have the meanings given to such terms in the Act or the Regulations; and
(h)	the singular shall include the plural and the plural shall include the singular; the masculine shall include the feminine; and the word “person” shall include bodies corporate, corporations, companies, partnerships, syndicates, trusts and any number or aggregate of persons.

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2.      DIRECTORS

2.1    Number. The number of directors shall, subject to the articles of the Corporation and any unanimous shareholder agreement, be fixed by the directors or if not so fixed, shall be the number of directors elected or continued as directors at the immediately preceding annual meeting of the Corporation. The business and affairs of the Corporation shall be managed by a board of directors of whom at least twenty-five percent shall be resident Canadians and of whom, if any of the issued securities of the Corporation are or were a part of a distribution to the public, at least two shall not be officers or employees of the Corporation or any affiliate of the Corporation.

2.2    Election and Removal. At each annual meeting of the Corporation, all the directors shall retire and the shareholders entitled to vote thereat shall elect a board of directors consisting of the number of directors for the time being fixed pursuant to the by-laws.

2.3    Retiring. A retiring director shall be eligible for re-election.

2.4    No Meeting. Where the Corporation fails to hold an annual meeting in accordance with the Act, the directors then in office shall be deemed to have been elected or appointed as directors on the last day on which the annual meeting could have been held pursuant to the Act and the by-laws and they may hold office until other directors are appointed or elected or until the day on which the next annual meeting is held, whichever shall first occur.

2.5    Continued. If at any meeting at which there should be an election of directors the places of any of the retiring directors are not filled by such election, such of the retiring directors who are not re-elected as may be requested by the newly-elected directors shall, if willing to do so, continue in office to complete the number of directors for the time being fixed pursuant to the by-laws until further new directors are elected at a general meeting convened for the purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being fixed pursuant to the by-laws, such number shall be fixed at the number of directors actually elected or continued in office.

2.6    Casual Vacancy. The remaining directors or director shall have the power from time to time to appoint any person as a director to fill any casual vacancy occurring in the board of directors.

2.7    Additional Directors. Between successive annual meetings the directors shall have power to appoint one or more additional directors but the number of additional directors shall not be more than one-third of the number of directors elected or appointed at the last annual meeting. Any director so appointed shall hold office only until the next following annual meeting of the Corporation, but shall be eligible for election at such meeting and, so long as he is an additional director, the number of directors shall be increased accordingly.

2.8    Alternate Directors. Any director may by instrument in writing delivered to the Corporation appoint any person to be his alternate to act in his place at meetings of the directors at which he is not present unless the directors shall have reasonably disapproved the appointment of such person as an alternate director and shall have given notice to that effect to the director appointing the alternate director within a reasonable time after delivery of such instrument to the Corporation. Every such alternate shall be entitled to notice of meetings of the directors and to attend and vote as a director at a meeting at which the person appointing him is not personally present, and, if he is a director, to have a separate vote on behalf of the director he is representing in addition to his own vote. A person may be appointed as an alternate for more than one director and shall have a separate vote for each director so represented. A director may at any time in writing by instrument, telegram, telex, facsimile or any method

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of transmitting legibly recorded messages delivered to the Corporation revoke the appointment of an alternate appointed by him. The remuneration payable to such an alternate shall be payable out of the remuneration of the director appointing him.

2.9    Vacation of Office. The office of a director shall ipso facto be vacated: (a) if he becomes bankrupt or suspends payments of his debts generally or compromises with his creditors or makes an authorized assignment or is declared insolvent; (b) if he is found to be a mentally incompetent person; or (c) if by notice in writing to the Corporation he resigns his office.

2.10    Ceasing. A director ceases to hold office when he:

(a)	dies;
(b)	resigns his office by notice in writing delivered to the Corporation;
(c)	is convicted of an indictable offence and the other directors shall have resolved to remove him;
(d)	ceases to be qualified to act as a director pursuant to the Act; or
(e)	is removed in accordance with the Act and this by-law.

2.11    Resignation. Every resignation of a director becomes effective at the time a written resignation is delivered to the Corporation or at the time specified in the resignation, whichever is later.

2.12    Removal. Subject to the Act, the Corporation may by ordinary resolution remove any director before the expiration of his period of office and may by an ordinary resolution appoint another person in his stead.

2.13    Powers. The directors shall manage or supervise the management of the affairs and business of the Corporation and shall have the authority to exercise all such powers of the Corporation as are not, by the Act or by the articles or by-laws, required to be exercised by the Corporation in general meeting.

2.14    Attorney. The directors may from time to time by power of attorney or other instrument under seal appoint any person to be the attorney of the Corporation for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under this by-law and excepting the powers of the directors relating to the constitution of the Board and of any of its committees and the appointment or removal of officers and the power to declare dividends) and for such period, with such remuneration and subject to such conditions as the directors may think fit, and any such appointment may be made in favour of any of the directors or any of the shareholders of the Corporation or in favour of any corporation, or of any of the shareholders, directors, nominees or managers of any corporation, firm or joint venture and any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him.

2.15    Committee of Directors. The directors may appoint from among their number a committee of directors and subject to the Act may delegate to such committee any of the powers of the directors.

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2.16    Shareholder Qualification. A director shall not be required to hold a share in the capital of the Corporation as qualification for his office but shall be qualified as required by the Act to become or act as a director. Any director who is not a shareholder shall be deemed to have agreed to be bound by the provisions of the articles and by-laws of the Corporation to the same extent as if he were a shareholder of the Corporation.

3.    MEETING OF DIRECTORS

3.1    Place of Meeting. Meetings of the board of directors and of a committee of directors (if any) may be held within or outside of Canada.

3.2    Call. A director may, and the Secretary or an Assistant Secretary upon request of a director shall, call a meeting of the board at any time. Reasonable notice shall be given for any meeting specifying the place, day and hour of such meeting and shall be given by mail, postage prepaid, addressed to each of the directors and alternate directors at his address as it appears on the books of the Corporation or by leaving it at his usual business or residential address or by telephone, telex, facsimile, email or any method of transmitting legibly recorded messages. Accidental omission to give notice of a meeting of directors to, or by the non-receipt of notice by, any director shall not invalidate the proceedings at that meeting.

3.3    Waive Notice. Any director of the Corporation may file with the Secretary a document executed by him waiving notice of any past, present or future meeting or meetings of the directors being, or required to have been, sent to him and may at any time withdraw such waiver with respect to meetings held thereafter. After the filing of such waiver with respect to future meetings, and until such waiver is withdrawn, no notice of any meeting of the directors need be given to such director or, unless the director otherwise requires in writing to the Secretary, to his alternate director, and all meetings of the directors so held shall be deemed not to be improperly called or constituted by reason of notice not having been given to such director or alternate director.

3.4    No Notice. It shall not be necessary to give notice of a meeting of directors to any director or alternate director if such meeting is to be held immediately following a general meeting at which such director shall have been elected or is the meeting of directors at which such director is appointed.

3.5    Chair. The Chairman of the Board, if any, or in his absence the President, shall preside as chairman at every meeting of the directors, or if neither the Chairman of the Board nor the President is present within fifteen minutes of the time appointed for holding the meeting or is willing to act as chairman, or, if the Chairman of the Board, if any, and the President have advised the Secretary that they will not be present at the meeting, the directors present shall choose one of their number to be chairman of the meeting. With the consent of the meeting, the solicitor of the Corporation may act as chairman of a meeting of the directors.

3.6    Vacancy. The directors may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number fixed pursuant to the by-laws of the Corporation as the necessary quorum of directors, the directors may act for the purpose of increasing the number of directors to that number, or to summon a special meeting of the Corporation, but for no other purpose. If the directors fail to call a meeting or if there are no directors in the office, the meeting may be called by any shareholder.

3.7    Defect. Subject to the provision of the Act, all acts done at any meeting of the directors or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it be

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afterwards discovered that there was some defect in the qualification, election or appointment of any such directors or of the members of such committee or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly elected or appointed and was qualified to be a director.

3.8    Quorum. The board of directors may from time to time fix the quorum required for the transaction of business at a meeting of the board of directors and until so fixed the quorum will be a majority of the then current number of directors, or if the number of directors is fixed at one, shall be one director.

3.9    Meetings by Telephone or Electronic Conference. A director may participate in a meeting of the board or of any committee of the directors by means of conference telephones or other communications facilities by means of which all directors participating in the meeting can hear each other. A director participating in a meeting in accordance with this by-law shall be deemed to be present at the meeting and to have so agreed and shall be counted in the quorum therefor and be entitled to speak and vote thereat.

3.10    Voting. The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings, as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes the chairman shall not have a second or casting vote. Meetings of the board held at regular intervals may be held at such place, at such time and upon such notice (if any) as the board may by resolution from time to time determine.

3.11    Resolution in Lieu of Meeting. Notwithstanding any of the foregoing provisions of this by-law, a resolution consented to in writing, whether by document, telegram, telex, facsimile or any method of transmitting legibly recorded messages, by all of the directors or their alternates shall be as valid and effectual as if it had been passed at a meeting of the directors duly called and held. Such resolution may be in two or more counterparts which together shall be deemed to constitute one resolution in writing. Such resolution shall be filed with the minutes of the proceedings of the directors and shall be effective on the date stated thereon or on the latest day stated on any counterpart. A resolution may be consented to by a director or alternate director who has an interest in the subject matter of the resolution provided that he has otherwise complied with the provisions of the articles, by-laws and the Act.

3.12    Seconds. No resolution proposed at a meeting of directors need be seconded, and the chairman of any meeting may move or propose a resolution.

4.    REMUNERATION OF DIRECTORS

4.1    Remuneration. The remuneration of the directors may from time to time be determined by the directors or, if the directors so decide, by ordinary resolution of the shareholders. Such remuneration may be in addition to any salary or other remuneration paid to any director in his capacity as officer or employee of the Corporation. The directors shall be reimbursed for reasonable travelling, hotel and other expenses they incur in and about the business of the Corporation and if any director shall perform any professional or other services for the Corporation that in the opinion of the directors are outside the ordinary duties of a director or shall otherwise be specially occupied in or about the Corporation’s business, he may be paid a remuneration to be fixed by the board, or, at the option of such director, by the Corporation in general meeting, and such remunaration may be either in addition to, or in substitution for any other remuneration that he may be entitled to received. The directors on behalf of the Corporation, unless otherwise determined by ordinary resolution, may pay a gratuity or pension or allowance on retirement to any director who has held any office or position with the corporation or to his

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spouse or dependants and may make contributions to any fund and pay premiums for the purchase or
provision of any such gratuity, pension or allowance.

5.    SUBMISSION OF CONTRACTS OR TRANSACTIONS TO SHAREHOLDERS FOR APPROVAL

5.1    Ratification. The board of directors in its discretion may submit any contract, act or transaction for approval or ratification at any annual meeting of the shareholders or at any special meeting of the shareholders called for the purpose of considering the same and, subject to the Act, any such contract, act or transaction that shall be approved or ratified or confirmed by a resolution passed by a majority of the votes cast at any such meeting (unless any different or additional requirement is imposed by the Act or by the Corporation’s articles or any other by-law) shall be as valid and as binding upon the Corporation and upon all the shareholders as though it had been approved, ratified or confirmed by every shareholder of the Corporation.

6.    FOR THE PROTECTION OF DIRECTORS AND OFFICERS

6.1    Conflicts. In supplement of and not by way of limitation upon any rights conferred upon directors by the Act, it is declared that no director shall be disqualified from his office or vacate his office by reason of holding any office or place of profit under the Corporation or under any body corporate in which the Corporation shall be a shareholder or by reason of being otherwise in any way directly or indirectly interested or contracting with the Corporation either as vendor, purchaser or otherwise or being concerned in a contract or arrangement made or proposed to be entered into with the Corporation in which he is in any way directly or indirectly interested either as vendor, purchaser or otherwise, nor shall any director be liable to account to the Corporation or any of its shareholders or creditors for any profit arising from any such office or place of profit; and, subject to the Act, no contract or arrangement entered into by or on behalf of the Corporation in which any director shall be in any way directly or indirectly interested shall be avoided or voidable and no director shall be liable to account to the Corporation or any of its shareholders or creditors for any profit realized by or from any such contract or arrangement by reason of any fiduciary relationship. Subject to the Act, no director or officer shall be obliged to make any declaration of interest in respect of a contract or proposed contract with the Corporation in which such director or officer is in any way directly or indirectly interested nor shall any director be obliged to refrain from voting in respect of any such contract.

7.    INDEMNITIES TO DIRECTORS AND OFFICERS

7.1    Indemnity. Subject to the Act, the Corporation may indemnify a director or officer or former director or officer of the Corporation or of a corporation of which the Corporation is or was a shareholder or creditor and the heirs and legal representatives of any such person against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him or them in respect of any civil, criminal or administrative action or proceeding to which he is or they are made a party by reason of his being or having been a director or officer of the Corporation or a director of officer of such corporation, including any action brought by the Corporation or any such corporation. Each director or officer of the Corporation on being elected or appointed shall be deemed to have contracted with the Corporation on the terms of the foregoing indemnity.

7.2    Failure. The failure of a director or officer of the Corpration to comply with the provisions of the Act or of the articles or the by-laws shall not invalidate any indemnity to which he is entitled under the by-laws.

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7.3    Insurance. The directors may cause the Corporation to purchase and maintain insurance for the benefit of any person who is or was serving as a director, officer, employee or agent of the Corporation or as a director, officer, employee or agent of any corporation of which the Corporation is or was a shareholder and his heirs or personal representatives, against any liability incurred by him as such director, officer, employee or agent.

8.    OFFICERS

8.1    Appointment. The board of directors shall annually or as often as may be required appoint a President and a Secretary and, if deemed advisable, may annually or as often as may be required appoint a Chairman of the Board, a Vice-Chairman of the Board, a Managing Director, one or more Vice-Presidents, a Treasurer, one or more Assistant Secretaries and/or one or more Assistant Treasurers. A director may be appointed to any office of the Corporation but none of the officers except the Chairman of the Board, the Vice-Chairman of the Board and the Managing Director need be a member of the board of directors. Two or more of the aforesaid offices may be held by the same person. In case and whenever the same person holds the offices of Secretary and Treasurer he may, but need not be, known as the Secretary-Treasurer. The board of directors may from time to time appoint such other officers and agents as it shall deem necessary who shall have such authority and shall perform such duties as may from time to time be prescribed by the board of directors.

8.2    Vacancies. If the office of any officer of the Corporation shall be or become vacant by reason of death, resignation, disqualification or otherwise, the directors by resolution shall, in the case of the President, and may, in the case of any other office, appoint a person to fill such vacancy.

8.3    Remuneration and Removal. The remuneration of all officers appointed by the board of directors shall be determined from time to time by resolution of the board of directors. The fact that any officer or employee is a director or shareholder of the Corporation shall not disqualify him from receiving such remuneration as may be determined. All officers, in the absence of agreement to the contrary, shall be subject to removal by resolution of the board of directors at any time, with or without cause.

8.4    Powers and Duties. All officers shall sign such contracts, documents or instruments in writing as require their respective signatures and shall respectively have and perform all powers and duties incident to their respective offices and such other powers and duties respectively as may from time to time be assigned to them by the board of directors.

8.5    Duties may be Delegated. In case of the absence or inability to act of any officer of the Corporation, or for any other reason that the board of directors may deem sufficient, the board of directors may delegate all or any of the powers of such officer to any other officer or to any director for the time being.

8.6    Chairman of the Board. The Chairman of the Board (if any) shall, when present, preside at all meetings of the board of directors, the executive committee of directors (if any) and the shareholders.

8.7    Vice-Chairman of the Board. If the Chairman of the Board is absent or is unable or refuses to act, the Vice-Chairman of the Board (if any) shall, when present, preside at all meetings of the board of directors, the executive committee of directors (if any) and the shareholders.

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8.8    Managing Director. The Managing Director shall be a resident Canadian and shall exercise such powers and have such authority as may be delegated to him by the board of directors in accordance with the Act.

8.9    President. Unless the Board determines otherwise, the President shall be the Chief Executive Officer of the Corporation. He shall be vested with and may exercise all the powers and shall perform all the duties of the Chairman of the Board and/or Vice-Chairman of the Board if none be appointed or if the Chairman of the Board and the Vice-Chairman of the Board are absent or are unable or refuse to act; provided, however, that unless he is a director he shall not preside as chairman at any meeting of directors or of the executive committee of directors (if any) or, subject to paragraph 9.9 of this by-law, at any meeting of shareholders.

8.10    Vice-President. The Vice-President or, if more than one, the Vice-Presidents, in order of seniority, shall be vested with all the powers and shall perform all the duties of the President in the absence or inability or refusal to act of the President; provided, however, that a Vice-President who is not a director shall not preside as chairman at any meeting of directors or of the executive committee of directors (if any) or, subject to paragraph 9.9 of this by-law, at any meeting of shareholders.

8.11    Secretary. The Secretary shall give or cause to be given notices for all meetings of the board of directors, the executive committee of directors (if any) and the shareholders when directed to do so and shall have charge of the minute books of the Corporation and, subject to the provisions of this by-law, of the records (other than accounting records) referred to in the Act.

8.12    Treasurer. Subject to the provisions of any resolution of the board of directors, the Treasurer shall have the care and custody of all the funds and securities of the Corporation and shall deposit the same in the name of the Corporation in such bank or banks or with such other depositary or depositaries as the board of directors may direct. He or she shall keep or cause to be kept the accounting records referred to in the Act. He or she may be required to give such bond for the faithful performance of his duties as the board of directors in its uncontrolled discretion may require but no director shall be liable for failure to require any such bond or for the insufficiency of any such bond or for any loss by reason of the failure of the Corporation to receive any indemnity thereby provided.

8.13    Assistant Secretary and Assistant Treasurer. The Assistant Secretary or, if more than one, the Assistant Secretaries in order of seniority, and the Assistant Treasurer or, if more than one, the Assistant Treasurers in order of seniority, shall respectively perform all the duties of the Secretary and the Treasurer, respectively, in the absence or inability or refusal to act of the Secretary or the Treasurer, as the case may be.

8.14    General Manager or Manager. The board of directors may from time to time appoint one or more General Managers or Managers and may delegate to him or them full powers to manage such matters and duties as by law must be transacted or performed by the board of directors and/or by the shareholders and to employ and discharge agents and employees of the Corporation or may delegate to him or them any lesser authority. A General Manager or Manager shall conform to all lawful orders given to him by the board of directors of the Corporation and shall at all reasonable times give to the directors or any of them all information they may require regarding the affairs of the Corporation. Any agent or employee appointed by a General Manager or Manager shall be subject to discharge by the board of directors.

8.15    Conflicts. Every officer of the Corporation who holds any office or possesses any property whereby, whether directly or indirectly, duties or interest might be created in conflict with his

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duties or interests as an officer of the Corporation shall, in writing, disclose to the President the fact and the nature, character and extent of the conflict in accordance with the provisions of the Act.

9.    SHAREHOLDERS’ MEETINGS

9.1    Annual Meeting. Subject to the Act and the Articles, the annual meeting of the shareholders shall be held on such day in each year and at such time as the directors may by resolution determine at any place within Canada or, if all the shareholders entitled to vote at such meeting so agree, outside Canada.

9.2    Special Meetings. Subject to the Act and the Articles, special meetings of the shareholders may be convened by order of the board of directors at any date and time and at any place within Canada or, if all the shareholders entitled to vote at such meeting so agree, outside Canada.

9.3    Meetings by Telephone or Electronic Conference. A shareholder may participate in a meeting of the shareholders by means of conference telephones or other communications facilities by means of which all shareholders participating in the meeting can hear each other. A person participating in a meeting by such means in accordance with this bylaw shall be deemed to be present at the meeting and to have so agreed shall be entitled to vote by means of telephonic, electronic or other communication facility that the Corporation has made available for that purpose.

9.4    Notice. A notice stating the day, hour and place of meeting shall be given by serving such notice on such persons as are entitled by law or under this by-law to receive such notice from the Corporation in the manner specified in paragraph 15.1 of this by-law or in such manner as may be prescribed by the directors, not less than twenty-one days or more than fifty days (in each case exclusive of the day on which the notice is delivered or sent and of the day for which notice is given) before the day of the meeting. Notice of a meeting at which special business is to be transacted shall state: (a) the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon; and (b) the text of any special resolution to be submitted to the meeting. Except as otherwise provided by the Act, where any special business at a general meeting includes considering, approving, ratifying, adopting or authorizing any document or the execution thereof or the giving of effect thereto, the notice convening the meeting shall, with respect to such document, be sufficient if it states that a copy of the document or proposed document is or will be available for inspection by shareholders at the registered office or records office of the Corporation or at some other place designated in the notice during usual business hours up to the date of such general meeting.

9.5    Waiver of Notice. A shareholder and any other person entitled to attend a meeting of shareholders may in any manner waive notice or reduce the period of notice of a meeting of shareholders and attendance of any such person at a meeting of shareholders shall constitute a waiver of notice of the meeting except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

9.6    Omission of Notice. The accidental omission to give notice of any meeting or any irregularity in the notice of any meeting or the non-receipt of any notice by any shareholder or shareholders, director or directors or the auditor of the Corporation shall not invalidate any resolution passed or any proceedings taken at any meeting of shareholders.

9.7    Votes. Subject to the Act, every question submitted to any meeting of shareholders shall be decided in the first instance by a show of hands unless (before or on the declaration of the result of the show of hands) a poll is directed by the Chairman or a shareholder or proxyholder entitled to vote at the meeting has demanced a ballot and in the case of an equality of votes the chairman of the meeting shall

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on a show of hands or on a ballot not have a second or casting vote in addition to the vote or votes to which he may be otherwise entitled as a member or proxyholder and this provision shall apply notwithstanding the Chairman is interested in the subject matter of the resolution.

9.8    Declaration. At any meeting, unless a ballot is demanded, a declaration by the chairman of the meeting that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.

9.9    Chair. The Chairman of the Board, if any, or in his absence the President of the Corporation or in his absence a Vice-President of the Corporation, if any, shall be entitled to preside as chairman at every meeting of shareholders of the Corporation. Notwithstanding the foregoing, with the consent of the meeting, which consent may be expressed by the failure to object of any person present and entitled to vote, the solicitor of the Corporation may act as chairman of the meeting of shareholders. If at any meeting of shareholders neither the Chairman of the Board nor President nor a Vice-President is present within fifteen minutes after the time appointed for holding the meeting or is willing to act as chairman, the Directors present, shall choose someone of their number, or the solicitor of the Corporation, to be chairman. If all the Directors present, and the solicitor of the Corporation, decline to take the chair or fail to so choose or if no Director be present, the persons present and entitled to vote shall choose some person in attendance, who need not be a shareholder, to be chairman.

