Exhibit 99.1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This management discussion and analysis (MD&A) for the six months ended June 30, 2010 is as of August 9, 2010. We have prepared this MD&A with reference to National Instrument 51-102 “Continuous Disclosure Obligations” of the Canadian Securities Administrators.  Under the U.S./Canada Multijurisdictional Disclosure System, we are permitted to prepare this MD&A in accordance with the disclosure requirements of Canada, which are different from those of the United States. This MD&A should be read in conjunction with our unaudited consolidated financial statements for the three and six months ended June 30, 2010 and the related notes thereto and the annual MD&A. Our consolidated financial statements are prepared in accordance with generally accepted accounting principles used in the United States of America (“U.S. GAAP”).  These principles differ in certain respects from Canadian generally accepted accounting principles (“Canadian GAAP”). The differences as they affect the interim financial statements are described in note 12 to our consolidated interim financial statements as at and for the three and six months ended June 30, 2010 and our June 30, 2010 Canadian Supplement to the MD&A as of August 9, 2010.  All amounts are expressed in U.S. dollars unless otherwise indicated.

The forward-looking statements in this discussion regarding our expectations of our future performance, liquidity and capital resources, and other non-historical statements, are based on our current expectations and beliefs, including certain factors and assumptions, as described in our Annual Information Form, but are also subject to numerous risks and uncertainties, as described in the “Risk Factors” section of our Annual Information Form. As a result of these risks and uncertainties, or other unknown risks and uncertainties, our actual results may differ materially from those contained in any forward-looking statements. The words “anticipates”, “believes”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “will”, “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We undertake no obligation to update forward-looking statements, except as required by law. Additional information relating to Cardiome Pharma Corp., including our 2009 Annual Information Form, is available by accessing the SEDAR website at www.sedar.com or the EDGAR website at www.sec.gov/edgar.

OVERVIEW

We are a life sciences company focused on developing drugs to treat or prevent cardiovascular diseases. Our lead programs are focused on the treatment of atrial fibrillation, an arrhythmia, or abnormal rhythm, of the upper chambers of the heart. We also have a Phase 1 program for GED-aPC, an engineered analog of recombinant human activated Protein C, and have pre-clinical projects directed at various cardiovascular indications.

Our product candidate for the acute conversion of atrial fibrillation is the intravenous formulation of vernakalant hydrochloride (vernakalant (iv)).  We have previously announced positive results for two pivotal Phase 3 atrial fibrillation trials, ACT 1 and ACT 3, respectively, for vernakalant (iv).  In addition, in Q2-2007 we announced positive results from an additional Phase 3 study, ACT 2, evaluating patients with post-operative atrial arrhythmia; and we have completed an open-label safety study, ACT 4, in conjunction with our North American co-development partner Astellas US LLC (Astellas).

In Q1-2007, the New Drug Application (NDA) for vernakalant (iv), filed by Astellas in 2006, was accepted for review by the United States Food & Drug Administration (FDA).  We were informed that the expected action date under the U.S. Prescription Drug User Fee Act (PDUFA) was October 19, 2007.  In Q3-2007, we announced that the FDA would be extending the review period for the NDA for vernakalant (iv) to January 19, 2008.  In Q4-2007, we, together with Astellas, participated in a panel review conducted by the Cardiovascular and Renal Drugs Advisory Committee and announced that the panel members voted 6 to 2 in favour of recommending to the FDA that vernakalant (iv) be approved for rapid conversion of acute atrial fibrillation to sinus rhythm. In Q1-2008, we announced that Astellas was informed by the FDA that a decision had not yet been made regarding the NDA for vernakalant (iv) and that the FDA did not provide an action letter prior to the target PDUFA action date. In Q1-2008, we initiated a Phase 3 European Comparator Study (the AVRO study) for vernakalant (iv). In Q3-2008, we announced that Astellas received an action letter from the FDA informing Astellas that the FDA had completed its review of the NDA for vernakalant (iv) and that the application is approvable.  In Q3-2009, we announced that, following extended discussions with the FDA, Astellas is undertaking a single confirmatory additional Phase 3 clinical trial under a Special Protocol Agreement (SPA).  The trial, called ACT 5, began patient enrolment in Q4-2009, and is expected to be completed in the first half of 2011.

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CARDIOME PHARMA CORP.

In Q2-2009, we announced a collaboration and license agreement for the development and commercialization of vernakalant (iv) with an affiliate of Merck & Co., Inc. (Merck), providing Merck with exclusive rights to vernakalant (iv) outside of the United States, Canada and Mexico (collectively “North America”).  Under the agreement, further development efforts and expenses for vernakalant (iv) outside of North America are the responsibility of Merck, notwithstanding the AVRO study, which was funded by us. In Q3-2009, we announced that Merck had filed a Marketing Authorisation Application (MAA) to the European Medicines Agency (EMA) seeking marketing approval for vernakalant (iv) in the European Union, triggering a $15 million milestone payment to us.  In Q4-2009, we announced that the AVRO study was completed and met its primary endpoint of achieving statistical significance in demonstrating the superiority of vernakalant (iv) over amiodarone in the conversion of atrial fibrillation to sinus rhythm within 90 minutes of the start of drug administration.  In Q2-2010, we announced final results from the AVRO study, which were presented at Heart Rhythm 2010, the annual meeting of the Heart Rhythm Society.  In Q2-2010, we also announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended marketing approval for vernakalant (iv) for the conversion of recent onset atrial fibrillation to sinus rhythm in adults.

Our product candidate for the long-term prevention of atrial fibrillation recurrence is the oral formulation of vernakalant hydrochloride (vernakalant (oral)).  In 2006, we announced positive results from a Phase 2a pilot study.  A Phase 2b clinical study for vernakalant (oral) was initiated in Q1-2007 and we announced positive final results from the completed study in Q3-2008.  In Q2-2009, we announced a collaboration and license agreement for the development and commercialization of vernakalant (oral) providing a Merck affiliate with exclusive rights to vernakalant (oral) globally.  Further development efforts and expenses for vernakalant (oral) globally are the responsibility of Merck.  Based on recent discussions with Merck, the next phase of the clinical program for vernakalant (oral) is not expected to commence in the summer of 2010 as previously guided. Merck continues to work toward optimizing the clinical development plan for vernakalant (oral), and we will provide updated guidance when Merck has finalized their planning.

In Q2-2007, Cardiome acquired exclusive worldwide rights to GED-aPC, an engineered analog of recombinant human activated Protein C, for all indications. In Q4-2007, we announced initiation of a Phase 1 study for GED-aPC.  In Q3-2009, we announced that enrolment in this trial was completed.  Results from this study are expected to be released in 2010.  We also announced the decision that future development and commercialization of the GED-aPC technology, currently held in a subsidiary company, will be funded either externally or via a partnership with another life sciences company.  We are currently seeking external capital to fund future activities related to the development of GED-aPC. We may choose to co-invest in the venture to maintain an equity interest.

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CARDIOME PHARMA CORP.

CORPORATE DEVELOPMENT

Long-term debt

In February 2010, we announced that Merck, through an affiliate, advanced to us $25 million pursuant to a $100 million secured, interest-bearing credit facility granted to us under the collaboration and license agreement with Merck. This credit facility can be accessed in amounts of up to $25 million annually, subject to certain minimums, from January 1, 2010 to December 31, 2013.   We may, at our option, repay all or a portion of the advance from time to time without premium or penalty. This advance must be repaid in full by December 31, 2016.

AVRO Study Results

In May 2010, we announced final results from the AVRO Phase 3 comparator study for vernakalant (iv), which showed that vernakalant (iv) was superior to amiodarone injection, in converting patients’ heart rate from atrial fibrillation to sinus rhythm within 90 minutes of the start of administration. The results of the study were presented at Heart Rhythm 2010, the annual meeting of the Heart Rhythm Society.