9.10    Ballot. A ballot may be demanded either before or after any vote by a show of hands by any person entitled to vote at the meeting. No poll may be demanded on the election of the chairman. If at any meeting a ballot is demanded on the question of adjournment it shall be taken forthwith without adjournment. If at any meeting a ballot is demanded on any other question or as to the election of directors, the vote shall be taken by ballot in such manner and either at once, later in the meeting or after adjournment as the chairman of the meeting directs but in no event later than seven days after the meeting. The result of a ballot shall be deemed to be the resolution of the meeting at which the ballot was demanded. Any business other than that upon which the poll has been demanded may be proceeded with pending the taking of the poll. A demand for a ballot may be withdrawn.

9.11    Determination. In the case of any dispute as to the admission or rejection of a vote, whether by show of hands or on a poll, the chairman shall determine the same, and his determination made in good faith is final and conclusive.

9.12    Action. Unless the Act, the articles or the by-laws otherwise provide, any action to be taken by a resolution of the shareholders may be taken by an ordinary resolution.

9.13    Votes. Subject to any special voting rights or restrictions attached to any class of shares and the restrictions on joint registered holders of shares:

(a)   on a show of hands:

(i)	every shareholder who is present in person and entitled to vote shall have one vote; and
(ii)	a proxyholder duly appointed by a holder of a share who would have been entitled to vote shall have one vote; and

(b)   on a poll, every shareholder shall have one vote for each share of which he is the registered holder and may exercise such vote either in person or by proxy.

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9.14    Not Registered. Any person who is not registered as a shareholder but is entitled to vote at any meeting in respect of a share, may vote the share in the same manner as if he were a shareholder; but, unless the directors have previously admitted his right to vote at that meeting in respect of the share, he shall satisfy the directors of his right to vote the share before the time for holding the meeting, or adjourned meeting, as the case may be, at which he proposes to vote.

9.15    Corporate Representative. Any corporation not being a subsidiary which is a shareholder of the Corporation may by resolution of its directors or other governing body authorize such person as it thinks fit to act as its representative at any general meeting or class meeting. The person so authorized shall be entitled to exercise in respect of and at such meeting the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual shareholder of the Corporation personally present, including, without limitation, the right, unless restricted by such resolution, to appoint a proxyholder to represent such corporation, and shall be counted for the purpose of forming a quorum if present at the meeting. Evidence of the appointment of any such representative may be sent to the Corporation in writing by written instrument, telegram, telex, facsimile or any method of transmitting legibly recorded messages. Notwithstanding the foregoing, a corporation being a shareholder may appoint a proxyholder.

9.16    Unsound Mind. A shareholder of unsound mind entitled to attend and vote, in respect of whom an order has been made by any court having jurisdiction, may vote, whether on a show of hands or on a poll, by his committee or curator bonis or other person in the nature of a committee or curator bonis appointed by that court, and any such committee or curator bonis, or other person may appoint a proxyholder. The chairman may require such proof of such appointment as he sees fit.

9.17    Joint Registered Holders. In the case of joint registered holders of a share, the vote of the senior who exercises a vote, whether in person or by proxyholder, shall be accepted to the exclusion of the votes of the other joint registered holders; and for this purpose, seniority shall be determined by the order in which the names stand in the register of shareholders. Several legal personal representatives of a deceased shareholder whose shares are registered in his sole name shall, for the purpose of this by-law, be deemed joint registered holders.

9.18    Proxyholders. A shareholder holding more than one share in respect of which he is entitled to vote shall be entitled to appoint one or more (but not more than five) proxyholders to attend, act and vote for him on the same occasion. If such a shareholder should appoint more than one proxyholder for the same occasion he shall specify the number of shares each proxyholder shall be entitled to vote. A shareholder may also appoint one or more alternate proxyholders to act in the place and stead of an absent proxyholder.

9.19    Proxyholders. Any person, having attained the age of majority, may act as proxyholder whether or not he is entitled on his own behalf to be present and to vote at the meeting at which he acts as proxyholder. The proxy may authorize the person so appointed to act as proxyholder for the appointor for the period, at any meeting or meetings, and to the extent permitted by the Act.

9.20    Proxyholder. A person appointed by proxy need not be a shareholder.

9.21    Proxies. A proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing, or, if the appointor is a corporation, either under the seal of the corporation or under the hand of a duly authorized officer or attorney of that corporation.

9.22    Deposit of Proxies. Unless the directors fix some other time by which proxies must be deposited, a proxy and the power of attorney or other authority, if any, under which it is signed, or a

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notarially certified copy thereof, shall be deposited at the registered office of the Corporation or at such other place as is specified for that purpose in the notice convening the meeting or form of proxy, not less than 48 hours (excluding Saturdays and holidays) before the time for holding the meeting in respect of which the person named in the instrument is appointed.

9.23    Deposit of Proxies. In addition to any other method of depositing proxies provided for in the by-laws, the directors may by resolution make regulations relating to the depositing of proxies at any place or places and fixing the time for depositing the proxies. If the Corporation is or becomes a reporting company, the time so fixed shall not exceed 48 hours (excluding Saturdays and holidays) preceding the meeting or adjourned meeting specified in the notice calling a meeting of shareholders and providing for particulars of such proxies to be sent to the Corporation or any agent of the Corporation in writing or by letter, telegram, telex, facsimile or any method of transmitting legibly recorded messages so as to arrive before the commencement of the meeting or adjourned meeting at the office of the Corporation or of any agent of the Corporation appointed for the purpose of receiving such particulars and providing that proxies so deposited may be acted upon as though the proxies themselves were deposited as required by this Part.

9.24    Death or Incapacity. A vote given in accordance with the terms of a proxy is valid notwithstanding the previous death or incapacity of the shareholder giving the proxy or the revocation of the proxy or of the authority under which the form of proxy was executed or the transfer of the share in respect of which the proxy is given, provided that no notification in writing of such death, incapacity, revocation or transfer shall have been received at the registered office of the Corporation or by the chairman of the meeting or adjourned meeting for which the proxy was given before the vote was taken.

9.25    Retain Ballots. Every ballot cast upon a poll and every proxy appointing a proxyholder who casts a ballot upon a poll shall be retained by the Secretary for such period and be subject to such inspection as the Act may provide.

9.26    Votes on Poll. On a poll a person entitled to cast more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.

9.27    Determinations. The chairman of the meeting may determine whether or not a proxy, deposited for use at such meeting, which may not strictly comply with the requirements of this Part as to form, execution, accompanying documentation, time of filing, or otherwise, shall be valid for use at such meeting and any such determination made in good faith shall be final, conclusive and binding upon such meeting.

9.28    Form of Proxy. Subject to the provisions of Part IV of the Regulations, a proxy may be in the following form or in any other form that the directors or the chairman of the meeting shall approve or accept:

“The undersigned shareholder of                                hereby appoints,                                of                                or failing him,                                of                                as the nominee of the undersigned to attend, act and vote for the undersigned and on behalf of the undersigned at the            meeting of the shareholders of the said corporation to be held in the            day of            and at any adjournment or adjournments thereof.
DATED this day of           ,     .

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Signature of Shareholder

9.29    Revocation. Every proxy may be revoked by an instrument in writing:

(a)	executed by the shareholder giving the same or by his attorney authorized in writing or, where the shareholder is a corporation, by a duly authorized officer or attorney of the corporation; and
(b)	delivered either at the registered office of the Corporation at any time up to and including the last business day preceding the day of the meeting, or any adjournment thereof at which the proxy is to be used, or to the chairman of the meeting on the day of the meeting or any adjournment thereof before any vote in respect of which the proxy is to be used shall have been taken,

or in any other manner provided by law.

9.30    Adjournment. The chairman of any meeting may and shall, if so directed by the meeting, adjourn the same from time to time to a fixed time and place and no notice of such adjournment need to be given to the shareholders unless the meeting is adjourned by one or more adjournments for an aggregate of thirty days or more in which case notice of the adjourned meeting shall be given as for an original meeting. Any business may be brought before or dealt with at any adjourned meeting for which no notice is required which might have been brought before or dealt with at the original meeting in accordance with the notice calling the same.

9.31    Seconds. No motion proposed at a general meeting need be seconded and the chairman may propose a motion.

9.32    Quorum. Save as herein otherwise provided, a quorum for a meeting of shareholders shall be two shareholders, or two proxyholders representing shareholders, or any combination thereof, holding not less than one-twentieth of the issued shares entitled to be voted at the meeting. If there is only one shareholder the quorum is one person present and being, or representing by proxy, such shareholder. The directors, the Secretary or, in his absence, an Assistant Secretary, and the solicitor of the Corporation shall be entitled to attend at any meeting of shareholders but no such person shall be counted in the quorum or be entitled to vote at any meeting of shareholders unless he shall be a shareholder or proxyholder entitled to vote thereat.

9.33    Quorum. If within half an hour from the time appointed for a meeting of shareholders a quorum is not present, the meeting, if convened upon requisition by the shareholders shall be dissolved. In any other case, it shall stand adjourned to the same day in the next week, at the same time and place but may not transact any other business. If at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the person or persons present and being, or representing by proxy, a shareholder or shareholders entitled to attend and vote at the meeting shall be a quorum.

9.34    Opening Quorum. No business other than the election of the chairman or the adjournment of the meeting shall be transacted at any general meeting unless a quorum of shareholders entitled to attend and vote is present at the commencement of the meeting, but the quorum need not be present throughout the meeting.

9.35    Resolution in lieu of Meeting. Notwithstanding any of the foregoing provisions of this by-law, a resolution in writing signed by all the shareholders entitled to vote on that resolution at a

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meeting of the shareholders is, subject to the Act, as valid as if it had been passed at a meeting of the shareholders. Such resolution may be in two or more counterparts which together shall be deemed to constitute one resolution in writing. Such resolution shall be filed with the minutes of the proceedings of the shareholders and shall be effective on the date stated thereon or on the latest day stated on any counterpart.

9.36    Class Meetings. Unless the Act, the articles or by-laws otherwise provide, the provisions of this by-law relating to meetings shall apply with the necessary changes, and so far as they are applicable, to a class meeting of shareholders holding a particular class of shares.

10.      SHARES

10.1    Allotment and Issuance. Subject to the provisions of the Act, the shares shall be under the control of the directors who may, subject to the rights of the holders of the shares of the Corporation for the time being outstanding, issue, allot, sell or otherwise dispose of, and/or grant options on or otherwise deal in, shares authorized but not outstanding, and outstanding shares held by the Corporation, at such times, to such persons (including directors), in such manner, upon such terms and conditions and at such price or for such consideration, as the directors, in their absolute discretion, may determine.

10.2    Fully Paid. No share may be issued until it is fully paid and the Corporation shall have received the full consideration therefor in cash, property or past services actually performed for the Corporation. The value of property or services for the purposes of this by-law shall be the value determined by the directors by resolution to be, in all circumstances of the transaction, the fair market value thereof, and the full consideration received for a share issued by way of dividend shall be the amount declared by the directors to be the amount of the dividend.

10.3    Discounts. Subject to the Act, the Corporation or the directors on behalf of the Corporation, may pay a commission or allow a discount to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares, debentures, share rights, warrants or debenture stock in the Corporation, or procuring or agreeing to procure subscriptions, whether absolutely or conditionally, for any such shares, debentures, share rights, warrants or debenture stock, provided that the rate of the commission and discount shall not in the aggregate exceed 25 per cent of the amount of the subscription price of such shares. The Corporation may also pay such brokerage fees as may be lawful.

10.4    Certificates. Every shareholder is entitled, without charge, to one certificate representing the share or shares of each class or series held by him; provided that, in respect of a share or shares held jointly by several persons, the Corporation shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint registered holders or to his duly authorized agent shall be sufficient delivery to all; and provided further that the Corporation shall not be bound to issue certificates representing redeemable shares, if such shares are to be redeemed within one month of the date on which they were allotted. Any share certificate may be sent through the mail by prepaid mail to the shareholder entitled thereto, and neither the Corporation nor any transfer agent shall be liable for any loss occasioned to the shareholder owing to any such share certificate so sent being lost in the mail or stolen.

10.5    Certificates. Every share certificate issued by the Corporation shall be in such form as the directors approve and shall comply with the Act.

10.6    Replacement Certificates. If a share certificate:

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(a)	is worn or defaced, the directors shall, upon production to them of the said certificate and upon such other terms, if any, as they may think fit, order the said certificate to be cancelled and shall issue a new certificate in lieu thereof;
(b)	is lost, stolen or destroyed, then, upon proof thereof to the satisfaction of the directors and upon such indemnity, if any, as the directors deem adequate being given, a new share certificate in lieu thereof shall be issued to the person entitled to such lost, stolen or destroyed certificate; or
(c)	represents more than one share and the registered owner thereof surrenders it to the Corporation with a written request that the Corporation issue in his name two or more certificates each representing a specified number of shares and in the aggregate representing the same number of shares as the certificate so surrendered, the Corporation shall cancel the certificate so surrendered and issue in lieu thereof certificates in accordance with such request.

There shall be paid to the Corporation such sum as the directors may from time to time fix, for each certificate to be issued under this by-law.

10.7    Trust. Except as required by law, statute or the by-laws, no person shall be recognized by the Corporation as holding any share upon any trust, and the Corporation shall not be bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or in any fractional part of a share or (except only as by law, statute or the by- laws provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in its registered holder.

10.8    Two Names. The certificate representing shares registered in the name of two or more persons shall be delivered to the person first named on the register of shareholders.

10.9    Redemption of Shares. Subject to the Act, the articles and the special rights and restrictions attached to any class of shares of the Corporation, the Corporation may, by a resolution of the directors and in compliance with the Act, purchase any of its shares in accordance with the special rights and restrictions attaching thereto. No such purchase or redemption shall be made if the Corporation is insolvent at the time of the proposed purchase or redemption or if the proposed purchase or redemption would render the Corporation insolvent. Subject to the Act, any shares purchased or redeemed by the Corporation may be sold or, if cancelled, reissued by it, but while such shares are held by the Corporation, it shall not exercise any vote in respect of such shares and no dividend or other distribution shall be paid or made thereon. If the Corporation proposes at its option to redeem some but not all of the shares of any class or series, the directors may, subject to the special rights and restrictions attached to such shares, decide the manner in which the shares to be redeemed shall be selected and such redemption may or may not be made pro rata among every shareholder holding any such shares as the directors may determine.

10.10    Signatures. Subject to the Act, the signature of the Chairman of the Board, the Vice- Chairman of the Board, the Managing Director, the President, a Vice-President or any other director or officer of the Corporation may be printed, engraved, lithographed or otherwise mechanically reproduced upon certificates for shares of the Corporation. Certificates so signed shall be deemed to have been manually signed by the Chairman of the Board, the Vice-Chairman of the Board, the Managing Director, the President, the Vice-President, the director or the officer whose signature is so printed, engraved, lithographed or otherwise mechanically reproduced thereon and shall be as valid to all intents and purposes as if they have been signed manually. Where the Corporation has appointed a registrar, transfer agent, branch registrar or branch transfer agent for the shares (or for the shares of any class or classes) of

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the Corporation, the signature of the Secretary or Assistant Secretary may also be printed, engraved, lithographed or otherwise mechanically reproduced on certificates representing the shares (or the shares of the class or classes in respect of which any such appointment has been made) of the Corporation and when countersigned by or on behalf of a registrar, transfer agent, branch registrar or branch transfer agent, such certificates so signed shall be as valid to all intents and purposes as if they had been signed manually. A share certificate containing the signature of a person which is printed, engraved, lithographed or otherwise mechanically reproduced thereon may be issued notwithstanding that the person has ceased to be an officer of the Corporation and shall be as valid as if he were an officer at the date of its issue.

11.    TRANSFER OF SECURITIES

11.1    Transfer of Shares. Subject to the restrictions, if any, set forth in the articles and the by-laws, any shareholder may transfer any of his shares by instrument in writing executed by or on behalf of such shareholder and delivered to the Corporation or its transfer agent. The instrument of transfer of any share of the Corporation shall be in the form, if any, on the back of the Corporation’s share certificates or in such other form as the directors may from time to time approve or accept. If the directors so determine, each instrument of transfer shall be in respect of only one class of share. Except to the extent that the Act may otherwise provide, the transferor shall be deemed to remain the holder of the shares until the name of the transferee is entered in the register of shareholders or a branch register of shareholders in respect thereof.

11.2    Signature. The signature of the registered owner of any shares, or of his duly authorized attorney, upon an authorized instrument of transfer shall constitute a complete and sufficient authority to the Corporation, its directors, officers and agents to register, in the name of the transferee as named in the instrument of transfer, the number of shares specified therein or, if no number is specified, all the shares of the registered owner represented by share certificates deposited with the instrument of transfer. If no transferee is named in the instrument of transfer, the instrument of transfer shall constitute a complete and sufficient authority to the Corporation, its directors, officers and agents to register, in the name of the person on whose behalf any certificate for the shares to be transferred is deposited with the Corporation for the purpose of having the transfer registered, the number of shares if specified in the instrument of transfer or, if no number is specified, all the shares represented by all share certificates deposited with the instrument of transfer.

11.3    Transferee. Neither the Corporation nor any director, officer or agent thereof shall be bound to enquire into the title of the person named in the form of transfer as transferee, or, if no person is named therein as transferee, of the person on whose behalf the certificate is deposited with the Corporation for the purpose of having the transfer registered or be liable to any claim by such registered owner or by any intermediate owner or holder of the certificate or of any of the shares represented thereby or any interest therein for registering the transfer, and the transfer, when registered, shall confer upon the person in whose name the shares have been registered a valid title to such shares.

11.4    Instrument of Transfer. Every instrument of transfer shall be executed by the transferor and left at the registered office of the Corporation or at the office of its transfer agent or registrar for registration together with the share certificate for the shares to be transferred and such other evidence, if any, as the directors or the transfer agent or registrar may require to prove the title of the transferor or his right to transfer the shares and the right of the transferee to have the transfer registered. All instruments of transfer, where the transfer is registered, shall be retained by the Corporation or its transfer agent or registrar and any instrument of transfer, where the transfer is not registered, shall be returned to the person depositing the same together with the share certificate which accompanied the same when tendered for registration.

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11.5    Fees. There shall be paid to the Corporation in respect of the registration of any transfer such sum, if any, as the directors may from time to time determine.

11.6    Restriction on Transfers. Notwithstanding any other provision of the by-laws, while the Corporation is, or becomes a corporation which is not a reporting issuer as defined in the Securities Act (British Columbia), then no shares shall be transferred and entered on the register of shareholders without the previous consent of the directors expressed by a resolution of the board and the directors shall not be required to give any reason for refusing to consent to any such proposed transfer. The consent of the board required by this by-law may be in respect of a specific proposed trade or trades or trading generally, whether or not over a specified period of time, or by specific persons or with such other restrictions or requirements as the directors may determine.

11.7    Transmission of Shares. In the case of the death of a shareholder, the survivor or survivors, where the deceased was a joint registered holder, and the legal personal representative of the deceased, where he was the sole holder, shall be the only persons recognized by the Corporation as having any title to his interest in the shares. Before recognizing any legal personal representative the directors may require him to deliver to the Corporation the original or a court-certified copy of a grant of probate or letters of administration in British Columbia or such other evidence and documents as the directors consider appropriate to establish the right of the personal representative to such title to the interest in the shares of the deceased shareholder.

11.8    Death or Bankruptcy. Upon the death or bankruptcy of a shareholder, his personal representative or trustee in bankruptcy, although not a shareholder, shall have the same rights, privileges and obligations that attach to the shares formerly held by the deceased or bankrupt shareholder if the documents required by the Act shall have been deposited with the Corporation. This by-law does not apply on the death of a shareholder with respect to shares registered in his name and the name of another person in joint tenancy.

11.9    Death or Bankruptcy. Any person becoming entitled to a share in consequence of the death or bankruptcy of a shareholder shall, upon such documents and evidence being produced to the Corporation as the Act requires, or who becomes entitled to a share as a result of an order of a Court of competent jurisdiction or a statute, has the right either to be registered as a shareholder in his representative capacity in respect of such share, or, if he is a personal representative, instead of being registered himself, to make such transfer of the shares as the deceased or bankrupt person could have made; but the directors shall, as regards a transfer by a personal representative or trustee in bankruptcy, have the same right, if any, to decline or suspend registration of a transferee as they would have in the case of a transfer of a share by the deceased or bankrupt person before the death or bankruptcy.

11.10    Transfer Agent and Registrar. The directors may from time to time by resolution appoint or remove one or more transfer agents and/or branch transfer agents and/or registrars and/or branch registrars (which may or may not be the same individual or body corporate) for the securities issued by the Corporation in registered form (or for such securities of any class or classes) and may provide for the registration of transfers of such securities (or such securities of any class or classes) in one or more places and such transfer agents and/or branch transfer agents and/or registrars and/or branch registrars shall keep all necessary books and registers of the Corporation for the registering of such securities (or such securities of the class or classes in respect of which any such appointment has been made). In the event of any such appointment in respect of the shares (or the shares of any class or classes) of the Corporation, all share certificates issued by the Corporation in respect of the shares (or the shares) of the class or classes in respect of which such appointment has been made) of the Corporation shall be countersigned by or on behalf of one of the said transfer agents and/or branch transfer agents or by or on behalf of one of the said registrars and/or branch registrars, if any.

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11.11    Securities Registrars. A central securities register of the Corporation shall be kept at the registered office of the Corporation or at such other office or place in Canada as may from time to time be designated by resolution of the board of directors and a branch securities register or registers may be kept at such office or offices of the Corporation or other place or places, either in or outside Canada, as may from time to time be designated by resolution of the directors.

11.12    Shareholder Indebted to the Corporation. If so provided in the articles or by-laws of the Corporation, the Corporation has a lien on a share registered in the name of a shareholder or his legal representative for a debt of that shareholder to the Corporation. By way of enforcement of such lien the directors may refuse to permit the registration of a transfer of such share.

12.      DIVIDENDS

12.1    Dividends. The directors may from time to time declare and authorize payment of such dividends, if any, as they may deem advisable and need not give notice of such declaration to any shareholder. No dividend shall be paid otherwise than out of funds and/or assets properly available for the payment of dividends and a declaration by the directors as to the amount of such funds or assets available for dividends shall be conclusive. The Corporation may pay any such dividend wholly or in part by the distribution of specific assets, and in particular by paid up shares, bonds, debentures or other securities of the Corporation or any other corporation, or in any one or more such ways as may be authorized by the Corporation or the directors, and where any difficulty arises with regard to such a distribution the directors may settle the same as they think expedient, and in particular may fix the value for distribution of such specific assets or any part thereof, and may determine that cash payments in substitution for all or any part of the specific assets to which any shareholders are entitled shall be made to any shareholders on the basis of the value so fixed to adjust the rights of all parties, and may vest any such specific assets in trustees for the persons entitled to the dividend as may seem expedient to the directors.

12.2    Payment Date. Any dividend declared on shares of any class by the directors may be made payable on such date as is fixed by the directors.

12.3    Declaration. Subject to the rights of shareholders (if any) holding shares with specific rights as to dividends, all dividends on shares of any class shall be declared and paid according to the number of such shares held.

12.4    Funds. The directors may, before declaring any dividend, set aside out of the funds properly available for the payment of dividends such sums as they think proper as a reserve or reserves, which shall, at the discretion of the directors, be applicable for meeting contingencies, or for equalizing dividends, or for any other purpose to which such funds of the Corporation may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Corporation or be invested in such investments as the directors may from time to time think fit. The directors may also, without placing the same in reserve, carry forward such funds which they think prudent not to divide.

12.5    Joint Holders. If several persons are registered as joint holders of any share, any one of them may give an effective receipt for any dividend, bonus or other moneys payable in respect of the share.

12.6    No Interest. No dividend shall bear interest against the Corporation. Where the dividend to which a shareholder is entitled includes a fraction of a cent, such fraction shall be disregarded in making payment thereof and such payment shall be deemed to be payment in full.

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12.7    Delivery. Any dividend, bonus or other moneys payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder, or in the case of joint holders, to the registered address of that one of the joint holders who is first named on the register, or to such person and to such address as the holder or joint holders may direct in writing. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. The mailing of such cheque or warrant shall, to the extent of the sum represented thereby (plus the amount of any tax required by law to be deducted) discharge all liability for the dividend, unless such cheque or warrant shall not be paid on presentation or the amount of tax so deducted shall not be paid to the appropriate taxing authority.

12.8    Surplus. Notwithstanding anything contained in the by-laws, the directors may from time to time capitalize any undistributed surplus on hand of the Corporation and may from time to time issue as fully paid and non-assessable any unissued shares, or any bonds, debentures or debt obligations of the Corporation as a dividend representing such undistributed surplus on hand or any part thereof.

12.9    Fractions. Notwithstanding any other provisions of the by-laws, should any dividend result in any shareholders being entitled to a fractional part of a share of the Corporation, the directors shall have the right to pay such shareholders in place of that fractional share, the cash equivalent thereof calculated on the par value thereof or, in the case of shares without par value, calculated on the price or consideration for which such shares were or were deemed to be issued, and shall have the further right and complete discretion to carry out such distribution and to adjust the rights of the shareholders with respect thereon on as practical and equitable a basis as possible including the right to arrange through a fiscal agent or otherwise for the sale, consolidation or other disposition of those fractional shares on behalf of those shareholders of the Corporation.

13.    VOTING SHARES AND SECURITIES IN OTHER COMPANIES

13.1    Voting Other Securities. All of the shares or other securities carrying voting rights of any other body corporate held from time to time by the Corporation may be voted at any and all meetings of shareholders, bondholders, debenture holders or holders of other securities (as the case may be) of such other body corporate and in such manner and by such person or persons as the board of directors of the Corporation shall from time to time determine. The proper signing officers of the Corporation may also from time to time execute and deliver for and on behalf of the Corporation proxies and/or arrange for the issuance of voting certificates and/or other evidence of the right to vote in such names as they may determine without the necessity of a resolution or other action by the board of directors.

14.    INFORMATION AVAILABLE TO SHAREHOLDERS

14.1    Information. Except as provided by the Act, no shareholder shall be entitled to discovery of any information respecting any details or conduct of the Corporation’s business which in the opinion of the directors it would be inexpedient in the interests of the Corporation to communicate to the public.

14.2    Inspection. The directors may from time to time, subject to rights conferred by the Act, determine whether and to what extent and at what time and place and under what conditions or regulations the documents, books and registers and accounting records of the Corporation or any of them shall be open to the inspection of shareholders and no shareholder shall have any right to inspect any document or book or register or accounting record of the Corporation except as conferred by statute or authorized by the board of directors or by a resolution of the shareholders.

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15.    NOTICES

15.1    Service. Any notice or other document required by the Act, the Regulations, the articles or the by-laws to be sent to any shareholder or director or to the auditor shall be delivered personally or sent by prepaid mail, fax, email, cable, telegram or telex to any such shareholder at his latest address as shown in the records of the Corporation or its transfer agent and to any such director at his latest address as shown in the records of the Corporation or in the last notice filed under section 106 or 113 of the Act, and to the auditor at his business address; provided always that notice may be waived or the time for the notice may be waived or abridged at any time with the consent in writing of the person entitled thereto. If a notice or document is sent to a shareholder by prepaid mail in accordance with this paragraph and the notice or document is returned on three consecutive occasions because the shareholder cannot be found, it shall not be necessary to send any further notices or documents to the shareholder until he informs the Corporation in writing of his new address.

15.2    Shares Registered in More than One Name. All notices or other documents with respect to any shares registered in more than one name shall be given to whichever of such persons is named first in the records of the Corporation and any notice or other document so given shall be sufficient notice or delivery to all the holders of such shares.

15.3    Persons Becoming Entitled by Operation of Law. Subject to the Act, every person who by operation of law, transfer or by any other means whatsoever shall become entitled to any share or shares shall be bound by every notice or other document in respect of such share or shares which, previous to his name and address being entered in the records of the Corporation, shall be duly given to the person or person from who he derives his title to such share or shares.

15.4    Deceased Shareholders. Subject to the Act, any notice or other document delivered or sent by post, fax, email, cable, telegram or telex or left at the address of any shareholder as the same appears in the records of the Corporation shall, notwithstanding that such shareholder be then deceased, and whether or not the Corporation has notice of his decease, be deemed to have been duly served in respect of the shares held by such shareholder (whether held solely or with any other person or person) until some other person be entered in his stead in the records of the Corporation as the holder or one of the holders thereof and such service shall for all purposes be deemed a sufficient service of such notice or document on his heirs, executors or administrators and on all persons, if any, interested with him in such shares.

15.5    Signature to Notices. The signature of any director or officer of the Corporation to any notice or document to be given by the Corporation may be written, stamped, typewritten or printed or partly written, stamped, typewritten or printed.

15.6    Computation of Time. Where a given number of days’ notice or notice extending over a period is required to be given under any provisions of the articles or by-laws of the Corporation the day of service or posting of the notice or document shall, unless it is otherwise provided, be counted in such number of days or other period.

15.7    Proof of Service. With respect to every notice or other document sent by post it shall be sufficient to prove that the envelope or wrapper containing the notice or other document was properly addressed as provided in paragraph 15.1 of this by-law and put into a post office or into a letter box. A certificate of an officer of the Corporation in office at the time of the making of the certificate or of a transfer officer of any transfer agent or branch transfer agent of shares of any class of the Corporation as to facts in relation to the sending or delivery of any notice or other document to any shareholder, director,

20

officer or auditor or publication of any notice or other document shall be conclusive evidence thereof and shall be binding on every shareholder, director, officer or auditor of the Corporation as the case may be.

15.8    Record Dates. The directors may fix in advance a date, which shall not be more than the maximum number of days permitted by the Act, preceding the date of any meeting of shareholders, including class and series meetings, or of the payment of any dividend or to participate in a liquidation distribution or of the proposed taking of any other proper action requiring the determination of shareholders, as the record date for the determination of the shareholders entitled to notice of, or to attend and vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend or for any other proper purpose and, in such case, notwithstanding anything elsewhere contained in the by-laws, only shareholders of record on the date so fixed shall be deemed to be shareholders for the purposes aforesaid.

15.9    Record Date. Where no record date is so fixed for the determination of shareholders as provided in the preceding by-law, the record date of the determination of shareholders entitled to receive notice of a meeting of shareholders shall be:

(a)	at the close of business on the day immediately preceding the day on which the notice is given; or
(b)	if no notice is given, the day on which the meeting is held; and

the record date for the determination of shareholders for any purpose other than to establish a shareholders’ right to receive notice of a meeting or to vote shall be at the close of business on the day on which the directors pass the resolution relating thereto.

16.    CHEQUES, DRAFTS AND NOTES

16.1    Cheques. All cheques, drafts or orders for the payment of money and all notes and acceptances and bills of exchange shall be signed by such officer or officers or person or person, whether or not officers of the Corporation, and in such manner as the board of directors may from time to time designate by resolution.

17.    CUSTODY OF SECURITIES

17.1    Custody. All shares and securities owned by the Corporation may be lodged (in the name of the Corporation) with a chartered bank or trust company or in a safety deposit box or, if so authorized by resolution of the board of directors, with such other depositaries or in such other manner as may be determined from time to time by the board of directors.

17.2    Nominees. All share certificates, bonds, debentures, notes or other obligations belonging to the Corporation may be issued or held in the name of a nominee or nominees of the Corporation (and if issued or held in the name of more than one nominee shall be held in the names of the nominees jointly with the right of survivorship) and shall be endorsed in blank with endorsement guaranteed in order to enable transfer to be completed and registration to be effected.

18.    EXECUTION OF INSTRUMENTS

18.1    Execution. Contracts, documents or instruments in writing requiring the signature of the Corporation may be signed by:

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(a)	the Chairman of the Board, the Vice-Chairman of the Board, the Managing Director, the President or a Vice-President together with the Secretary or the Treasurer, or
(b)	any two directors

and all contracts, documents and instruments in writing so signed shall be binding upon the Corporation without any further authorization or formality. The board of directors shall have power from time to time by resolution to appoint any director or directors, officer or officers, or any person or person, on behalf of the Corporation either to sign contracts, documents and instruments in writing generally or to sign specific contracts, documents or instruments in writing.

18.2    Seal. The corporate seal (if any) of the Corporation may be affixed to contracts, documents and instruments in writing signed as aforesaid or by any officer or officers, person or persons, appointed as aforesaid by resolution of the board of directors, but any such contract, document or instrument is not invalid merely because the corporate seal is not affixed thereto.

18.3    Definition. The term “contracts, documents or instruments in writing” as used in this by-law shall include deeds, mortgages, hypothecs, charges, conveyances, transfers and assignments of property real or personal, immovable or movable, agreements, releases, receipts and discharges for the payment of money or other obligations, conveyances, transfers and assignments of shares, share warrants, stocks, bonds, debentures or other securities and all paper writings.

18.4    Securities. In particular without limiting the generality of the foregoing:

(a)	the Chairman of the Board, the Vice-Chairman of the Board, the Managing Director, the President or a Vice-President together with the Secretary or the Treasurer, or
(b)	any two directors; or
(c)	any director or directors, officer or officers, or any person or person, on behalf of the Corporation appointed from time to time by resolution of the board of directors;

shall have authority to sell, assign, transfer, exchange, convert or convey any and all shares, stocks, bonds, debentures, rights, warrants or other securities owned by or registered in the name of the Corporation and to sign and execute (under the seal of the Corporation or otherwise) all assignments, transfers, conveyances, powers of attorney and other instruments that may be necessary for the purpose of selling, assigning, transferring, exchanging, converting or conveying any such shares, stocks, bonds, debentures, rights, warrants or other securities.

18.5    Signatures. The signature or signatures of the Chairman of the Board, the Vice-Chairman of the Board, the Managing Director, the President, a Vice-President, the Secretary, the Treasurer, an Assistant Secretary or an Assistant Treasurer or any director of the Corporation and/or of any other officer or officers, person or person, appointed as aforesaid by resolution of the board of directors may, if specifically authorized by resolution of the directors, be printed, engraved, lithographed or otherwise mechanically reproduced upon any contracts, documents or instruments in writing or bonds, debentures or other securities of the Corporation executed or issued by or on behalf of the Corporation and all contracts, documents or instruments in writing or bonds, debentures or other securities of the Corporation on which the signature or signatures of any of the foregoing officers or persons authorized as aforesaid shall be so reproduced pursuant to special authorization by resolution of the directors shall be deemed to have been manually signed by such officers or persons whose signature or signatures is or are so reproduced and shall be as valid to all intents and purposes as if they had been signed manually and

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notwithstanding that the officers or persons whose signature or signatures is or are so reproduced may have ceased to hold office at the date of the delivery or issue of such contracts, documents or instruments in writing or bonds, debentures or other securities of the Corporation.

19.    FINANCIAL YEAR

19.1    Year End. The financial year of the Corporation shall terminate on such date in each year as the directors may from time to time by resolutions determine.

20.    BORROWING

20.1    Borrowing. Subject to the provisions of the Act, the directors may from time to time authorize the Corporation to:

(a)	borrow money on the credit of the Corporation;
(b)	issue, resell, sell or pledge debt obligations of the Corporation;
(c)	give a guarantee on behalf of the Corporation to secure performance of an obligation of any person;
(d)	mortgage, charge, hypothecate, pledge or otherwise create a security interest on all or any property of the Corporation, owned or subsequently acquired to secure any obligation of the Corporation; and
(e)	give financial assistance to any person, directly or indirectly, by way of loan, guarantee, the provision of security or otherwise.

20.2    The directors may make any bonds, debentures or other debt obligations issued by the Corporation by their terms assignable free from any equities between the Corporation and the person to whom they may be issued or any other person who lawfully acquires them by assignment, purchase or otherwise.

20.3    The directors may authorize the issue of any bonds, debentures or other debt obligations of the Corporation at a discount, premium or otherwise and with special or other rights or privileges as to redemption, surrender, drawings, allotment of or conversion into or exchange for shares, attending and voting at general meetings of the Corporation and otherwise as the directors may determine at or before the time of issue.

20.4    The Corporation shall keep or cause to be kept at its registered office in accordance with the Act a register of its debentures and a register of debentureholders, which registers may be combined, and, subject to the provisions of the Act, may keep or cause to be kept one or more branch registers of its debentureholders at such place or places as the directors may from time to time determine and the directors may by resolution, regulation or otherwise make such provisions as they think fit respecting the keeping of such branch registers.

20.5    Every bond, debenture or other debt obligation of the Corporation shall be signed manually by at least one director or officer of the Corporation or by or on behalf of a trustee, registrar, branch registrar, transfer agent or branch transfer agent for the bond, debenture or other debt obligations appointed by the Corporation or under any instrument under which the bond, debenture or other debt obligation is issued and any additional signatures may be printed or otherwise mechanically reproduced

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thereon and, in such event, a bond, debenture or other debt obligation so signed is as valid as if signed manually notwithstanding that any person whose signature is so printed or mechanically reproduced shall have ceased to hold the office that he is stated on such bond, debenture or other debt obligation to hold at the date of the issue thereof.

20.6    The Corporation shall keep or cause to be kept a register of its indebtedness to every director or officer of the Corporation or an associate of any of them in accordance with the provisions of the Act.

21.      DISCLOSURE OF INTEREST OF DIRECTORS

21.1    Conflicts. A director who is in any way, directly or indirectly, interested in an existing or proposed contract or transaction with the Corporation or who holds any office or possesses any property whereby, directly or indirectly, a duty or interest might be created to conflict with his duty or interest as a director shall declare the nature and extent of his interest in such contract or transaction or of the conflict or potential conflict with his duty and interest as a director, as the case may be, in accordance with the provisions of the Act.

21.2    A director shall not vote in respect of any such contract or transaction with the Corporation in which he is interested and if he shall do so his vote shall not be counted, but he shall be counted in the quorum present at the meeting at which such vote is taken. Subject to the provisions of the Act, the prohibitions contained in this by-law shall not apply to:

(a)	any contract or transaction relating to a loan to the Corporation, the repayment of all or part of which a director or a specified corporation or a specified firm in which he has an interest has guaranteed or joined in guaranteeing;
(b)	any contract or transaction made, or to be made, with or for the benefit of an affiliated corporation of which a director is a director or officer;
(c)	any contract by a director to subscribe for or underwrite shares or debentures to be issued by the Corporation or a subsidiary of the Corporation, or any contract, arrangement or transaction in which a director is, directly or indirectly interested if all the other directors are also, directly or indirectly interested in the contract, arrangement or transaction;
(d)	determining the remuneration of the directors in that capacity;
(e)	purchasing and maintaining insurance to cover directors against liability incurred by them as directors; or
(f)	the indemnification of any director by the Corporation.

These exceptions may from time to time be suspended or amended to any extent approved by the Corporation in general meeting and permitted by the Act, either generally or in respect of any particular contract or transaction or for any particular period.

21.3    The interest of a director in any matter described in this by-law or otherwise shall not affet such director’s alternate director and such alternate director may be counted in a quorum and may vote upon such matter notwithstanding disqualification of the director, nor shall a disqualification of an alternate director affect the ability of a director to be counted in a quorum or to vote on a matter in which such director’s alternate director shall be disqualified.

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21.4    A director may hold any office or position with the Corporation, other than the office of auditor of the Corporation, in conjunction with his office of director for such period and on such terms, as to remuneration or otherwise, as the directors may determine and no director or intended director shall be disqualified by his office from contracting with the Corporation either with regard to his tenure of any such other office or position or as vendor, purchaser or otherwise, and, subject to compliance with the provisions of the Act, no contract or transaction entered into by or on behalf of the Corporation in which a director is in any way interested shall be liable to be voided by reason thereof.

21.5    Subject to compliance with the provisions of the Act, a director or his firm may act in a professional capacity for the Corporation and he or his firm shall be entitled to remuneration for professional services as if he were not a director.

21.6    A director may be or become a director or other officer or employee of, or otherwise interested in, any corporation or firm in which the Corporation may be interested as a shareholder or otherwise, and, subject to compliance with the provisions of the Act, such director shall not be accountable to the Corporation for any remuneration or other benefits received by him as director, officer or employee of, or from his interest in, such other corporation or firm.

MADE by resolution of the Board of Directors on the 11th day of January, 2002.

President

Secretary

CONFIRMED by the Shareholders in accordance with the Canada Business Corporations Act on the 15th day of February, 2002.

Secretary

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EX-2

Exhibit 2

Consolidated Financial Statements

Cardiome Pharma Corp.
(Expressed in Canadian dollars)
December 31, 2004

AUDITORS’ REPORT

To the Board of Directors and Shareholders of

Cardiome Pharma Corp.

We have audited the consolidated balance sheets of Cardiome Pharma Corp. as at December 31, 2004 and December 31, 2003 and the consolidated statements of loss and deficit and cash flows for the year ended December 31, 2004, for the thirteen months ended December 31, 2003 and for the year ended November 30, 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2004 and December 31, 2003 and the results of its operations and its cash flows for the year ended December 31, 2004, for the thirteen months ended December 31, 2003 and for the year ended November 30, 2002, in accordance with Canadian generally accepted accounting principles.

As discussed in note 3 to the consolidated financial statements, the Company changed its policy for the method of accounting for stock-based compensation, effective December 1, 2002.

Vancouver, Canada,
February 4, 2005. /s/ Ernst & Young LLP
Chartered Accountants

Cardiome Pharma Corp.

Continued under the laws of Canada

CONSOLIDATED BALANCE SHEETS

(expressed in Canadian dollars)

	December 31,			December 31,
	2004			2003
	$			$
ASSETS
Current
Cash and cash equivalents [note 6]		7,673,892			13,978,880
Short-term investments [notes 6 and 10]		16,693,319			30,604,031
Amounts receivable [note 5]		14,289,307			4,360,377
Prepaid expenses		1,131,591			798,004
Total current assets		39,788,109			49,741,292
Capital assets [note 7]		2,687,290			849,689
Intangible assets [note 8]		25,851,072			41,533,337
		68,326,471			92,124,318
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities [note 15]		5,833,974			4,343,118
Deferred revenue [note 13]		4,868,817			4,893,400
Future income tax liability [note 14]		2,164,000			—
Current portion of capital lease obligations [note 12[b]]		7,061			27,045
Current portion of deferred leasehold inducement [note 9]		95,108			—
Total current liabilities		12,968,960			9,263,563
Capital lease obligations [note 12[b]]		—			7,040
Deferred revenue [note 13]		4,015,106			8,304,168
Deferred leasehold inducement [note 9]		859,984			—
Future income tax liability [note 14]		4,918,000			15,860,000
Total liabilities		22,762,050			33,434,771
Commitments and contingencies [notes 12 and 16]
Shareholders’ equity
Share capital [note 11[b]]		131,427,488			119,645,857
Contributed surplus		6,195,605			3,335,319
Deficit		(92,058,672	)		(64,291,629	)
Total shareholders’ equity		45,564,421			58,689,547
		68,326,471			92,124,318

See accompanying notes

On behalf of the Board:

/s/ Mark C. Rogers	/s/ Harold H. Shlevin
Director	Director

Cardiome Pharma Corp.

CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT

(expressed in Canadian dollars)

				Thirteen
	Year ended			months ended			Year ended
	December 31,			December 31,			November 30,
	2004			2003			2002
	$			$			$
REVENUE
Licensing fees [note 13]		12,563,649			1,350,366			1,480,641
Research collaborative fees [note 13]		13,839,595			4,696,827			287,768
		26,403,244			6,047,193			1,768,409
EXPENSES
Research and development		38,666,892			16,928,018			9,759,442
General and administration		7,296,911			5,631,050			3,760,006
Amortization		5,062,158			6,028,230			4,441,501
Write-down of intangible assets [note 8]		11,521,176			—			—
		62,547,137			28,587,298			17,960,949
Operating loss		(36,143,893	)		(22,540,105	)		(16,192,540	)
OTHER INCOME (EXPENSES)
Interest and other income		679,171			611,075			559,418
Foreign exchange gain (losses)		(1,080,321	)		(46,783	)		73,416
		(401,150	)		564,292			632,834
Loss before income taxes		(36,545,043	)		(21,975,813	)		(15,559,706	)
Future income tax recovery [notes 8 and 14]		8,778,000			2,110,000			1,530,000
Net loss for the period		(27,767,043	)		(19,865,813	)		(14,029,706	)
Deficit, beginning of period		(64,291,629	)		(44,425,816	)		(30,396,110	)
Deficit, end of period		(92,058,672	)		(64,291,629	)		(44,425,816	)
Basic and diluted loss per common share [note 11[f]]		(0.71	)		(0.63	)		(0.60	)
Weighted average number of common shares outstanding [note 11[f]]		39,231,791			31,470,279			23,560,044

See accompanying notes

Cardiome Pharma Corp.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(expressed in Canadian dollars)

				Thirteen
	Year ended			months ended			Year ended
	December 31,			December 31,			November 30,
	2004			2003			2002
	$			$			$
OPERATING ACTIVITIES
Loss for the period		(27,767,043	)		(19,865,813	)		(14,029,706	)
Add items not affecting cash:
Amortization		5,062,158			6,028,230			4,441,501
Stock-based compensation		3,067,802			2,059,053			84,000
Deferred leasehold inducement amortization		(75,288	)		—			—
Write-down of intangible assets		11,521,176			—			—
Future income tax recovery		(8,778,000	)		(2,110,000	)		(1,530,000	)
		(16,969,195	)		(13,888,530	)		(11,034,205	)
Changes in non-cash working capital items relating to operations:
Amounts receivable		(9,928,930	)		(3,847,710	)		(336,655	)
Prepaid expenses		(333,587	)		(726,805	)		—
Accounts payable and accrued liabilities		1,806,524			948,087			1,741,108
Deferred revenue		(4,313,645	)		11,742,635			106,559
Cash used in operating activities		(29,738,833	)		(5,772,323	)		(9,523,193	)
FINANCING ACTIVITIES
Issuance of share capital		11,574,114			31,063,759			27,884,444
Payment on obligations under capital leases		(27,024	)		(27,395	)		(15,937	)
Repayment of long-term debt		—			—			(724,574	)
Cash provided by financing activities		11,547,090			31,036,364			27,143,933
INVESTING ACTIVITIES
Acquisition of Cardiome, Inc. [note 4]		—			—			(1,382,606	)
Purchase of capital assets		(2,695,034	)		(336,050	)		(203,375	)
Leasehold inducements		1,030,380			—			—
Patent costs capitalized		(359,303	)		(81,457	)		(481,962	)
Purchase of short-term investments		(39,690,850	)		(38,553,131	)		(33,717,159	)
Sale of short-term investments		53,601,562			26,255,128			18,212,961
Cash provided by (used in) investing activities		11,886,755			(12,715,510	)		(17,572,141	)
Increase (decrease) in cash and cash equivalents during the period		(6,304,988	)		12,548,531			48,599
Cash and cash equivalents, beginning of period		13,978,880			1,430,349			1,381,750
Cash and cash equivalents, end of period		7,673,892			13,978,880			1,430,349
Supplemental cash flow information:
Interest paid		20,788			3,439			3,039

See accompanying notes

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

1. NATURE OF OPERATIONS

Cardiome Pharma Corp. (the “Company”) was incorporated under the Company Act (British Columbia) on December 12, 1986 under the name Nortran Resources Ltd. The Company changed its name to Nortran Pharmaceuticals Inc. on June 24, 1992 and subsequently to Cardiome Pharma Corp. on June 20, 2001. On March 8, 2002, the Company was continued under the laws of Canada. The Company is a product-focused cardiovascular drug development company.

The Company has financed its cash requirements primarily from share issuances, payments from research collaborators and licensing fees. The Company’s ability to realize the carrying value of its assets is dependent on successfully bringing its technologies to market and achieving future profitable operations, the outcome of which cannot be predicted at this time. It may be necessary for the Company to raise additional funds for the continuing development of its technologies.

The Company changed its fiscal year end from November 30 to December 31, effective December 31, 2003. Accordingly, for the 2003 fiscal period, the Company has reported its annual consolidated financial statements for the thirteen month period ended December 31, 2003.

2. SIGNIFICANT ACCOUNTING POLICIES

The Company prepares its accounts in accordance with Canadian generally accepted accounting principles. A reconciliation of amounts presented in accordance with United States generally accepted accounting principles is detailed in note 17. The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements:

Principles of consolidation

These consolidated financial statements include the accounts of Cardiome Pharma Corp. and its wholly-owned subsidiaries, Rhythm-Search Developments Ltd. (incorporated in Canada), Cardiome, Inc. (incorporated in the United States), and Cardiome Research and Development (Barbados), Inc. (incorporated in Barbados). Intercompany accounts and transactions have been eliminated on consolidation.

1

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)

Use of estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts recorded in the consolidated financial statements. Significant areas requiring the use of estimates relate to the assessment of net recoverable value of technology licenses and patents, accrual of clinical trial expenses, reporting of revenue recognition and stock-based compensation. The reported amounts and note disclosure are determined using management’s best estimates based on assumptions that reflect the most probable set of economic conditions and planned course of actions. Actual results could differ from those estimates.

Foreign currency translation

The Company follows the temporal method of accounting for the translation of foreign currency amounts, including those of its integrated foreign subsidiaries, into Canadian dollars. Under this method, monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars using exchange rates in effect at the balance sheet date. All other assets and liabilities are translated at the exchange rates prevailing at the date the assets were acquired or the liabilities incurred. Revenue and expense items are translated at the monthly average exchange rate during the period. Foreign exchange gains and losses, both realized and unrealized, are included in the determination of the loss for the period.

Cash equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents, which are carried at the lower of cost or market.

Short-term investments

The Company considers all highly liquid financial instruments with an original maturity greater than 90 days and less than one year to be short-term investments. Short-term investments are considered available-for-sale and are carried at the lower of cost and market value.

2

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)

Capital assets

Capital assets are recorded at cost less accumulated amortization. Amortization is provided using the straight-line method over the following terms:

Laboratory equipment	5 years
Computer equipment	3 years
Office equipment	5 years
Laboratory equipment under capital lease	Term of lease
Leasehold improvements	Term of lease
Web-site development costs	3 years

Technology licenses and patent costs

Technology licenses, which includes licenses and rights to technologies, are initially recorded at fair value based on consideration paid and amortized on a straight-line basis over the estimated useful life of the underlying technologies of ten years.

Patent costs associated with the preparation, filing, and obtaining of patents are capitalized and amortized on a straight-line basis over the estimated useful lives of the patents of ten years.

Management evaluates the recoverability of technology licenses and patents on a quarterly basis based on the expected utilization of the underlying technologies. If the estimated net recoverable value, calculated based on undiscounted estimated future cash flows, exceed the carrying value of the underlying technology, the excess amount is charged to operations. The amounts shown for technology licenses and patent costs do not necessarily reflect present or future values and the ultimate amount recoverable will be dependent upon the successful development and commercialization of products based on these rights.

Leases

Leases have been classified as either capital or operating leases. Leases which transfer substantially all the benefits and risks incidental to the ownership of assets are accounted for as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases wherein rental payments are expensed as incurred.

3

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)

Deferred leasehold inducements

Deferred leasehold inducement representing a tenant improvement allowance is being amortized on a straight-line basis over the initial term of the lease of ten years as a reduction of rent expense.

Government grants

Government grants are recorded as a reduction of the related expenditure when there is reasonable assurance that the Company has complied with all conditions necessary to receive the grants, collectibility is reasonably assured, and the amounts are non-refundable. During the year ended December 31, 2004, the Company recorded government grants of $48,463 [thirteen months ended December 31, 2003 — $76,000; year ended November 30, 2002 — $37,000] as a reduction of research and development expenditures.

Revenue recognition

Research collaborative fees, which are non-refundable, are recorded as revenue as the related research expenses are incurred pursuant to the terms of the agreement and provided collectibility is reasonably assured.

Licensing fees comprise initial fees and milestone payments derived from collaborative licensing arrangements. Non-refundable milestone payments are recognized upon the achievement of the specified milestones when the milestone is substantive in nature, the achievement of the milestone was not reasonably assured at the inception of the agreement, and the Company has no further significant involvement or obligation to perform under the arrangement. Otherwise, non-refundable milestone payments and initial fees are deferred and amortized into revenue on a straight-line basis over the estimated period of the ongoing involvement of the Company.

Research and development costs

Research costs are expensed in the period incurred. Development costs are expensed in the period incurred unless the Company believes a development project meets generally accepted accounting criteria for deferral and amortization. At December 31, 2004 and December 31, 2003, no development costs have been deferred.

4

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)

Stock-based compensation and other stock-based payments

The Company grants stock options to executive officers and directors, employees, consultants and clinical advisory board members pursuant to a stock option plan described in note 11. Effective December 1, 2002, the Company adopted the fair value method of accounting for stock options granted, modified or settled since December 1, 2002 [note 3].

Future income taxes

The Company accounts for income taxes using the liability method of tax allocation. Future income taxes are recognized for the future income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases. Future income tax assets and liabilities are measured using substantively enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in rates is included in earnings in the period that includes the enactment date. Future income tax assets are recorded in the financial statements if realization is considered more likely than not.

Loss per common share

Loss per common share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period, excluding contingently issuable common shares. Diluted loss per common share is equivalent to basic loss per share as the outstanding options and warrants are anti-dilutive.

5

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

3. CHANGE IN ACCOUNTING POLICY

Stock-based compensation and other stock-based payments

The Company has elected to prospectively adopt the recommendations of the Canadian Institute of Chartered Accountants (the “CICA”) Handbook Section 3870, Stock-Based Compensation and Other Stock-Based Payments, effective December 1, 2002. This standard requires that all stock-based awards be measured and recognized using a fair value based method.

The fair value of stock options is estimated at the date of grant using the Black-Scholes Option Pricing Model and is amortized over the vesting terms. Prior to the adoption of this standard no compensation expense was recognized for stock options issued.

4. BUSINESS COMBINATION

On March 8, 2002, the Company acquired 100% of the outstanding common shares of Cardiome, Inc., (formerly Paralex, Inc.) a development stage enterprise. The acquisition provides the Company with certain intellectual property rights, under a license from Johns Hopkins University, relating to the use of xanthine oxidase inhibitors for treatment of congestive heart failure (the “CHF technology”), other cardiovascular disorders and neuromuscular disease. The acquisition also provides the Company with the rights, under an exclusive worldwide sublicense from ILEX Oncology, Inc. (“ILEX”), which has merged into Genzyme Corp. effective December 21, 2004, to oxypurinol for the treatment of hyperuricemia (gout) in humans who are intolerant of allopurinol. ILEX also granted the Company an exclusive license to certain safety and efficacy clinical data, know-how and an option to acquire additional efficacy clinical data of oxypurinol for the treatment of gout. Oxypurinol is one of the known xanthine oxidase inhibitors. The Company expected that the combination of these licenses would potentially expedite the development of the CHF technology directly into Phase II clinical trial. The Company issued 8,203,396 common shares in exchange for all of the outstanding shares of Cardiome, Inc.

The acquisition has been accounted for using the purchase method of accounting and accordingly the results of operations have been included in the consolidated statement of loss and deficit from the date of acquisition.

6

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

4. BUSINESS COMBINATION (cont’d.)

The purchase price has been allocated to the fair value of Cardiome, Inc.’s identifiable net assets and liabilities in accordance with the purchase method as follows:

	$
Assets acquired:
Cash		624
Other assets		560,368
License technology		48,897,408
Total assets acquired		49,458,400
Less liabilities assumed:
Accounts payable and accrued liabilities		355,502
Long-term debt		723,111
Future income tax liability		19,500,000
Total liabilities assumed		20,578,613
Net assets acquired		28,879,787
Consideration given:
8,203,396 common shares		27,480,261
Transaction costs		1,399,526
Total consideration		28,879,787

The purchase price allocation reflects the fair value, at the acquisition date, of the assets acquired and liabilities assumed based upon the Company’s evaluation of such assets and liabilities following the closing of the acquisition. The value of the common shares issued was determined to be $3.36 per share using the three-day average quoted market price of the Company’s common shares on the Toronto Stock Exchange (the “TSX”) for the period from December 20 to 22, 2001. December 21, 2001 was the date on which the terms of the acquisition were agreed to and announced. The amount allocated to the common shares of $27,480,261 is net of costs of registering the shares of $83,149.

7

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

5. FINANCIAL INSTRUMENTS AND RISK

For certain of the Company’s financial instruments, including cash equivalents, short-term investments, amounts receivable, and accounts payable, the carrying amounts approximate fair value due to their short-term nature. Other long-term financial instruments bear interest at rates which, in management’s opinion, approximate the current interest rates and therefore, approximate their fair value.

Financial risk is the risk to the Company’s results of operations that arises from fluctuations in interest rates and foreign exchange rates and the degree of volatility of these rates. Interest rate risk arises as the Company’s investments bear fixed interest rates. Foreign exchange risk arises as the Company’s investments which finance operations are substantially denominated in Canadian dollars and a significant portion of the Company’s expenses are denominated in United States dollars and Euros.

As at December 31, 2004, included in amounts receivable is an amount of $13,847,269 (US$11,520,191) due from one research collaborator. [December 31, 2003 — $3,687,645 (US$2,844,308)].

6. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash equivalents include approximately $6,207,000 [December 31, 2003 — $6,472,000] of commercial paper, bankers’ acceptances and term deposits with an average interest rate of 2.17% at December 31, 2004 [December 31, 2003 — 2.55%] including $2,687,365 (US$2,235,745) [December 31, 2003 — nil] denominated in U.S. dollars.

Short-term investments mainly comprise commercial paper and term deposits with an average interest rate of 2.25% at December 31, 2004 [December 31, 2003 — 2.31%] and maturities to April 2005 [December 31, 2003 — December 2004] including $5,228,607 (US$4,349,923) [December 31, 2003 - $6,461,043 (US$4,983,450)] denominated in U.S. dollars.

At December 31, 2004, the fair value of the short-term investments was approximately $16,693,000 [December 31, 2003 — $30,624,000], based on quoted market prices.

8

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

7. CAPITAL ASSETS

			Accumulated		Net book
	Cost		amortization		value
	$		$		$
December 31, 2004
Laboratory equipment		970,027		622,519		347,508
Computer equipment		744,843		413,344		331,499
Office equipment		372,721		135,467		237,254
Laboratory equipment under capital lease		77,418		70,966		6,452
Leasehold improvements		1,960,037		195,460		1,764,577
Web-site development costs		13,640		13,640		—
		4,138,686		1,451,396		2,687,290
December 31, 2003
Laboratory equipment		885,960		721,544		164,416
Computer equipment		576,215		446,436		129,779
Office equipment		266,843		120,017		146,826
Laboratory equipment under capital lease		77,418		45,161		32,257
Leasehold improvements		412,036		37,898		374,138
Web-site development costs		13,640		11,367		2,273
		2,232,112		1,382,423		849,689

Included in leasehold improvements at December 31, 2003, is an amount of $371,126 of leasehold improvements under construction for which no amortization has been charged.

9

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

8. INTANGIBLE ASSETS

			Accumulated		Net book
	Cost		amortization		Value
	$		$		$
December 31, 2004
Technology licenses		38,300,346		13,263,862		25,036,484
Patents		1,514,650		700,062		814,588
Total		39,814,997		13,963,924		25,851,072
December 31, 2003
Technology licenses		53,365,070		12,282,502		41,082,568
Patents		1,049,010		598,241		450,769
Total		54,414,080		12,880,743		41,533,337

During the year ended December 31, 2004, the Company recorded additional amortization expense of $nil [thirteen months ended December 31, 2003 — $42,693; year ended November 30, 2002 — $227,584] with respect to patents no longer directly related to the Company’s current focus.

In addition, during the year ended December 31, 2004, the Company decided to discontinue its efforts to pursue the allo-intolerant gout indication for Oxypurinol and wrote down $7,054,176 of the intangible assets, net of future tax recovery, related to the Oxypurinol gout project. The net write-down includes the write-down of the net book value of intangible assets and related future income tax liability, which arose from the Company’s acquisition of Cardiome, Inc. by issuance of common shares of the Company in March 2002 [note 4], of $11,266,623 and $4,467,000, respectively, and a write-down of the carrying value of a license (cash payment in May 2002) by $254,553.

10

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

9. DEFERRED LEASEHOLD INDUCEMENT

Pursuant to a lease agreement, the Company received a cash tenant improvement allowance amounting to $1,030,380 from the landlord for leasehold improvements during the year ended December 31, 2004. $792,600 of the tenant improvement allowance (“Basic Allowance”) is being amortized on a straight line over the initial term of the lease. The remaining $237,780 (the “Additional Allowance”) represents a repayable allowance, collateralized with a letter of credit [note 10], which is being repaid over 10 years with interest at 10% per annum at approximately $38,000 per annum. The Company is obligated to refund the unpaid portion of the Additional Allowance upon early termination of the lease.

10.  CREDIT FACILITY

At December 31, 2004, the Company had available a corporate credit card facility, and an unused operating line of credit of $38,000 bearing interest at the bank’s prime rate and payable on demand. Cashable certificates totalling $387,780 [December 31, 2003 — $100,000] included in short-term investments are pledged as collateral for these facilities and the Additional Allowance [note 9].

11

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

11.  SHARE CAPITAL

[a]  Authorized

The authorized share capital of the Company consists of an unlimited number of common shares without par value, and an unlimited number of preferred shares without par value issuable in series of which none are currently issued and outstanding.

[b]  Issued

	Number of
Common shares	shares		Amount
	#		$
Balance, November 30, 2001		10,308,962		32,251,393
Issued upon conversion of special warrants		458,583		864,927
Issued for cash upon public offering [iv]		9,309,657		27,908,517
Issued for cash upon exercise of options		27,500		77,000
Issued for the acquisition of Cardiome, Inc. [note 4]		8,203,396		27,480,261
Balance, November 30, 2002		28,308,098		88,582,098
Share issuance cost related to a prior share offering		—		(34,100	)
Issued upon conversion of special warrants [iii]		3,810,000		7,133,752
Issued for cash upon public offering and exercise of over-allotment option [ii]		4,381,500		21,389,367
Issued for cash upon exercise of options		196,026		600,569
Issued for cash upon exercise of warrants		594,484		1,974,171
Issued pursuant to exercise of warrants on cashless basis [iv]		25,601		—
Balance, December 31, 2003		37,315,709		119,645,857
Issued for cash upon equity investment from Fujisawa [i]		646,712		4,080,753
Issued for cash upon exercise of options		534,925		1,809,645
Issued for cash upon exercise of warrants		1,991,010		5,683,717
Issued pursuant to exercise of warrants on cashless basis		104,478		—
Reallocation of contributed surplus arising from stock-based compensation related to the exercise of options		—		207,516
Balance, December 31, 2004		40,592,834		131,427,488

12

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

11. SHARE CAPITAL (cont’d.)

[i]	On October 28, 2004, the Company issued 646,712 common shares to Fujisawa Healthcare, Inc. (“Fujisawa”), following the exercise of an option by the Company requiring Fujisawa to acquire US$4 million of its common shares at a 25% premium to the average closing price of its common shares on the TSX over a 30-calendar day period, for a total deemed price per share of Cdn$7.89.
	The total proceeds received has been allocated to share capital based on the quoted market price of the Company’s common shares on the TSX on the option exercise date and the balance has been recorded as deferred licensing revenue [note 13 [b]].
[ii]	On September 23, 2003, the Company closed a public offering of common shares pursuant to which the Company issued 3,810,000 common shares at a price of $5.25 per common share, resulting in gross proceeds of $20,002,500. In addition, the Company granted the underwriters an over-allotment option to purchase up to 571,500 common shares at $5.25 per share, exercisable not later than 30 days after the closing of the offering. On October 23, 2003, the full over-allotment option was exercised and the Company issued 571,500 common shares at a price of $5.25 per share for gross proceeds of $3,000,375. In connection with the public offering, including the exercise of over-allotment option, the Company paid a cash commission of $1,265,158 and incurred total legal and professional fees of $348,350.
[iii]	On April 10, 2003, the Company completed a private placement of 3,810,000 special warrants for total gross proceeds of $8,010,600, of which 3,762,000 were issued at a price of $2.10 per special warrant and 48,000 were issued at a price of $2.30 per special warrant. Each special warrant entitled the holder to acquire, upon exercise, one common share of the Company and one half of one share purchase warrant, for no additional consideration. Pursuant to a receipt for a final prospectus qualifying the common shares and share purchase warrants on June 5, 2003, the Company issued 3,810,000 common shares and 1,905,000 share purchase warrants upon the automatic exercise of the special warrants. Each whole share purchase warrant entitled the holder to acquire one common share at $2.75 expiring April 10, 2004. In connection with the private placement, the Company paid a cash commission of $480,636 and incurred total legal and professional fees of $396,212.

13

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

11. SHARE CAPITAL (cont’d.)

[iv]

On March 8, 2002, the Company completed a public offering of 9,309,657 units (the “Units”) of the Company at a price of $3.32 per unit for total gross proceeds of $30,908,061 (the “Offering”). Each Unit was converted into one common share in the capital of the Company and one quarter of one common share purchase warrant (a “Warrant”) of the Company. One whole Warrant entitled the holder to purchase one common share of the Company at $6.64 expiring March 7, 2004. In connection with the public offering, the Company paid a cash commission of $2,163,564 and legal and professional fees of $835,980. In addition, the Company granted brokers’ warrants (“Brokers’ Warrants”) to purchase 930,966 Units at a price of $3.80 per Unit until March 8, 2004 to the lead agents of the public offering. During the period ended December 31, 2003, 105,596 Broker Warrants were exercised pursuant to a “cashless” exercise provision resulting in the issuance of 25,601 common shares.

[c]

Common share purchase warrants

Details of the share purchase warrants for the year ended December 31, 2004 are summarized as follows:

Number of Share Purchase Warrants Outstanding	#
Balance, December 31, 2003		5,109,527
Warrants exercised on a cash basis		(1,991,010	)
Warrants exercised on a cashless basis		(401,860	)
Warrants expired unexercised		(2,540,157	)
Balance, December 31, 2004		176,500

During the year ended December 31, 2004 the Company issued 104,478 common shares for 401,860 warrants exercised on a cashless basis. As at December 31, 2004, common shares issuable upon exercise of common share purchase warrants are as follows:

	Exercise	Number of
Date of expiry	price	warrants
February 9, 2007	US $2.40		101,508
February 9, 2007	US $4.80		37,496
February 9, 2007	US $8.00		37,496
Balance, December 31, 2004			176,500

14

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

11. SHARE CAPITAL (cont’d.)

[d] Stock options

In May 2001, the shareholders approved a stock option plan (“2001 Plan”) providing for the granting of options to executive officers and directors, employees, consultants and clinical advisory board members of the Company. The shares available for issuance under the 2001 Plan generally vest over periods up to 5 years with a term of six years. In May 2004, the shareholders approved an amendment to the 2001 Incentive Stock Option Plan to (i) increase the maximum aggregate number of Common Shares issuable under the 2001 Incentive Stock Option Plan from 5,500,000 Common Shares to 6,000,000 Common Shares and (ii) to change the period during which optionees may exercise options after ceasing to be an eligible person. At December 31, 2004, the Company has 1,006,916 [December 31, 2003 — 745,390] common shares available for future issuance under the 2001 Plan.

At December 31, 2004, stock options to executive officers and directors, employees, consultants and clinical advisory board members were outstanding as follows:

	Options outstanding						Options exercisable
	December 31, 2004						December 31, 2004
			Weighted
	Number of		average		Weighted		Number of		Weighted
Range of	common		remaining		average		common		average
exercise price	shares		contractual life		exercise price		shares		exercise price
$	issuable		(years)		$		issuable		$
$2.80-$2.92		102,500		2.21		2.90		102,500		2.90
$3.00-$3.68		2,815,209		3.96		3.29		2,198,541		3.28
$4.20-$5.05		548,450		4.47		5.03		548,450		5.03
$5.08-$5.96		428,750		2.36		5.51		388,750		5.52
$6.29-$7.24		807,000		5.34		6.46		165,416		5.61
		4,701,909		4.07		4.23		3,403,657		3.92

15

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

11.   SHARE CAPITAL (cont’d.)

Stock options activities are summarized as follows:

	Number of			Weighted average
	common shares			exercise
	under option			price
	#			$
Balance, November 30, 2001		1,079,688			4.37
Options granted		2,784,125			3.28
Options exercised		(27,500	)		2.80
Options forfeited		(84,375	)		4.23
Options expired		(142,500	)		4.68
Balance, November 30, 2002		3,609,438			3.53
Options granted		1,650,750			4.28
Options exercised		(196,026	)		3.06
Options forfeited		(355,578	)		4.10
Options expired		(150,000	)		5.96
Balance, December 31, 2003		4,558,584			3.70
Options granted		893,250			6.35
Options exercised		(534,925	)		3.38
Options forfeited		(215,000	)		3.95
Balance, December 31, 2004		4,701,909			4.23

[e]   Stock-based compensation

The estimated fair value of options granted from December 1, 2002 to officers, directors, employees, clinical advisory board members and consultants is amortized to expense over the vesting period. Compensation expense for the year ended December 31, 2004 amounted to $3,067,802 [December 31, 2003 — $2,059,053]. For the year ended December 31, 2004, this compensation expense is allocated between research and development expenses ($1,231,626) and general and administration expenses ($1,836,176) on the same basis as cash compensation. For the year ended December 31, 2003 this compensation expense is allocated between research and development expenses ($646,405) and general and administration expenses ($1,412,648) on the same basis as cash compensation. The weighted average fair value of stock options granted during the years ended December 31, 2004 and December 31, 2003 was $4.30 and $2.65 per share respectively. The estimated fair value of the stock options granted in 2004 and 2003 was determined using the Black-Scholes option pricing model with the following weighted-average assumptions: dividend yield — 0%; expected volatility — 75.2% and 85.0%, respectively; risk-free interest rate — 3.69% and 3.95%, respectively; and expected average life of the options — 6 years.

16

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

11.   SHARE CAPITAL (cont’d.)

[f] Loss per common share

	Year ended			Thirteen months			Year ended
	December 31,			ended December 31,			November 30,
	2004			2003			2002
	$			$			$
Numerator
Loss for the period		(27,767,043	)		(19,865,813	)		(14,029,706	)
Denominator
Weighted average number of common shares outstanding		39,231,791			31,470,279			23,560,044
Basic and diluted loss per common share		(0.71	)		(0.63	)		(0.60	)

12.   COMMITMENTS

[a]   Operating leases

The Company has entered into a lease agreement for the current office and laboratory space for a term of 10 years expiring through March 2014, with an option to extend for three additional two-year periods. Future minimum annual lease payments under the lease are as follows:

	$
2005		255,944
2006		262,549
2007		296,234
2008		331,241
2009		351,717
Thereafter		1,500,985
		2,998,670

Rent expense for the year ended December 31, 2004 amounted to $322,518 [thirteen months ended December 31, 2003 — $374,510; year ended November 30, 2002 — $263,891].

17

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

12.   COMMITMENTS (cont’d.)

[b]   Capital leases

The Company leases laboratory equipment under capital lease obligations. Future minimum lease payments under the capital leases are as follows:

	$
2005		7,138
Less: amount representing interest		(77	)
		7,061
Less: current portion of capital lease obligations		(7,061	)
Long term portion of capital lease obligations		—

Interest expense during the year ended December 31, 2004 amounted to $1,418 [thirteen months ended December 31, 2003 — $3,439; year ended November 30, 2002 — $3,039].

[c]   Clinical research agreements

The Company has entered into various collaborative clinical research and development agreements requiring it to fund fixed research and development expenditures of approximately $6.5 million for fiscal 2005.

18

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

12. COMMITMENTS (cont’d.)

[d]	License agreements
[i]	Pursuant to a license agreement, the Company is responsible for payment of royalties based on a percentage of revenue, subject to certain minimum annual royalties, of the licensed technology. The Company is no longer developing this licensed technology. As at December 31, 2004, no royalties were payable. The license agreement may be terminated by the licensor if certain development milestones are not met. Unless otherwise terminated, the agreement expires on the expiry date of the last issued patent relating to certain technology.
[ii]	Pursuant to a service agreement, the Company is responsible for payment of $500,000 upon commencement of Phase III clinical trials and a further $2,000,000 upon filing a New Drug Application in the United States or Canada for the licensed technology. The Company also has an obligation to pay royalties based on future net sales. The Company is no longer developing this licensed technology. As at December 31, 2004, no amounts were payable. The agreement expires on the expiry date of the last patent relating to certain technology.
[iii]	Pursuant to a license agreement, the Company is responsible for the payment of royalties based on a percentage of revenue and subject to certain minimum annual royalties commencing at US$5,000 and increasing over the next three years to US$100,000 per annum. The Company also has an obligation to develop and introduce certain licensed products into commercial markets as soon as it is practicable. The agreement sets out certain milestones relating to certain technology that need to be met in ensuring that this occurs. The license agreement may be terminated if either party fails to perform or breaches any of its obligations under the agreement. Furthermore, the Company may terminate the agreement for any reason upon giving 60 days’ written notice. Unless otherwise terminated, the agreement expires upon the expiration of the last issued patent relating to certain technology.
[iv]	Pursuant to a license and option agreement, the Company is responsible for milestone payments of up to US$3 million based on the successful completion of first phase II clinical trials and the U.S. Food and Drug Administration (“the FDA”) approval of the first new drug application and FDA approval for marketing and commercialization of the product in a cardiovascular indication. The Company is also responsible for milestone payments of up to US$6 million based on FDA approval for marketing and commercialization of the product in a hyperuricemic (gout) indication of the product and achievement of certain net sales of the product. The Company also has an obligation to pay royalties based on future net sales. During the year ended December 31, 2004, the Company decided to discontinue its efforts to pursue the allo-intolerant gout indication for Oxypurinol. At December 31, 2004, no amounts were payable. Unless otherwise terminated, the license agreement will terminate upon the expiration of the licensor’s obligation to pay royalties under its original license agreement with a third party.

19

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

13. COLLABORATIVE AGREEMENTS

[a]	On September 18, 2002, the Company entered into a development and transfer agreement with UCB Farchim S.A. (“UCB”) under which UCB purchased from the Company the exclusive rights to an anti-tussive program. Concurrently, the Company acquired a perpetual, worldwide exclusive license, with the right to grant sublicenses, to all cardiovascular applications associated with the technology. Consideration for the disposition includes royalties on future net sales of products arising from this technology, upfront payments, and milestone payments of up to US$8 million on the first product developed by UCB and an additional US$3 million for each subsequent product developed. Also, UCB agreed to pay the Company for research services to be provided over an initial period of 12 months, extendable to up to 36 months at a rate of US$600,000 per annum. The Company agreed to pay a royalty to UCB for any cardiovascular products developed and sold which utilize technology patented subsequent to September 18, 2002.
	The Company received an initial payment of US$1,000,000 in fiscal year ended November 30, 2002. This initial payment was amortized as licensing revenue on a straight-line basis over the maximum 36-month term of the service agreement. During the year ended December 31, 2004, the Company received research service fees of US$128,571 (thirteen months ended December 31, 2003 — US$650,000; year ended November 30, 2002 — US$150,000), which were included in research collaborative fees. The remaining unamortized deferred revenue balance of $881,777 related to the initial payment was recorded as revenue in March 2004 when UCB elected not to extend the research service agreement with the Company.
[b]	On October 16, 2003, the Company entered into a collaboration and license agreement with Fujisawa Healthcare, Inc. (“Fujisawa”) for the co-development and commercialization of RSD1235 as an intravenous formulation for the treatment of atrial fibrillation and atrial flutter. Pursuant to this agreement, effective October 28, 2003, the Company has granted Fujisawa an exclusive license to RSD1235 and its related technology to develop, make and sell intravenous drugs in North America, including a right to sublicense to third parties. The Company retains the rights to the intravenous formulation of RSD1235 for markets outside North America and worldwide rights to the oral formulation of RSD1235 for chronic atrial fibrillation. Under the terms of the agreement, the Company received an up-front payment of $13.09 million (US$10 million) and will be entitled to milestone payments of up to $71 million (US$54 million) based on achievement of specified development and commercialization milestones, as well as royalties based on future net sales and sublicense revenue. Fujisawa has also agreed to make further milestone payments with respect to any subsequent drugs developed under the agreement.

20

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

13. COLLABORATIVE AGREEMENTS (cont’d.)

Under the terms of the agreement, Fujisawa is responsible for 75% and the Company is responsible for 25% of eligible costs associated with the development of intravenous formulation of RSD1235. Fujisawa is also responsible for 100% of the marketing costs for the intravenous application of RSD1235 in North America.

In addition, the Company had the right to require Fujisawa to acquire $5.2 million (US$4 million) of its common shares at a 25% premium to the average closing price of its common shares on the TSX over a 30 calendar day period at any time within the twelve-month period after the Effective Date. The Company exercised its right on September 28, 2004 and completed this transaction with the issuance of 646,712 of its common shares to Fujisawa at a price of $7.89 per share [see note 11[b][i]].

This agreement can be terminated entirely, or on a country by country basis, by either party if certain development or commercialization milestones are not met. Unless the agreement is otherwise terminated, the royalty payment period for each country will expire on the later of the expiration of the last valid claim of the patent rights or the date upon which sales by other parties exceed a certain percentage of the market in the country for a certain period of time.

The initial upfront payment is recorded as licensing revenue on a straight-line basis over the estimated development period of 36 months. During the year ended December 31, 2004, the Company charged Fujisawa $1,923,296 (US$1,482,505) [thirteen months ended December 31, 2003 — $647,400 (US$482,774)] for project management and $11,728,751 (US$8,993,729) [thirteen months ended December 31, 2003 — $3,126,542 (US$2,361,534)] for research and development cost recoveries, which were included in research collaborative fees. In addition, during the year ended December 31, 2004, a development milestone was achieved and accordingly, $7,228,200 (US$6,000,000) was included in licensing fees [note 5].

21

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

14.  INCOME TAXES

At December 31, 2004, the Company has investment tax credits of $6,098,000 [December 31, 2003 - - $4,746,000] available to reduce future income taxes otherwise payable. The Company also has loss carryforwards of $23,538,000 [December 31, 2003 — $21,457,000] available to offset future tax income in Canada ($1,716,000) and the United States ($21,822,000). The investment tax credits and non-capital losses for income tax purposes expire as follows:

	Investment		Non-capital
	tax credits		losses
	$		$
2005		62,000		24,000
2006		111,000		—
2007		261,000		—
2008		520,000		—
2009		402,000		—
2010		559,000		1,692,000
2011		786,000		—
2012		845,000		—
2013		1,087,000		—
2014		1,465,000		—
2021		—		322,000
2022		—		2,733,000
2023		—		6,532,000
2024		—		12,235,000
		6,098,000		23,538,000

22

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

14.  INCOME TAXES (cont’d.)

Significant components of the Company’s future tax assets and liabilities are shown below:

	December 31,			December 31,
	2004			2003
	$			$
Future tax assets:
Tax loss carryforwards		9,323,000			8,093,000
Research and development deductions and credits		12,555,000			9,482,000
Tax values of depreciable assets in excess of accounting values		781,000			793,000
Revenue unearned for accounting purposes		3,504,000			4,701,000
Share issue costs		1,003,000			747,000
Other items		3,000			3,000
Total future tax assets		27,169,000			23,819,000
Valuation allowance		(22,290,000	)		(23,708,000	)
Total future tax assets		4,879,000			111,000
Future tax liabilities:
Accounting value of technology in excess of tax value		(9,797,000	)		(15,971,000	)
Revenue unearned for tax purposes		(2,164,000	)		—
Total future tax liabilities		(11,961,000	)		(15,971,000	)
Net future tax liabilities		(7,082,000	)		(15,860,000	)
Less current portion		(2,164,000	)		—
Net long-term portion		(4,918,000	)		(15,860,000	)

The potential income tax benefits relating to certain future tax assets have not been recognized in the accounts as their realization did not meet the requirements of “more likely than not” under the liability method of tax allocation.

23

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

14.  INCOME TAXES (cont’d.)

The reconciliation of income tax computed at the statutory tax rates to income tax expense (recovery), using a 35.62% [2003 — 37.75%;
2002 — 40.04%] statutory tax rate, is:

				Thirteen
	Year ended			months ended			Year ended
	December 31,			December 31,			November 30,
	2004			2003			2002
	$			$			$
Tax recovery at statutory income tax rates		(13,017,000	)		(8,296,000	)		(6,230,000	)
(Utilization of losses) / occurrence of losses		(1,974,000	)		(208,000	)		3,490,000
Temporary differences		449,000			5,423,000			1,194,000
Expenses not deductible for tax purposes		1,813,000			971,000			16,000
Income recognized for tax purposes but not for accounting purposes		5,125,000			—			—
Foreign tax rate differences		(1,174,000	)		—			—
Future income tax recovery		(8,778,000	)		(2,110,000	)		(1,530,000	)

24

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

15. RELATED PARTY TRANSACTIONS

The Company has incurred expenses for services provided by related parties as follows:

			Thirteen
	Year ended		months ended		Year ended
	December 31,		December 31,		November 30,
	2004		2003		2002
	$		$		$
Directors for:
- research consulting services		78,000		—		20,833
- administrative consulting services		—		—		2,500
Law firm in which an officer is a partner for:
- legal services		194,000		—		100,159

The amounts charged are recorded at their exchange amounts and are subject to normal trade terms. Included in accounts payable and accrued liabilities at December 31, 2004 is $54,688 [December 31, 2003 — $nil; November 30, 2002 — $27,355] owing to a legal firm where the Company’s current corporate secretary is a partner.

16. CONTINGENCIES

[a]

The Company may, from time to time, be subject to claims and legal proceedings brought against it in the normal course of business. Such matters are subject to many uncertainties. Management believes that adequate provisions have been made in the accounts where required and the ultimate resolution of such contingencies will not have a material adverse effect on the consolidated financial position of the Company.

[b]

The Company entered into indemnification agreements with all officers and directors. The maximum potential amount of future payments required under these indemnification agreements is unlimited. However, the Company maintains appropriate liability insurance that limits the exposure and enables the Company to recover any future amounts paid, less any deductible amounts pursuant to the terms of the respective policies, the amounts of which are not considered material.

25

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

16. CONTINGENCIES (cont’d.)

[c] The Company entered into license and research agreements with third parties that include indemnification provisions that are customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result of third party claims or damages arising from these transactions. In some cases, the maximum potential amount of future payments that could be required under these indemnification provisions is unlimited. These indemnification provisions may survive termination of the underlying agreement. The nature of the indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay. Historically, the Company has not made any indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations.

17. RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The Company prepares the consolidated financial statements in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) which as applied in these consolidated financial statements conform in all material respects to United States generally accepted accounting principles (“U.S. GAAP”), except as follows:

[a] In 2001, the Company adopted the liability method of accounting for income taxes. As a result of differences in the transition rules between the recommendations of CICA with respect to accounting for income taxes and of Statement of Financial Accounting Standard (“SFAS”) 109, accounting for Income Taxes, there is a $102,720 difference in technology and deficit under U.S. GAAP for the period ended December 31, 2004 [December 31, 2003 — $111,280; November 30, 2002 — $222,560].

26

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

17. RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d.)

[b]	For U.S. GAAP purposes, the Company has elected to prospectively adopt SFAS 148, “Accounting for Stock Based Compensation - Transition and Disclosure”, an amendment to SFAS 123 “Accounting for Stock Based Compensation” for employee awards granted under its stock option plan, modified or settled subsequent to December 1, 2002. The standard permits the prospective recognition of stock based compensation expense for all employee stock-based compensation transactions occurring subsequent to December 1, 2002 using a fair value based method. Prior to the adoption of this standard, the Company elected to follow Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to Employees” (APB 25) and related interpretations, in accounting for stock options granted to executive officers, directors and employees. Compensation expense is calculated based on the difference, on the date of grant, between the fair market value of the Company’s stock and the exercise price and is recorded over the vesting period of the options. For purposes of reconciliation to U.S. GAAP, the Company recorded compensation expense in respect of options granted to executive officers, directors and employees below fair market value of $10,000 for the year ended November 30, 2002.
[c]	Under U.S. GAAP, stock based compensation to non-employees must be recorded at the fair value of the options granted on the earlier of the date at which a performance commitment is reached or the vesting date of the options. This compensation is expensed over the vesting periods of each option grant. The fair value of the stock options was estimated using the Black-Scholes option pricing model and the following weighted-average assumptions for the years ended November 30, 2002: dividend yield 0.0%; expected volatility 93%; risk-free interest rate 3.0%; and expected average option life of 3.8 years. For purposes of reconciliation to U.S. GAAP, the Company recorded additional compensation expense of $76,799 for the year ended November 30, 2002 in respect of options earned by non-employees.
[d]	Under U.S. GAAP, short-term investments are classified as available-for-sale and carried at market values with unrealized gains or losses reflected as a component of accumulated other comprehensive income.

27

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

17.  RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d.)

The effect of the above on the Company’s consolidated financial statements is set out below:

Consolidated statements of loss and deficit

	Year ended			Thirteen months			Year ended
	December 31,			ended December 31,			November 30,
	2004			2003			2002
	$			$			$
Loss for the period, Canadian GAAP		(27,767,043	)		(19,865,813	)		(14,029,706	)
Amortization of other assets [note 17[a]]		(102,720	)		(111,280	)		(102,720	)
Adjustment for stock-based compensation
- employees [note 17[b]]		—			—			(10,000	)
- non-employees [note 17[c]]		—			—			(76,799	)
Loss for the period, U.S. GAAP		(27,869,763	)		(19,977,093	)		(14,219,225	)
Reclassification adjustment for unrealized gains on short-term investments		(19,973	)		(72,509	)		(29,591	)
Unrealized gains on investments [note 17[d]]		—			19,973			72,509
Comprehensive loss for the period, U.S. GAAP		(27,889,736	)		(20,029,629	)		(14,176,307	)
Loss for the period, U.S. GAAP		(27,869,763	)		(19,977,093	)		(14,219,225	)
Weighted average number of common shares outstanding, U.S. GAAP		39,231,791			31,470,279			23,560,044
Basic and diluted loss per common share, U.S. GAAP		(0.71	)		(0.63	)		(0.60	)

28

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

17.  RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d.)

Balance sheets

Material variations in selected balance sheet accounts under U.S. GAAP are as follows:

	December 31,			December 31,
	2004			2003
	$			$
Short-term investments [note 17[d]]		16,693,319			30,624,004
Intangible and other assets [note 17[a]]		25,859,632			41,644,617
Accumulated other comprehensive income (losses) [note 17[d]]		—			19,973
Contributed surplus [notes 17[b], [c] and [d]]		7,116,654			4,256,368
Deficit		(92,971,161	)		(65,101,398	)

[e]  Accounts payable and accrued liabilities comprise:

	December 31,		December 31,
	2004		2003
	$		$
Trade accounts payable		2,966,237		3,084,425
Accrued contract research		2,005,022		392,496
Employee-related accruals		605,000		646,000
Other accrued liabilities		257,715		220,197
		5,833,974		4,343,118

29

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

17.  RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d.)

[f]  Pro forma information — Stock-based compensation

The following pro forma financial information presents the loss for the period and basic and diluted loss per common share had the Company recognized stock based compensation for stock options granted to employees and directors using a fair value based method for all stock based transactions prior to December 1, 2002. For stock options granted in 2001, the fair value for these options was estimated at the date of grant using a Black-Scholes pricing model with the following weighted-average assumptions: dividend yield — 0%; expected volatility — 88.1%; risk-free interest rate — 3.0%; and expected average life of the options — 6 years. For stock options granted in 2004 and 2003, see note 11[e].

Applying the above, supplemental disclosure of pro forma loss and loss per share is as follows:

	Year ended			Thirteen months			Year ended
	December 31,			ended December 31,			November 30,
	2004			2003			2002
	$			$			$
Loss for the period — U.S. GAAP		(27,869,763	)		(19,977,093	)		(14,219,225	)
Deduct: Stock based employee compensation expense included in reported loss above		3,067,802			2,059,053			—
Add: Total stock based employee compensation expense using fair value based method for all awards		(3,373,002	)		(3,128,778	)		(4,102,190	)
Pro forma loss for the period		(28,174,963	)		(21,046,818	)		(18,321,415	)
Basic and diluted loss per common share
As reported		(0.71	)		(0.63	)		(0.60	)
Pro forma		(0.72	)		(0.67	)		(0.78	)

[g]  Recent pronouncements

In December 2004, the Financial Accounting Standards Board issued SFAS 123(R) “Share-Based Payment”, a revision to SFAS 123 “Accounting for Stock Based Compensation”. SFAS 123(R) requires all share-based payments to be recognized in the financial statements based on their fair values using either a modified-prospective or modified-retrospective transition method. The standard no longer permits pro forma disclosure or the prospective recognition adopted by the Company in fiscal 2003. Accordingly, from the date of adoption of the revised standard, the Company will be required to recognize compensation expense for all share-based payments based on grant-date fair value, including those granted, modified or settled prior to December 1, 2002.

30

Cardiome Pharma Corp.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2004 (expressed in Canadian dollars)

18.  SEGMENTED INFORMATION

The Company operates primarily in one business segment with all of its assets and operations located in Canada, except for intellectual property with a net book value of approximately $25,000,000 [2003 — $41,000,000] located in the U.S. During the year ended December 31, 2004, 4% and 96% of total revenue are derived from two collaborators in Switzerland and the United States respectively [thirteen months ended December 31, 2003 — 25% and 75% from one collaborator in Switzerland and two collaborators in the United States, respectively; year ended November 30, 2002 - - 76%, 21% and 3% from three collaborators in Sweden, Switzerland and United States, respectively].

EX-3

Exhibit 3

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

February 28, 2005

     The following should be read in conjunction with our audited consolidated financial statements and the notes included thereto. Our audited consolidated financial statements have been prepared in accordance with Canadian GAAP. A reconciliation to U.S. GAAP is presented in note 17 of our audited consolidated financial statements included herein. Effective December 31, 2003, we changed our fiscal year end from November 30 to December 31. As a result, this discussion and analysis includes comparison of the financial results for the year ended December 31, 2004 (“fiscal 2004”) to those for the thirteen months ended December 31, 2003 (“fiscal 2003”). The forward-looking statements in this discussion regarding our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion include numerous risks and uncertainties, as described in the “Risk Factors” section of our Annual Information Form. Our actual results may differ materially from those contained in any forward-looking statements. Additional information relating to our company, including our 2004 Annual Information Form, is available by accessing the SEDAR website at www.sedar.com. All amounts are expressed in Canadian dollars unless otherwise indicated.

Overview

     We are a life sciences company focused on developing proprietary drugs to treat or prevent cardiovascular diseases. Our current efforts are focused on the treatment of atrial arrhythmias and congestive heart failure.

     Atrial fibrillation is an arrhythmia, or abnormal rhythm, of the upper chambers of the heart. We have announced positive top-line Phase III results for our intravenous formulation of RSD1235, or RSD1235 (iv), our lead product candidate for the acute conversion of atrial fibrillation, and are currently conducting two additional Phase III trials in conjunction with Fujisawa Healthcare, Inc., or Fujisawa, our collaborative partner. We are also developing an oral formulation of RSD1235, or RSD1235 (oral), as maintenance therapy for the long-term treatment of atrial fibrillation and intend to initiate a Phase II clinical trial in the second half of 2005.

     Congestive heart failure is the failure of the heart to pump blood at a rate sufficient to support the body’s needs. We have recently completed enrollment in a Phase II trial of oral Oxypurinol in 405 patients with congestive heart failure.

     The following table summarizes current and recently completed clinical studies of each of our research and development projects:

Project	Stage of Development	Current Status
RSD1235 (iv)	1(st) Phase III Clinical Trial (ACT 1) 2(nd) Phase III Clinical Trial (ACT 2) 3(rd) Phase III Clinical Trial (ACT 3)	Trial completed and top-line results released in December 2004 and February 2005 Trial initiated in March 2004 Trial initiated in July 2004
RSD1235(oral)	Phase I — Formulation Evaluation Study Phase I — Food Effect Study	Interim results released in November 2004 and controlled release formulation selected Trial completed in January 2005
Oxypurinol CHF	Phase II Clinical Trial — (OPT-CHF) Phase II Proof of Concept Trial — IV (Exotic EF)	Patient recruitment completed in December 2004 Interim results announced in September 2004
	Phase II Proof of Concept Trial — (LaPlata)	Interim results announced in September 2004

1

Corporate Development

     We accomplished several significant milestones during fiscal 2004:

•   We recently completed and announced the top-line results from ACT 1, the first Phase III clinical trial of RSD1235 (iv) for the treatment of recent-onset atrial fibrillation. This blinded, placebo-controlled study will be used to support the application for regulatory approval of RSD1235 (iv) in the U.S. and Canada. Top-line data from the study showed that 52% of recent-onset atrial fibrillation patients who received RSD1235 (iv) converted to normal heart rhythm, as compared to 4% of placebo patients (p<0.001).

•   We initiated ACT 2, the second Phase III clinical trial of RSD1235 (iv) for the treatment of atrial fibrillation. ACT 2 will enroll approximately 210 patients and will focus on the treatment of patients with transient atrial fibrillation occurring after coronary artery bypass graft (CABG) or valve replacement surgery. ACT 2 is intended to support the safety dossier attached to the RSD1235 (iv) new drug application, or NDA, and may also form the basis for expanding the application of RSD1235 (iv) into the treatment of post-operative atrial fibrillation.

•   Fujisawa initiated ACT 3, the third Phase III clinical trial of RSD1235 (iv) for the treatment of atrial fibrillation. This blinded, placebo-controlled study will also be used to support the new drug application or NDA, application for RSD1235 (iv). ACT 3 will enroll approximately 240 patients and measures the safety and efficacy of RSD1235 in recent-onset atrial fibrillation patients.

•   We completed formulation work on a controlled-release formulation of RSD1235 (oral). This formulation was then advanced into Phase I single-dose safety and pharmacokinetic studies in healthy volunteers. Further Phase I studies will be undertaken as preparation for a Phase II proof-of-concept efficacy study in atrial fibrillation patients.

•   We completed patient enrollment in OPT-CHF, a Phase II clinical study measuring the safety and efficacy of the oral application of Oxypurinol in moderate to severe symptomatic congestive heart failure patients. This blinded, placebo-controlled study will measure the clinical symptom impact of six months of dosing of Oxypurinol on 405 congestive heart failure patients.

•   We completed two investigator-sponsored proof of concept trials which both measured the impact of Oxypurinol on the cardiac output of congestive heart failure patients. The 20 patient open-label (no placebo control) EXOTIC-EF study showed that a single IV dose of Oxypurinol appeared to increase cardiac output. The 60 patient, blinded, placebo-controlled LaPlata study showed that 28 days of orally dosed Oxypurinol appeared to have a similar effect.

•   We succeeded in listing our common shares on the Nasdaq National Market. This move was intended to broaden our shareholder base by making it easier for U.S.—based investors to trade our common shares.

•   We completed a sale of $4 million of our common shares to Fujisawa at a 25% premium to the average closing price of our common shares on the Toronto Stock Exchange over the preceding 30 calendar-day period.

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Critical Accounting Policies and Significant Estimates

     Our consolidated financial statements are prepared in accordance with Canadian GAAP. A reconciliation of amounts presented in accordance with U.S. GAAP is described in note 17 to the audited consolidated financial statements for the year ended December 31, 2004. These accounting principles require us to make certain estimates and assumptions. We believe that the estimates and assumptions upon which we rely are reasonable based upon information available at the time that these estimates and assumptions are made. Actual results could differ from these estimates. Areas requiring significant estimates include the assessment of net recoverable value and amortization of technology licenses and patents, determination of accrued liabilities, recognition of revenue, and stock-based compensation.

     The significant accounting policies that we believe are the most critical in fully understanding and evaluating the reported financial results include the following:

•   intangible assets;

•   accrued liabilities and clinical trial expenses;

•   revenue recognition;

•   research and development costs; and

•   stock-based compensation.

Intangible Assets

     Intangible assets are comprised of purchased technology licenses and patent costs. Technology licenses, including those acquired in exchange for the issuance of equity instruments by us, are amortized on a straight-line basis over the estimated useful life of the underlying technologies. We determine the estimated useful lives for intangible assets based on a number of factors: legal, regulatory or contractual limitations; known technological advances; anticipated demand; and the existence or absence of competition. A significant change in any of the above factors may require a revision of the expected useful life of the intangible asset, resulting in accelerated amortization or an impairment charge, which could have a material impact on our results of operations. We evaluate the recoverability of the net book value of our intangible assets on a quarterly basis based on the expected utilization of the underlying technologies. If the estimated net recoverable value, calculated based on undiscounted estimated future cash flows, exceeds the carrying value of the underlying technology, the excess amount is charged to operations. The amounts shown for technology licenses and patent costs do not necessarily reflect present or future values and the ultimate amount recoverable will be dependent upon the successful development and commercialization of products based on these rights. Patent costs associated with the preparation, filing, and obtaining of patents are capitalized and amortized on a straight-line basis over the estimated useful lives of the patents.

Accrued Liabilities and Clinical Trial Expenses

     We have entered into service agreements with various contract research organizations, investigators and other vendors that provide resources, services and expertise that complement our efforts in developing our drug candidates. These agreements may be in force over a number of fiscal years or accounting periods. Since payments under these agreements may not coincide with the period in which the services are rendered, judgment is required in estimating the amount of clinical trial expense to be recorded in each accounting period. Judgment and estimates are also involved in determining the amount of expenditures that are contractually committed under the various agreements. We consider the following factors in estimating the amount of clinical trial expense for an accounting period: the level of patient enrollment; the level of services provided and goods

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delivered; and the proportion of the overall contracted time that elapsed during the accounting period. In making these assessments, we monitor patient enrollment levels and related activities at a given point in time through internal reviews, correspondence and discussions with contractors and review of contractual terms. We may sometimes rely on the information provided by our contractors. A significant change in the above factors and the accuracy of information provided by our contractors may alter our estimate of our clinical trial expenditure for the accounting period and accrued liabilities as of the end of the accounting period. This could have a material impact on our results of operations and liabilities.

Revenue Recognition

     Revenue to date has primarily been derived from research collaborative fees and licensing fees, which are comprised of initial fees and milestone payments from collaborative licensing arrangements and related reimbursement of expenses. Non-refundable research collaborative fees are recorded as revenue as the related research expenses are incurred pursuant to the terms of the agreement, provided collectibility is reasonably assured. Non-refundable milestone payments are fully recognized upon the achievement of the milestone event when we have no further involvement or obligation to perform under the arrangement. Initial fees and milestone payments which require our ongoing involvement are deferred and amortized into income over the estimated period of our ongoing involvement. A significant change in estimating the period of our on-going involvement could have a material impact on our results of operations.

Research and Development Costs

     Research and development costs consist of direct and indirect expenditures related to our research and development programs. Research and development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. We assess whether these costs have met the relevant criteria for deferral and amortization at each reporting date. No development costs have been deferred.

Stock-based Compensation and other Stock-based Payments

     Effective December 1, 2002, we have elected to prospectively adopt the recommendations of the Canadian Institute of Chartered Accountants, or CICA, in new section 3870 of the CICA Handbook, with respect to stock-based compensation and other stock-based payments. This standard requires that all share-based awards be measured and recognized using a fair value based method.

     The fair value of stock options is estimated at the date of grant using the Black-Scholes option pricing model and is amortized over the vesting terms of options which is generally four to five years from grant. Prior to the adoption of this standard, no compensation expense was recognized for stock options issued. The change in this accounting policy did not result in any adjustment to our opening deficit balance on December 1, 2002. For fiscal 2004 and 2003 respectively, we recorded approximately $3.1 million and $2.1 million of stock-based compensation for stock options granted after December 1, 2002, to employees and non-employees.

     The Black-Scholes option pricing model is based on several subjective assumptions including the expected life of the option, the expected volatility at the time of the options are granted, and the fair value of our stock at the date of grant of the stock options. Changes in these assumptions can materially affect the measure of the estimated fair value of our employee stock options, hence our results of operations.

Results of Operations

     We changed our year end to December 31 effective December 31, 2003. Our transition year was the thirteen month period ended December 31, 2003.

     For the year ended December 31, 2004, or fiscal 2004, we recorded a net loss of $27.8 million ($0.71 per common share) compared to a net loss of $19.9 million ($0.63 per common share) and $14.0 million ($0.60

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per common share) for the thirteen months ended December 31, 2003, or fiscal 2003, and for the year ended November 30, 2002, or fiscal 2002, respectively. Since our formation in 1986, we have incurred a cumulative deficit of $92.1 million. The increase in net loss for fiscal 2004, as compared to fiscal 2003, was largely due to our expanded clinical development activities during fiscal 2003 and the write-down of intangible assets associated with Oxypurinol for the treatment of gout. However, this was partially offset by the increase in licensing fees and research collaborative fees as described below. Our results of operations were in line with management’s expectations.

     We expect losses to continue for at least two fiscal years as we invest in our product research and development, including clinical trials and regulatory compliance.

Revenues

     Total revenue increased to $26.4 million in fiscal 2004 from $6.0 million in fiscal 2003. The total revenue in fiscal 2004 was comprised of $12.6 million for licensing fees and $13.8 million for research collaborative fees, as compared to $1.3 million for licensing fees and $4.7 million for research collaborative fees for fiscal 2003.

     Licensing fees represent the amortization of deferred revenue related to upfront payments from our collaborative partners. The increase in licensing fees in fiscal 2004, as compared to those in fiscal 2003, was primarily due to the recognition of the remaining $0.9 million of unamortized deferred revenue related to the upfront payment from our collaborative partner, UCB Farchim S.A., as compared to $0.5 million for fiscal 2003, the increased amortization of deferred revenue, related to the upfront payment and the premium on equity investment from Fujisawa, of $4.5 million, as compared to $0.8 million for fiscal 2003, and the milestone payment for the successful completion of the first Phase III clinical trial of $7.2 million, as compared to $0.0 for fiscal 2003.

     The increase in research collaborative fees in fiscal 2004, was mainly attributable to the increased research and development cost recovery of $11.7 million, as compared to $3.2 million for fiscal 2003 and the increased project management fees of $1.9 million in fiscal 2004, as compared to $0.6 million for fiscal 2003. This was offset by the declined research service fees of $0.2 million from UCB Farchim S.A. in fiscal 2004, as compared to $0.9 million for fiscal 2003.

     We expect to continue recognizing as revenue the amortization of deferred revenue related to the upfront payment and the premium on equity investment from Fujisawa. We will continue to receive project management fees and development cost reimbursements from Fujisawa.

Research and Development Expenditures

     Research and development expenditures were $38.7 million for fiscal 2004, as compared to $16.9 million for fiscal 2003.

     The increase of $21.8 million in research and development expenditures in fiscal 2004, as compared to those incurred in fiscal 2003, was primarily due to the expanded clinical development activities in 2004, with commencement, continuation or completion of three Phase III studies of RSD1235 (iv) (ACT 1, ACT 2, and ACT 3), one Phase II regulatory study (OPT-CHF), two Phase II proof-of-concept studies (EXOTIC-EF, LaPlata) of Oxypurinol, and two Phase I studies of RSD1235 (oral). Stock-based compensation of $1.2 million in 2004, as compared to $0.6 million in fiscal 2003, also contributed to the increased research and development costs.

     The following provides a description of major clinical trial(s) and research and development expenditures for each of our projects:

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RSD1235 (iv)

     During fiscal 2004, we completed the first Phase III clinical study of RSD1235 (iv) applied to recent-onset atrial fibrillation, and initiated two additional Phase III studies, ACT 2 and ACT 3.

The ACT 1 Study

     In August 2003, we initiated ACT 1, our first Phase III clinical trial of active atrial fibrillation, and finished its patient enrollment in October 2004. The study looked at three sub-groups of patients, including 237 patients with recent-onset atrial fibrillation (more than three hours but less than seven days), 119 patients with longer-term atrial fibrillation (more than seven days but less than 45 days) and 60 patients with atrial flutter. The primary endpoint in ACT 1 was conversion of recent-onset atrial fibrillation to normal heart rhythm for a period of at least one minute post-dosing within 90 minutes of the start of dosing. The study was initiated in August 2003, and was carried out in 45 centers in the U.S., Canada and Scandinavia.

     In December 2004 and February 2005, we announced top-line results for ACT 1. We anticipate a full trial report will be presented in May 2005 at the Heart Rhythm Society Meetings in New Orleans. The study showed that of the 237 patients with recent-onset atrial fibrillation, 52% of those receiving RSD1235 (iv) converted to normal heart rhythm, as compared to 4% of placebo patients (p0.001). In those recent-onset atrial fibrillation patients dosed with RSD1235 (iv) who converted to normal heart rhythm, the median time to conversion was 11 minutes from the initiation of dosing. Of the 75 patients who converted to normal heart rhythm within 90 minutes of the initiation of dosing, 74 (99%) of them remained in normal rhythm for at least 24 hours. In the longer-term atrial fibrillation population, 8% of patients who were dosed with RSD1235 (iv) had their atrial fibrillation converted, as compared to 0% of placebo patients, a difference which was not statistically significant.

     The top-line ACT 1 study data suggests that RSD1235 (iv) is also well-tolerated in the target patient population. In the 30 day interval following drug administration to these recent-onset patients, serious adverse events occurred in 18% of placebo patients and 13% of drug group patients. Potentially drug-related serious adverse events occurred in 0% of placebo patients and 1.4% of patients receiving RSD1235 (iv). There were no cases of drug-related Torsades de Pointes, a well-characterized arrhythmia which is an occasional side effect of many current anti-arrhythmia drugs. No patients needed to discontinue ACT 1 due to study drug, and there were no deaths attributed to RSD1235 (iv).

     RSD1235 (iv) appears to be ineffective in converting atrial flutter patients to normal heart rhythms. Only one of 39 patients dosed with RSD1235 (iv) converted to normal heart rhythm, while 0 of 15 placebo patients converted to normal heart rhythm. In the 30 day interval following treatment administration, serious adverse events occurred in 27% of placebo patients and 18% of drug group patients. Potentially serious adverse drug-related events occurred in zero placebo patients and in two patients receiving RSD1235 (iv).

The ACT 2 Study

     The ACT 2 study, initiated in March of 2004, will enroll approximately 210 patients and will evaluate the efficacy and safety of RSD1235 (iv) in the treatment of patients who have developed transient atrial fibrillation following cardiac surgery. The primary endpoint in this study is acute conversion of atrial fibrillation to normal heart rhythm.

The ACT 3 Study

     Our collaborative partner, Fujisawa, initiated the ACT 3 study in July 2004. ACT 3 will enroll approximately 240 patients. Two groups of patients will be enrolled. The primary endpoint will be based on 160 patients with recent-onset atrial fibrillation or atrial flutter (in atrial fibrillation or atrial flutter longer than

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three hours but less than seven days). The study will also measure the safety and efficacy of RSD1235 (iv) in 80 longer-term atrial fibrillation patients (in atrial fibrillation more than seven days but less than 45 days).

     As the project advanced from Phase II clinical testing in a single study in fiscal 2002 to Phase III clinical testing in three concurrent studies in fiscal 2004, our expenditures for this project increased substantially. Total research and development for this project was $21.3 million for fiscal 2004, as compared to $7.5 million and $6.3 million for fiscal 2003 and fiscal 2002, respectively. Also included in the increased expenditures in fiscal 2004 were the costs associated with the manufacturing of stability batches of RSD1235 and clinical drug supplies. These stability batches will generate manufacturing data required for our potential NDA in 2005. In accordance with our collaboration and license agreement with Fujisawa, overall RSD1235 (iv) expense recoveries of $11.7 million were recorded as research collaborative fees for fiscal 2004, as compared to $3.2 million for fiscal 2003.

The RSD1235 Oral Project

     Following a proof of concept trial suggesting RSD1235 has oral bioavailability, with approximately 70% of the orally administrated RSD1235 found in the blood stream of the healthy volunteers who ingested the drug, we started our formulation work and pre-clinical toxicology testing in 2003. We completed our oral formulation work and began testing of our formulations in healthy volunteers in fiscal 2004. We also continued to conduct pre-clinical toxicology testing on RSD1235 (oral) in fiscal 2004.

     In September 2004, we initiated dosing of RSD1235 (oral) in 12 healthy volunteers in a Phase I formulation evaluation study in Europe. This study was an open-label, cross-over evaluation of two sustained release formulations of RSD1235 (oral) in comparison to an immediate release formulation of RSD1235 (oral). Based on the successful completion of the study in November 2004, we have chosen a controlled-release formulation for further clinical development.

     In November 2004, we initiated a food effect study. The objective of the study is to further evaluate the effect of food on the absorption of our controlled-release formulation of RSD1235 in patients under both fed and fasted conditions.

     Total expenditures for the RSD1235 (oral) project increased to $5.1 million for fiscal 2004, as compared to $0.4 million for fiscal 2003. The increase was the result of the increased operational activities associated with the formulation work, manufacture of drug supplies, the initiation of Phase I clinical trials and pre-clinical toxicology testing work in fiscal 2004. An important part of the increased expenditures in fiscal 2004 were costs associated with the manufacturing of drug supplies for ongoing and future clinical trials.

Oxypurinol for Congestive Heart Failure Project

     During fiscal 2004, patient recruitment was completed for three clinical studies applying Oxypurinol to the treatment of congestive heart failure which were initiated in fiscal 2003: the OPT-CHF study, the EXOTIC-EF study, and the LaPlata study.

The OPT-CHF Study

     OPT-CHF which was initiated in March 2003 finished its patient recruitment on December 22, 2004. The placebo-controlled study investigates the impact of 24 weeks of daily oral dosing of Oxypurinol (600 mg/day) on the clinical outcomes of an expected 405 moderate to severe symptomatic heart failure.

     The study enrolled New York Heart Association class III and IV patients with ejection fractions less than or equal to 40%. All randomized patients have experienced at least one hospitalization or emergency room visit for heart failure in the previous 18 months, or had a new heart failure medication added to their drug regimen due to lack of medical stability.

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     The primary end point of the study is a composite that assigns all patients to one of three categories: improved, unchanged or worsened. Improvement consists of improvement in New York Heart Association class or improvement in patient global heart failure assessment. Worsening includes death, re-hospitalization or emergency clinic visit, requirement for acute change in medication, and other factors. We have completed patient recruitment and expect to report the results in the third quarter of 2005. If successful, we may initiate a Phase III clinical trial in 2006.

The EXOTIC-EF Study

     In September 2004, we announced positive interim results for an investigator-sponsored study, EXOTIC-EF. This open-label study, which was conducted in Europe, evaluated intravenous dosing of Oxypurinol in 20 catheterized congestive heart failure patients. The endpoints of this study were left-ventricle ejection fraction and cardiac oxygen consumption. The reported data covered all 14 patients dosed to date. Oxypurinol administration resulted in an average absolute increase of 3.6% (p0.0032) in left-ventricle ejection fraction at 5.5 hours post-dosing relative to pre-dosing. This represents a 19.8% relative increase in average ejection fraction.

The LaPlata Study

     This investigator-sponsored randomized, double-blinded, placebo controlled trial involved 28 days of oral dosing of Oxypurinol in congestive heart failure patients with left-ventricle ejection fraction equal to less than 40% and class II-III congestive heart failure as rated by the New York Heart Association classification system. The trial enrolled a total of 60 patients, of whom 47 met the entry criteria. The remaining 13 patients enrolled had left-ventricle ejection fraction exceeding 40%, as measured by blinded reading of echocardiograms upon completion of the study.

     Following 28 days of oral daily dosing (600 mg/day), left-ventricle ejection fraction increased by 6.8% (p=0.017) relative to placebo in the 47 patients who met the prospectively-defined entry criteria. The 6.8% average absolute improvement over placebo represented an average relative increase in cardiac output of 22.6% for the patients receiving Oxypurinol. Improvement in the six minute walk was seen in both treatment groups. However, no statistically significant difference between the two groups was observed. No safety concerns were noted. These final results were announced on February 11, 2005.

     As we advanced this project from pre-clinical stage, when the project was acquired by us in fiscal 2002, to a Phase II clinical stage in fiscal 2004, our expenditures for this project increased substantially. Research and development expenditures for this project increased to $8.6 million for fiscal 2004, as compared to $3.3 million for fiscal 2003.

Oxypurinol for Gout

     Pursuant to our license from Genzyme, in May 2002 we exercised our option to acquire the rights to clinical trial data for Oxypurinol in the treatment of allopurinol intolerant gout. Genzyme completed a pivotal, open-label Phase II/III clinical study for the treatment of patients with symptomatic gout who are intolerant to allopurinol prior to our acquisition of this technology. In December 2003, we submitted a NDA to the U.S. Food and Drug Administration, or FDA, for Oxypurinol for the treatment of allopurinol intolerant gout patients. In June 2004, we received an “approvable” letter from the FDA stating that prior to final marketing approval, the FDA requires additional clinical and manufacturing data from us. We have stopped pursuing the allopurinol intolerant gout indication for Oxypurinol for the foreseeable future in order to maintain our focus on our cardiovascular assets.

     As a result of the above decision, we have taken non-cash write-downs totaling $7.1 million, net of future income tax recovery, to the intangible assets related to this project in September 2004. The write-downs include write-down of intangible assets and future tax liability, which arose from our acquisition of Cardiome, Inc.

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(formerly Paralex, Inc.) by issuance of our common shares in March 2002. The write-downs of intangible assets and future tax liability were $11.3 million and $4.5 million, respectively. In addition, we wrote down the carrying value of a license (cash payment in May 2002) by $0.2 million.

     Our expenditure for this project was $3.2 million for fiscal 2004, as compared to $4.4 million and $0.8 million for fiscal 2003 and fiscal 2002, respectively. The decrease in expenditure for fiscal 2004, as compared to those incurred in fiscal 2003, was due to the decision to discontinue the program indefinitely.

Other Pre-Clinical Projects

     During fiscal 2004, we also continued certain pre-clinical studies to support various intellectual property protection and business development activities. The total expenditures for these activities were $0.5 million for fiscal 2004, as compared to $1.3 million and $0.4 million for fiscal 2003 and fiscal 2002, respectively.

     We expect the research and development expenditures for the year ending December 31, 2005, or fiscal 2005, to be higher than those incurred in fiscal 2004. A significant portion of the research and development expenditures will be incurred in the following activities:

•   RSD1235 Intravenous Project — we expect to complete both ACT 2 and ACT 3 in fiscal 2005 and to begin our preparation work for an NDA for this project;

•   RSD1235 Oral Project — we expect to complete at least one additional Phase I clinical study in Europe and initiate a Phase II clinical proof-of-concept study in atrial fibrillation patients in North America and Europe in fiscal 2005; and

•   Oxypurinol for Congestive Heart Failure Project — we expect to release final results for the OPT-CHF, EXOTIC-EF and the LaPlata studies in fiscal 2005.

General and Administration Expenditures

     General and administration expenditures for fiscal 2004 were $7.3 million as compared to $5.6 million and $3.8 million for fiscal 2003 and fiscal 2002, respectively.

     The increase of $1.7 million in general and administration expenditures in fiscal 2004, as compared to those incurred in fiscal 2003, was largely attributable to the increase of $310,000 in consulting and professional fees, the increase of $635,000 in wages and benefits (including stock-based compensation for administrative and executive personnel), listing fees for the Nasdaq National Market of $150,000, and increase of $572,000 in other expenditures to support our expanded operational activities.

Amortization

     Amortization was $5.1 million for the year ended December 31, 2004, as compared to $6.0 million and $4.4 million for fiscal 2003 and fiscal 2002, respectively. The decrease in amortization for fiscal 2004 was attributable to the reduced net book value of our intangible and other assets, after the write-down of intangible assets associated with the Oxypurinol gout program in September 2004. The decrease in amortization in fiscal 2004 was also due to the additional amortization taken for the transition year (thirteen month period) in fiscal 2003.

Write-down of Intangible Assets

     We recorded a total write-down of intangible assets of $11.5 million in fiscal 2004, as compared to $0.0 for the same fiscal period in 2003. The write-down was a result of our decision on the Oxypurinol gout program as described above.

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Other Income (Expenses)

     Interest and other income was $0.7 million for fiscal 2004, as compared to $0.6 million for fiscal 2003. The increase for the current year was due to the higher average balance of cash and short-term investment balances.

     A net foreign exchange loss of $1.1 million was recorded for the year ended December 31, 2004, as compared to a net foreign exchange loss of $46,783 and a net foreign exchange gain of $73,416 for fiscal 2003 and fiscal 2002, respectively. The net foreign exchange loss for the current year was mainly the result of the strengthening Canadian dollar in comparison to the U.S. dollar on our U.S. dollar denominated investment portfolio, foreign currency receivables and foreign currency payables. We are exposed to market risk related to currency exchange rates in the U.S. and Europe because the majority of our clinical development expenditures are incurred in U.S. dollars and Euros. Some of these risks are offset by the reimbursements from Fujisawa in U.S. dollars.

Future Income Tax Recovery

     Future income tax recovery was $8.8 million for fiscal 2004, as compared to $2.1 million for fiscal 2003. The increase in the recovery for fiscal 2004, as compared to fiscal 2003, reflects the recovery of $4.5 million related to the write-down of intangible assets regarding the Oxypurinol gout project and the recognition of the tax benefits of the current year’s losses of the U.S. subsidiary of $6.5 million less other withholding tax amounts of $2.2 million.

Quarterly Financial Data

     Set forth below is the selected unaudited consolidated financial data for each of the last eight quarters:

	Three Months		Three Months			Three Months			Three Months
	Ended		Ended			Ended			Ended
2004	December 31		September 30			June 30			March 31
	(Canadian dollars)
	(in thousands of dollars, except per share amounts)
Total revenue	$	11,640	$	4,505		$	5,269		$	4,989
Research and development expenses		8,914		9,744			12,432			7,577
General and administration expenses		2,154		1,414			2,182			1,547
Net income (loss) for the period		1,787		(14,986	)		(9,841	)		(4,727	)
Basic net income (loss) per common share		0.05		(0.38	)		(0.25	)		(0.13	)
Diluted net income (loss) per common share		0.04		(0.38	)		(0.25	)		(0.13	)

	Four Months			Three Months			Three Months			Three Months
	Ended			Ended			Ended			Ended
2003	December 31			August 31			May 31			February 28
	(Canadian dollars)
	(in thousands of dollars, except per share amounts)
Total revenue	$	4,925		$	359		$	363		$	400
Research and development expenses		7,761			3,456			2,507			3,204
General and administration expenses		2,030			1,174			1,408			1,019
Net loss for the period		(5,853	)		(5,058	)		(4,376	)		(4,579	)
Basic and diluted loss per common share		(0.16	)		(0.16	)		(0.15	)		(0.16	)

     Total revenue relate to our licensing and research collaborative revenues. The significant increase in revenue since the quarter ended August 31, 2003 is primarily related to our license and research collaborative agreement with Fujisawa. The primary factor affecting the losses in the various quarters is the number and stage

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of our clinical development programs as well as the adoption of our accounting policy with respect to recognizing as an expense the fair value of stock options since December 1, 2002. In addition, the substantial increase in loss for the quarter ended September 30, 2004 is due to the write-down of technology and licenses with respect to our decision on Oxypurinol gout project as described earlier.

     For the quarter ended December 31, 2004, or Q4-2004, the significant increase in revenue, when compared with the four months ended December 31, 2003, or Q3-2003, was due to the milestone payment for the successful completion of the 1st Phase 3 clinical trial of $7.2 million. The increase in research and development expenditures for Q4-2004, as compared with Q4-2003, was due to the expanded research and development activities. The level of general and administrative expenditures for Q4-2004, was comparable to the amount recorded for Q4-2003. The increase in the tax recovery was the result of the recognition of the tax benefits of the current year’s losses of the U.S. subsidiary less other withholding tax amounts.

Selected Consolidated Financial Information

     The following table sets forth consolidated financial data for our last three fiscal periods:

	Fiscal Periods Ended
	December 31,			December 31,			November 30,
	2004			2003(1)			2002
	$			$			$
	(in thousands of dollars, except earnings per share)
Revenue		26,403			6,047			1,768
Net loss		(27,767	)		(19,866	)		(14,030	)
Basic and diluted loss per common share		(0.71	)		(0.63	)		(0.60	)
Total assets		68,326			92,124			67,802
Long-term obligation (2)		233			34			61

(1)	On December 31, 2003, we changed our fiscal year end from November 30 to December 31. As such, the data in this column reflects a 13 month period. In addition, we elected to prospectively adopt the recommendations of the C.I.C.A. new Handbook section 3870, Stock-based Compensation and other Stock-based Payments, effective December 1, 2002. This standard requires that all stock-based awards be measured and recognized using a fair value based method. For the thirteen months ended December 31, 2003, we recorded $1,991,865 and $67,188 of stock-based compensation for the stock options granted after December 1, 2002, to employees and non-employees, respectively. The increase in revenues and net loss since November 30, 2002 reflects our expanded clinical development activities and our partnering agreement with Fujisawa.
(2)	Amounts represent capital lease obligations and repayable tenant inducement advances.
(3)	We have not declared any cash dividends since inception.

Liquidity and Capital Resources

Sources and Uses of Cash

     Our operational activities for the year ended December 31, 2004 were financed mainly by our working capital carried forward from the preceding fiscal year, research collaborative and licensing fees collected from our partners, Fujisawa and UCB Farchim S.A., and the cash received from the exercise of share purchase warrants and options. During the year ended December 31, 2004, cash provided by financing activities was

11

mainly the proceeds of $7.5 million received from the issuance of our common shares upon exercise of share purchase warrants and options and the proceeds of $4.1 million received from the sale of our common shares to Fujisawa. During the thirteen months ended December 31, 2003, cash provided by financing activities primarily consisted of the proceeds of $28.5 million received from issuance of our common shares pursuant to the two financings completed in fiscal 2003 and the proceeds of $2.6 million received from the issuance of our common shares upon exercise of share purchase warrants and options.

     Cash used in operating activities for the year ended December 31, 2004 was $29.7 million, as compared to $5.8 million for the thirteen months ended December 31, 2003. The increase was primarily due to the increase in the loss for the current year resulting from the substantial increase of clinical operational activities and the net change in non-cash working capital items primarily related to accounts receivable and deferred revenue.

     Cash provided by investing activities for the year ended December 31, 2004 was $11.9 million, as compared to $12.7 million of cash used in investing activities for the thirteen month period ended December 31, 2003. The increase in cash provided by investing activities was mainly due to the increase of $26.2 million net sale of short-term investments; this was offset by the increase of $2.4 million purchases of capital assets. The increase in purchases of capital assets for fiscal 2004 compared to fiscal 2003 was due to the construction cost associated with our new facility. Approximately 60% of these construction costs were recovered from our landlord through a leasehold inducement program.

     At December 31, 2004, we had working capital of $26.8 million, as compared to $40.5 million at December 31, 2003. We had available cash reserves comprised of cash, cash equivalents and short-term investments of $24.4 million at December 31, 2004, as compared to $44.6 million at December 31, 2003.

     As of December 31, 2004 and in the normal course of business we are obligated to make future payments. These obligations represent contracts and other commitments that are known and committed.

			Payment Due by Period
	Total		2005		2006–2007		2008–2009		Thereafter
	(in thousands of Canadian dollars)
Capital lease obligations(1)	$	7	$	7	$	0	$	0	$	0
Other long-term obligation		226		16		37		45		128
Operating lease obligations		2,998		256		559		683		1,500
Commitments for clinical research agreements(2)		6,522		6,522		0		0		0
Commitments under license agreement(3)		601		48		192		241		120
										per annum
Total	$	10,354	$	6,849	$	788	$	969	$	1,748

(1)	Includes interest portion.
(2)	The total commitment of $6.5 million reflects $2.1 million of commitments that are non-cancelable and $4.4 million of commitments that are cancelable should we decide to discontinue the related clinical research work.
(3)	As of December 31, 2004, pursuant to four license and service agreements, we have various commitments as described in Note 12(d) of the annual consolidated financial statements for the year ended December 31, 2004. The majority of these commitments are contingent upon achievement of certain milestones which may or may not actually occur. The amounts disclosed in this table represent minimum annual royalties described in Note 12(d)(iii), converted from Canadian dollars to U.S. dollars at the closing exchange rate on December 31, 2004 of 0.8319.

12

Outstanding Share Capital

     As at February 25, 2005 there were 41,010,750 common shares issued and outstanding, 4,866,493 common shares issuable upon the exercise of outstanding stock options at a weighted-average exercise price of $5.12 per share, 303,166 common shares reserved for future grant or issuance under our stock option plan and 176,500 common shares issuable upon the exercise of outstanding warrants at a weighted-average exercise price of $4.10 per share.

Related Party Transactions

     During fiscal 2004, we incurred $78,000 of consulting fees for regulatory services provided with respect to the Oxypurinol gout project to one of our directors on ordinary commercial terms.

     Included in accounts payable and accrued liabilities at December 31, 2004 is $55,000 (December 31, 2003 — $0.0) owing to a law firm where our current Corporate Secretary is a partner. The amount was charged at normal trade terms. Since his appointment as our Corporate Secretary in May 2004, we have incurred approximately $194,000 of legal fees for services provided by the law firm for fiscal 2004.

Off-Balance Sheet Arrangements

     We have no off-balance sheet arrangements.

Financial Instruments and Risks

     We are exposed to market risks related to changes in interest rates and foreign currency exchange rates. We invest our cash reserves in fixed rate, highly liquid and highly rated financial instruments such as treasury bills, commercial papers and banker’s acceptances. We have not entered into any forward currency contracts or other financial derivatives to hedge foreign exchange risk. We are subject to foreign exchange rate changes that could have a material effect on future operating results or cash flow.

     We believe that our current cash position, together with proceeds from any potential offering and the anticipated cash inflows from our collaborative partner and interest income should be sufficient to finance our operational and capital needs for at least the next two years. However, our future cash requirements may vary materially from those now expected due to a number of factors, including the costs associated with the completion of the clinical trials, collaborative and license arrangements with third parties, and opportunities to in-license complementary technologies. We will continue to review our financial needs and seek additional financing as required from sources that may include equity financing, and collaborative and licensing arrangements. However, there can be no assurance that such additional funding will be available or if available, whether acceptable terms will be offered.

13

EX-4.1

Exhibit 4.1

CARDIOME PHARMA CORP.

CODE OF ETHICS FOR SENIOR OFFICERS

It is the policy of Cardiome Pharma Corp. (the “Company”) that the chief executive officer, chief financial officer, chief scientific officer, all vice-presidents, and principal accounting officer, controller and/or persons performing similar functions (the “Senior Officers”) observe high standards of business and personal ethics in the conduct of their duties and responsibilities. The Senior Officers must practice honesty and integrity in every aspect of dealing with other Company employees, the public, the business community, stockholders, customers, suppliers and government authorities. The Senior Officers shall abide by this Code of Ethics of Senior Officers (the “Code”) and shall adhere to the following ethical principles:

1.	Honest and Ethical Conduct. Each Senior Officer shall act in an honest and ethical manner including the ethical handling of actual or apparent conflicts of interest between personal as well as professional relationships.
2.	Conflicts of Interest. Each Senior Officer shall avoid conflicts of interest and material transactions or relationships involving potential conflicts of interest unless properly approved by the appropriate authority. Senior Officers shall not receive benefits from a person doing or seeking to do business with the Company which is not in the best interest of the Company.
3.	Full, Fair, Accurate, Timely and Understandable Disclosure. Each Senior Officer will make full, fair, accurate, timely and understandable disclosures in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission, and in other public communications made by the Company.
4.	Compliance with Applicable Laws. Each Senior Officer will comply with all applicable governmental laws, and all relevant rules and regulations.
5.	Internal Reporting of Conflicts of Interest and Ethical Violations. Each Senior Officer will promptly report directly to the Corporate Governance Committee any material transaction or relationship that reasonably could be expected to give rise to such a conflict or violation.. The Corporate Governance Committee shall fully investigate and report to the Board of Director any actual, potential or alleged violations of this Code.
6.	Consequences for non-adherence to the Code. Any violation of this Code, whether or not material, may have repercussions that could include termination of employment.

EX-4.2

Exhibit 4.2

FORM 53-901F

SECURITIES ACT

MATERIAL CHANGE REPORT UNDER
SECTION 85(1) OF THE SECURITIES ACT (BRITISH COLUMBIA)
AND EQUIVALENT LEGISLATION OF OTHER JURISDICTIONS

Item 1.	REPORTING ISSUER
	Cardiome Pharma Corp.
	6190 Agronomy Road, 6th Floor
	Vancouver, BC V6T 1Z3
Item 2.	DATE OF MATERIAL CHANGE
	January 27, 2005
Item 3.	PRESS RELEASE
	January 27, 2005 — Vancouver, British Columbia
Item 4.	SUMMARY OF MATERIAL CHANGE
	Cardiome Pharma Corp announced the appointment of Dr. Charles Fisher to the position of Chief Medical Officer and Executive Vice President, Clinical and Regulatory Affairs.
Item 5.	FULL DESCRIPTION OF MATERIAL CHANGE
	See attached press release.
Item 6.	RELIANCE ON SECTION 85(2) OF THE SECURITIES ACT (BRITISH COLUMBIA) AND EQUIVALENT LEGISLATION OF OTHER JURISDICTIONS
	Not Applicable.
Item 7.	OMITTED INFORMATION
	Not Applicable.
Item 8.	SENIOR OFFICER
	Name:             Christina Yip
	Title:               Vice President, Finance and Administration
	Phone No.:      604-677-6905
Item 9.	STATEMENT OF SENIOR OFFICER
	The foregoing accurately discloses the material change referred to herein.

Dated at Vancouver, British Columbia, this 27^th day of January, 2005.

CARDIOME PHARMA CORP.
Per:
	Christina Yip,
	Vice President, Finance and Administration

IT IS AN OFFENCE FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE FILED OR FURNISHED UNDER THE ACT OR THIS REGULATION THAT, AT THE TIME AND IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION.

FOR IMMEDIATE RELEASE      NASDAQ: CRME      TSX: COM

CARDIOME APPOINTS DR. CHARLES FISHER AS CHIEF
MEDICAL OFFICER AND EXECUTIVE VICE PRESIDENT

Vancouver, Canada, January 27, 2005 Cardiome Pharma Corp (NASDAQ: CRME) (TSX: COM) today announced the appointment of Dr. Charles Fisher to the position of Chief Medical Officer and Executive Vice President, Clinical and Regulatory Affairs. Dr. Fisher will be responsible for overseeing and implementing Cardiome’s clinical and regulatory programs and contributing to new product development.

Dr. Fisher has over 20 years of experience in clinical research trials and Phase 1 to 4 drug development. He was most recently Divisional Vice President of Global Pharmaceutical Development, Abbott Laboratories, responsible for the global development of pharmaceuticals, biologics and drug coated medical devices. While at Abbott Laboratories, he oversaw the development and FDA approval of Humira for the treatment of rheumatoid arthritis. Prior to Abbott Laboratories, he was an Executive Director and Clinical Research Fellow at Eli Lilly & Co. During his time with Eli Lilly, he was responsible for developing business strategy for critical care, cardiovascular, inflammation and bioproducts, therapeutics areas, identification of disease state targets, and business development. Dr. Fisher led the Eli Lilly scientific team in the development and regulatory approval of Xigris for the treatment of severe sepsis. He was a co-founder of the biopharmaceutical company Incyte and assisted Ono Pharmaceuticals in achieving Japanese regulatory approval of Elaspol for the treatment of acute lung injury.

Dr. Fisher is a Fellow of the American College of Physicians, American College of Chest Physicians, American College of Critical Care Physicians, American College of Emergency Physicians, and the American Academy of Emergency Medicine. He is also a member of numerous professional societies.

Prior to joining industry, Dr. Fisher had a distinguished career as Professor and Head, Critical Care Medicine at the Cleveland Clinic Foundation. He is renowned as an international thought leader in sepsis and is an invited speaker at international conferences. He has personally designed, conducted and executed over 20 clinical trials as Principle Investigator. He scientifically championed molecules, met with the US and European regulatory authorities, conducted investigator meetings, sat on numerous scientific and advisory boards; and participated in various clinical research groups. He has authored 88 peer-reviewed manuscripts and has been a reviewer for 14 journals. He has been issued four patents in the US, two in the EU, and has five patents pending.

Dr. Fisher obtained his MD in 1973 from Michigan State University. He completed his internship and residency at the University of California, UC Davis Medical Center and fellowship training at the University of Manitoba. From 1977-1997 Dr. Fisher held various Professorship and Directorship positions at The University of Manitoba, the University of California, Davis Medical Center, Case Western University and the Cleveland Clinic Foundation.

About Cardiome Pharma Corp.

Cardiome Pharma Corp. is a product-focused cardiovascular drug development company with three clinical drug programs, two of which focus on atrial arrhythmia (intravenous and oral dosing) and one directed at congestive heart failure.

Cardiome’s lead anti-arrhythmic product, RSD1235, is designed to be an acute-use, intravenous (IV) administration treatment for termination of atrial fibrillation (AF) and a chronic-use oral drug for the maintenance of normal heart rhythm following termination of AF. RSD1235 selectively blocks ion channels in the heart that are known to be active during episodes of AF. Cardiome reported Phase 3 results for IV RSD1235 in December 2004. Of the 237 patients with recent-onset atrial fibrillation (AF), 52% of those receiving an IV dose of RSD1235 converted to normal heart rhythm, as compared to 4% of placebo patients (p< .001). There were no cases of drug-related

“Torsades de Pointes”. Controlled-release oral formulations of RSD1235 are currently being evaluated in Phase 1 clinical trials.

Cardiome’s lead drug in the congestive heart failure (CHF) area is oxypurinol, a xanthine oxidase inhibitor. CHF is the failure of the heart to pump blood at a rate sufficient to support the body’s needs. Oxypurinol is currently in a Phase 2 clinical trial that will evaluate the safety and effectiveness of oxypurinol in the treatment of patients with moderate to severe symptomatic CHF.

Cardiome is traded on the Toronto Stock Exchange (COM) and the NASDAQ National Market (CRME). Further information about Cardiome can be found at www.cardiome.com.

For Further Information:
Don Graham
Director of Corporate Communication
(604) 676-6963 or Toll Free: 1-800-330-9928
Email: dgraham@cardiome.com

Forward-Looking Statement Disclaimer

Statements contained in this news release relating to future results, events and expectation are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such statements. Such factors include, among others, those described in the Company’s annual report on Form 40-F. The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

EX-4.3

Exhibit 4.3

FORM 53-901F

SECURITIES ACT

MATERIAL CHANGE REPORT UNDER
SECTION 85(1) OF THE SECURITIES ACT (BRITISH COLUMBIA)
AND EQUIVALENT LEGISLATION OF OTHER JURISDICTIONS

Item 1.	REPORTING ISSUER
	Cardiome Pharma Corp. 6190 Agronomy Road, 6th Floor Vancouver, BC V6T 1Z3
Item 2.	DATE OF MATERIAL CHANGE
	February 4, 2005
Item 3.	PRESS RELEASE
	February 4, 2005 — Vancouver, British Columbia
Item 4.	SUMMARY OF MATERIAL CHANGE
	Cardiome Pharma Corp announced additional results from their recently completed 416-patial atrial arrhythmia (“AF”) clinical study, called ACT 1.
Item 5.	FULL DESCRIPTION OF MATERIAL CHANGE
	See attached press release.
Item 6.	RELIANCE ON SECTION 85(2) OF THE SECURITIES ACT (BRITISH COLUMBIA) AND EQUIVALENT LEGISLATION OF OTHER JURISDICTIONS
	Not Applicable.
Item 7.	OMITTED INFORMATION
	Not Applicable.
Item 8.	SENIOR OFFICER
	Name:              Christina Yip
	Title:                Vice President, Finance and Administration
	Phone No.:       604-677-6905
Item 9.	STATEMENT OF SENIOR OFFICER
	The foregoing accurately discloses the material change referred to herein.

Dated at Vancouver, British Columbia, this 4^th day of February, 2005.

CARDIOME PHARMA CORP.
Per:
	Christina Yip,
	Vice President, Finance and Administration

IT IS AN OFFENCE FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE FILED OR FURNISHED UNDER THE ACT OR THIS REGULATION THAT, AT THE TIME AND IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION.

FOR IMMEDIATE RELEASE      NASDAQ: CRME      TSX: COM

CARDIOME REPORTS ADDITIONAL ACT 1 CLINICAL RESULTS

Vancouver, Canada, and Deerfield, IL, USA, February 4^th, 2005 Cardiome Pharma Corp (NASDAQ: CRME) (TSX: COM) and its co-development partner Fujisawa Healthcare, Inc. today announced additional results from their recently completed 416-patient atrial arrhythmia (“AF”) clinical study, called ACT 1. Top-line results for ACT 1 were announced on December 20, 2004, showing that the drug converted 52% of recent-onset patients to normal heart rhythm, while causing no side-effect arrhythmias. Data released today covered three aspects of the clinical data that were not available at the time of the announcement in December: the time to conversion, the rate of relapse to AF, and the conversion rate in the atrial flutter sub-group.

In the recent-onset AF patients dosed with intravenous RSD1235 who converted to normal heart rhythm, the median time to conversion was 11 minutes from the initiation of dosing. This study result correlates very closely with the data from Cardiome’s CRAFT Phase 2 study where the mean time to conversion was 11 minutes from the initiation of dosing.

Of those recent-onset AF patients dosed with RSD1235 who converted to normal heart rhythm within 90 minutes of the initiation of dosing, 1 of 75 patients relapsed to atrial arrhythmia within 24 hours. This relapse rate also compares well with the earlier data from the CRAFT Phase 2 study, where 0 of 11 RSD1235-dosed patients who met the primary endpoint reverted back to atrial fibrillation within 24 hours.

RSD1235 appears to be ineffective in converting atrial flutter patients to normal heart rhythm. Only 1 of 39 patients dosed with RSD1235 converted to normal heart rhythm, while 0 of 15 placebo patients converted to normal heart rhythm. In the 30 day interval following treatment administration, serious adverse events occurred in 27% of placebo patients and 18% of drug group patients. Potentially drug-related serious adverse events occurred in 0 placebo patients and in 2 patients receiving RSD1235. Patients with atrial flutter account for approximately 8% of the 2.4 million patients with atrial arrhythmia.¹

In October 2003, Cardiome licensed North American rights to the intravenous formulation of RSD1235 to Fujisawa Healthcare, Inc. Cardiome retains worldwide rights to oral RSD1235 for the prevention of AF recurrence and all rights to the intravenous formulations outside of Canada, US and Mexico. Intravenous RSD1235 is currently being evaluated in two further Phase 3 clinical trials, entitled ACT 2 and ACT 3.

Cardiome has now begun clinical testing of an oral formulation of RSD1235, for potential prophylactic treatment of AF patients who have been returned to normal heart rhythm. Cardiome owns unencumbered world-wide rights to such an application of RSD1235.

AF is an arrhythmia (erratic heartbeat) of the upper storage chambers of the heart. The disease is caused by irregular electrical impulses that regulate the heart’s rate and rhythm. AF is often associated with other forms of heart disease and is a leading contributor to stroke, congestive heart failure and sudden cardiac arrest. In 1999 there were 6.2 million cases of atrial arrhythmia in the developed world. The worldwide market for drugs to treat atrial fibrillation, the main category of atrial arrhythmia, was US$1.16 billion in 1999, with approximately $800 million of this in the US alone. Currently available drugs to acutely treat AF lack sufficient efficacy and have serious safety risks. These safety issues include risk of drug induced pro-arrhythmia and other cardiac liabilities. Market growth will be driven by an aging population and safer alternatives such as RSD1235.

¹ National Hospital Discharge Survey, 1999

Conference Call Notification

Cardiome will hold a teleconference and webcast today to discuss the results. The conference call will be held at 1:00 p.m. EST (10:00 a.m. PST), please dial 1-877-461-2815 or 416-695-5261 to access the call. There will be a separate dial-in line for analysts on which we will respond to questions at the end of the presentation. The webcast can be accessed through the “What’s New” section of Cardiome’s website at http://www.cardiome.com/new/index.php.

About Cardiome Pharma Corp.

Cardiome Pharma Corp. is a product-focused cardiovascular drug development company with three clinical drug programs, two of which focus on atrial arrhythmia (intravenous and oral dosing) and one directed at congestive heart failure.

Cardiome’s lead anti-arrhythmic product, RSD1235, is designed to be an acute-use, intravenous (IV) administration treatment for termination of atrial fibrillation (AF) and a chronic-use oral drug for the maintenance of normal heart rhythm following termination of AF. RSD1235 selectively blocks ion channels in the heart that are known to be active during episodes of AF. Controlled-release oral formulations of RSD1235 are currently being evaluated in clinical trials.

Cardiome’s lead drug in the congestive heart failure (CHF) area is oxypurinol, a xanthine oxidase inhibitor. CHF is the failure of the heart to pump blood at a rate sufficient to support the body’s needs. Oxypurinol is currently in a Phase 2 clinical trial that will evaluate the safety and effectiveness of oxypurinol in the treatment of patients with moderate to severe symptomatic CHF.

Cardiome is traded on the Toronto Stock Exchange (COM) and the NASDAQ National Market (CRME). Further information about Cardiome can be found at www.cardiome.com.

About Fujisawa Healthcare, Inc.

Fujisawa Healthcare, Inc., headquartered in Deerfield, Ill., develops, manufactures, and markets proprietary pharmaceutical products in the United States and abroad. Fujisawa Healthcare, Inc. is a subsidiary of Fujisawa Pharmaceutical Co., Ltd. based in Osaka, Japan. Fujisawa Pharmaceutical Co., Ltd., founded in 1894, is a leading pharmaceutical manufacturer with a major presence in the global market. Additional information on Fujisawa Healthcare, Inc. and its products can be found on the Internet at http://www.fujisawa.com. On April 1, 2005, Astellas Pharma Inc. will be created by the merger of Fujisawa Pharmaceutical Co., Ltd. and Yamanouchi Pharmaceutical Co., Ltd. More information regarding the formation of Astellas Pharma Inc. can be found at www.astellas.com.

For Further Information:

Don Graham	Maribeth Landwehr
Cardiome Pharma Corp	Fujisawa Healthcare, Inc.
Director of Corporate Communication	Manager, Corporate Communications
(604) 676-6963 or Toll Free: 1-800-330-9928	(847) 317-8988
Email: dgraham@cardiome.com	E-mail: mailto:maribeth_landwehr@fujisawa.com

Forward-Looking Statement Disclaimer

Statements contained in this news release relating to future results, events and expectation are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such statements. Such factors include, among others, those described in the Company’s annual report on Form 40-F. The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

EX-4.4

Exhibit 4.4

FORM 53-901F

SECURITIES ACT

MATERIAL CHANGE REPORT UNDER
SECTION 85(1) OF THE SECURITIES ACT (BRITISH COLUMBIA)
AND EQUIVALENT LEGISLATION OF OTHER JURISDICTIONS

Item 1.	REPORTING ISSUER
	Cardiome Pharma Corp. 6190 Agronomy Road, 6th Floor Vancouver, BC V6T 1Z3
Item 2.	DATE OF MATERIAL CHANGE
	February 11, 2005
Item 3.	PRESS RELEASE
	February 11, 2005 – Vancouver, British Columbia
Item 4.	SUMMARY OF MATERIAL CHANGE
	Cardiome Pharma Corp announced results for the physician-sponsored “La Plata” clinical study for oxypurinol in congestive heart failure (CHF) patients.
Item 5.	FULL DESCRIPTION OF MATERIAL CHANGE
	See attached press release.
Item 6.	RELIANCE ON SECTION 85(2) OF THE SECURITIES ACT (BRITISH COLUMBIA) AND EQUIVALENT LEGISLATION OF OTHER JURISDICTIONS
	Not Applicable.
Item 7.	OMITTED INFORMATION
	Not Applicable.
Item 8.	SENIOR OFFICER
	Name:            Christina Yip
	Title:              Vice President, Finance and Administration
	Phone No.:     604-677-6905
Item 9.	STATEMENT OF SENIOR OFFICER
	The foregoing accurately discloses the material change referred to herein.

Dated at Vancouver, British Columbia, this 11^th day of February, 2005.

CARDIOME PHARMA CORP.
Per:
	Christina Yip,
	Vice President, Finance and Administration

IT IS AN OFFENCE FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE FILED OR FURNISHED UNDER THE ACT OR THIS REGULATION THAT, AT THE TIME AND IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION.

FOR IMMEDIATE RELEASE    NASDAQ: CRME    TSX: COM

CARDIOME REPORTS OXYPURINOL CLINICAL RESULTS

Vancouver, Canada, February 11, 2005 Cardiome Pharma Corp. (NASDAQ: CRME) (TSX: COM) today announced results for the physician-sponsored “La Plata” clinical study for oxypurinol in congestive heart failure (CHF) patients. The blinded, placebo-controlled 60-patient study showed a statistically-significant improvement in an important measurement of cardiac function, the left ventricle ejection fraction (LVEF).

The randomized, double-blind, placebo controlled trial involved 28 days of oral dosing of oxypurinol in CHF patients with LVEF < 40% and class II-III CHF as rated by the New York Heart Association classification system. The trial enrolled a total of 60 patients, of whom 47 met the entry criteria. The remaining 13 patients enrolled had LVEF exceeding 40%, as measured by blinded reading of echocardiograms upon completion of the study.

Following 28 days of oral daily dosing (600 mg/day), LVEF increased by 6.8% (p=0.017) relative to placebo in the 47 patients who met the prospectively-defined entry criteria. The 6.8% average absolute improvement over placebo represented an average relative increase in cardiac output of 22.6% for the patients receiving oxypurinol. Decreases in serum uric acid of 17.0 mg/L (p< 0.001) relative to placebo, were also demonstrated in patients who met the entry criteria (n=47). Improvement in the 6 minute walk was seen in both treatment groups. However no statistically significant difference between the two groups was observed. No safety concerns were noted.

“The large physiological effect of oxypurinol demonstrated in this study further confirms our confidence in this program.” stated Dr. Charles Fisher, Cardiome’s Chief Medical Officer. “We are especially encouraged that the observed improvement compares well with existing therapeutic alternatives such as beta-blockers and cardiac resynchronization.”

Interim results for this study were presented at a satellite symposium to the Heart Failure Society of America’s annual meeting in September 2004. Cardiome is also currently conducting a phase 2 study (called OPT-CHF) testing the benefit of six months of daily dosing of oxypurinol (600 mg/day) on clinical outcomes of 400 heart failure patients. The last patient was enrolled in OPT-CHF in December of 2004. Results of the OPT-CHF study are expected to be released in the third quarter of 2005.

About Cardiome Pharma Corp.

Cardiome Pharma Corp. is a product-focused cardiovascular drug development company with three clinical drug programs, two of which focus on atrial arrhythmia (intravenous and oral dosing) and one directed at congestive heart failure.

Cardiome’s lead anti-arrhythmic product, RSD1235, is designed to be an acute-use, intravenous (IV) administration treatment for termination of atrial fibrillation (AF) and a chronic-use oral drug for the maintenance of normal heart rhythm following termination of AF. RSD1235 selectively blocks ion channels in the heart that are known to be active during episodes of AF. Cardiome reported Phase 3 results for IV RSD1235 in December 2004. Of the 237 patients with recent-onset atrial fibrillation (AF), 52% of those receiving an IV dose of RSD1235 converted to normal heart rhythm, as compared to 4% of placebo patients (p< .001). There were no cases of drug-related “Torsades de Pointes”. Controlled-release oral formulations of RSD1235 are currently being evaluated in Phase 1 clinical trials.

Cardiome’s lead drug in the congestive heart failure (CHF) area is oxypurinol, a xanthine oxidase inhibitor. CHF is the failure of the heart to pump blood at a rate sufficient to support the body’s needs. Oxypurinol is currently in a Phase 2 clinical trial that will evaluate the safety and effectiveness of oxypurinol in the treatment of patients with moderate to severe symptomatic CHF.

Cardiome is traded on the Toronto Stock Exchange (COM) and the NASDAQ National Market (CRME). Further information about Cardiome can be found at www.cardiome.com.

For Further Information:
Don Graham
Director of Corporate Communication
(604) 676-6963 or Toll Free: 1-800-330-9928
Email: dgraham@cardiome.com

Forward-Looking Statement Disclaimer

Statements contained in this news release relating to future results, events and expectation are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such statements. Such factors include, among others, those described in the Company’s annual report on Form 40-F. The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

EX-4.5

Exhibit 4.5

FORM 53-901F

SECURITIES ACT

MATERIAL CHANGE REPORT UNDER
SECTION 85(1) OF THE SECURITIES ACT (BRITISH COLUMBIA)
AND EQUIVALENT LEGISLATION OF OTHER JURISDICTIONS

Item 1.	REPORTING ISSUER
	Cardiome Pharma Corp. 6190 Agronomy Road, 6th Floor Vancouver, BC V6T 1Z3
Item 2.	DATE OF MATERIAL CHANGE
	February 23, 2005
Item 3.	PRESS RELEASE
	February 23, 2005 — Vancouver, British Columbia
Item 4.	SUMMARY OF MATERIAL CHANGE
	Cardiome Pharma Corp announced that it has received a US$6 million milestone payment from its codevelopment partner, Fujisawa Healthcare Inc.
Item 5.	FULL DESCRIPTION OF MATERIAL CHANGE
	See attached press release.
Item 6.	RELIANCE ON SECTION 85(2) OF THE SECURITIES ACT (BRITISH COLUMBIA) AND EQUIVALENT LEGISLATION OF OTHER JURISDICTIONS
	Not Applicable.
Item 7.	OMITTED INFORMATION
	Not Applicable.
Item 8.	SENIOR OFFICER
	Name:             Christina Yip
	Title:               Vice President, Finance and Administration
	Phone No.:      604-677-6905
Item 9.	STATEMENT OF SENIOR OFFICER
	The foregoing accurately discloses the material change referred to herein.

Dated at Vancouver, British Columbia, this 23^rd day of February, 2005.

CARDIOME PHARMA CORP.
Per:
	Christina Yip,
	Vice President, Finance and Administration

IT IS AN OFFENCE FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE FILED OR FURNISHED UNDER THE ACT OR THIS REGULATION THAT, AT THE TIME AND IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION.

FOR IMMEDIATE RELEASE    NASDAQ: CRME    TSX: COM

CARDIOME RECEIVES US$6 MILLION MILESTONE PAYMENT

Vancouver, Canada, February 23, 2005 Cardiome Pharma Corp (NASDAQ: CRME) (TSX: COM) today announced that it has received a US$6 million milestone payment from its co-development partner, Fujisawa Healthcare Inc. The milestone payment was triggered by the successful completion of ACT 1, the first of three Phase 3 clinical trials for Cardiome’s lead antiarrhythmic product, intravenous RSD1235.

Cardiome licensed North American rights to the intravenous formulation of RSD1235 to Fujisawa Healthcare Inc in October 2003. Cardiome retains worldwide rights to oral RSD1235 for the prevention of AF and all rights to the intravenous formulations outside of Canada, US and Mexico. Cardiome may receive an additional US$48 million in milestone payments from Fujisawa over the course of the agreement, based upon the achievement of certain clinical and commercial milestones.

About Cardiome Pharma Corp.

Cardiome Pharma Corp. is a product-focused cardiovascular drug development company with three clinical drug programs, two of which focus on atrial arrhythmia (intravenous and oral dosing) and one directed at congestive heart failure.

Cardiome’s lead anti-arrhythmic product, RSD1235, is designed to be an acute-use, intravenous (IV) administration treatment for termination of atrial fibrillation (AF) and a chronic-use oral drug for the maintenance of normal heart rhythm following termination of AF. RSD1235 selectively blocks ion channels in the heart that are known to be active during episodes of AF. Cardiome reported Phase 3 results for IV RSD1235 in December 2004. Of the 237 patients with recent-onset atrial fibrillation (AF), 52% of those receiving an IV dose of RSD1235 converted to normal heart rhythm, as compared to 4% of placebo patients (p< .001). There were no cases of drug-related “Torsades de Pointes”. Controlled-release oral formulations of RSD1235 are currently being evaluated in Phase 1 clinical trials.

Cardiome’s lead drug in the congestive heart failure (CHF) area is oxypurinol, a xanthine oxidase inhibitor. CHF is the failure of the heart to pump blood at a rate sufficient to support the body’s needs. Oxypurinol is currently in a Phase 2 clinical trial that will evaluate the safety and effectiveness of oxypurinol in the treatment of patients with moderate to severe symptomatic CHF.

Cardiome is traded on the Toronto Stock Exchange (COM) and the NASDAQ National Market (CRME). Further information about Cardiome can be found at www.cardiome.com.

For Further Information:
Don Graham
Director of Corporate Communication
(604) 676-6963 or Toll Free: 1-800-330-9928
Email: dgraham@cardiome.com

Forward-Looking Statement Disclaimer

Statements contained in this news release relating to future results, events and expectation are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such statements. Such factors include, among others, those described in the Company’s annual report on Form 40-F. The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

EX-5.1

Exhibit 5

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Interests of Experts” and to the use of our report dated February 4, 2005, with respect to the consolidated financial statements of Cardiome Pharma Corp. included in this Annual Report (Form 40-F) for the fiscal year ended December 31, 2004.

	/s/ ERNST & YOUNG LLP
Vancouver, Canada	Chartered Accountants
March 1, 2005

EX-99.1

Exhibit 99.1

CERTIFICATIONS PURSUANT TO
RULE 13a-14(a)

I, Robert W. Rieder, certify that:

     1.     I have reviewed this Annual Report on Form 40-F of Cardiome Pharma Corp.;

     2.     Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;

     3.     Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Annual Report;

     4.     The Registrant’s other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

          a)     designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared;

          b)     evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          c)     diclosed in this Annual Report any change in the Registrant's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

     5.     The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

          a)     all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

          b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: March 1, 2005

By:                     /s/        ROBERT W. RIEDER     
       Name:         Robert W. Rieder
       Title:           President and Chief Executive Officer

EX-99.2

Exhibit 99.2

CERTIFICATIONS PURSUANT TO
RULE 13a-14(a)

I, Douglas G. Janzen, certify that:

     1.     I have reviewed this Annual Report on Form 40-F of Cardiome Pharma Corp.;

     2.     Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;

     3.     Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Annual Report;

     4.     The Registrant’s other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

          a)     designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared;

          b)     evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          c)     disclosed in this Annual Report any change in the Registrant's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

     5.     The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

          a)     all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

          b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: March 1, 2005

By:          /s/          DOUGLAS G. JANZEN          
       Name:            Douglas G. Janzen
       Title:               Chief Financial Officer

EX-99.3

Exhibit 99.3

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the annual report of Cardiome Pharma Corp. (the “Company”) on Form 40-F for the fiscal year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert W. Rieder, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 1, 2005

By:	/s/ ROBERT W. RIEDER
	Name:	Robert W. Rieder
	Title:	President and Chief Executive Officer

EX-99.4

Exhibit 99.4

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the annual report of Cardiome Pharma Corp. (the “Company”) on Form 40-F for the fiscal year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Doug Janzen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 1, 2005

By:	/s/ DOUGLAS G. JANZEN
	Name:	Douglas G. Janzen
	Title:	Chief Financial Officer