Positive CHMP Recommendation

In June 2010, we announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended marketing approval for vernakalant (iv) for the conversion of recent onset atrial fibrillation to sinus rhythm in adults.

The CHMP issued the positive opinion following a review of data supporting the efficacy, safety and tolerability profile of vernakalant (iv). The proposed indication for vernakalant (iv) is for the rapid conversion of recent onset of atrial fibrillation to sinus rhythm for non-surgery adult patients with atrial fibrillation of seven days or less and for post-cardiac surgery patients with atrial fibrillation of three days or less.

Granting of marketing authorization by the European Commission is expected later this year and will apply to the 27 countries that are members of the European Union plus Norway and Iceland.

CLINICAL DEVELOPMENT

The following table summarizes recent clinical trials and regulatory developments associated with each of our research and development programs:

Project	Stage of Development	Current Status	Cost to Date (in millions of dollars)
Vernakalant (iv)	FDA New Drug Application (NDA)	ACT 5 trial initiated in Q4-2009	92.2
	European Marketing Authorisation Application (MAA)	Positive CHMP opinion in Q2-2010
	European Comparator (AVRO) Study	Final results released in Q2-2010
Vernakalant (oral)	Phase 2b Clinical Trial	Final results released in Q3-2008	108.1
GED-aPC	Phase 1	Phase 1 study completed	15.6
Pre-clinical Projects	Pre-Clinical Stage	Pre-clinical studies	2.4

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CARDIOME PHARMA CORP.

The following provides a description of our clinical development efforts for each of our projects during the quarter:

Vernakalant (iv)

During Q2-2010, we continued to support Merck in the development of vernakalant (iv) outside of North America.  Further development efforts for vernakalant (iv) outside of North America are now the responsibility of Merck.  When requested, we also continued to support Astellas with the development of vernakalant (iv) in North America, including the ongoing ACT 5 trial.

Vernakalant (oral)

During Q2-2010, we continued to support Merck in the development of vernakalant (oral).  Further development efforts for vernakalant (oral) globally are now the responsibility of Merck.

GED-aPC

During Q2-2010, we continued our efforts to secure external capital to fund continued clinical development of GED-aPC.  Further clinical trials are not expected to begin until such funding is obtained.

Other Projects

We continue to conduct pre-clinical research and development work on our internal early stage cardiovascular assets as well as review the external world for later stage and commercial assets.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

There were no changes in our internal controls over financial reporting that occurred during the six months ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

Our interim consolidated financial statements are prepared in accordance with U.S. GAAP.  These accounting principles require us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods.  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 were made.  Actual results may differ from these estimates under different assumptions or conditions.  Significant areas requiring management estimates include the assessment of net recoverable value and amortization period of technology licenses, clinical trial accounting, revenue recognition, stock-based compensation, and recognition of future income tax assets.

The significant accounting policies that we believe are the most critical in fully understanding and evaluating our reported financial results include our accounting policies with respect to intangible assets, clinical trial accounting, revenue recognition, research and development costs, stock-based compensation, and income taxes.  These and other significant accounting policies are described more fully in Notes 2 and 19 of our 2009 consolidated annual financial statements and in our 2009 annual management’s discussion and analysis.

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CARDIOME PHARMA CORP.

Changes in Significant Accounting Policies

Prior to January 1, 2010, we prepared our consolidated financial statements in conformity with Canadian GAAP and provided a supplemental reconciliation to U.S. GAAP. Effective January 1, 2010, we adopted U.S. GAAP as the reporting standard for our consolidated financial statements. Our consolidated interim financial statements for the three and six months ended June 30, 2010, including related notes, have therefore been prepared in accordance with U.S. GAAP. All comparative financial information contained in our consolidated interim financial statements has been recast to reflect our results as if they had been historically reported in accordance with U.S. GAAP. These adjustments resulted in an increase in deficit of $13.7 million, a decrease in intangible assets of $13.8 million, an increase in common share capital of $0.4 million, an increase in additional paid-in capital of $0.1 million and a decrease in accumulated other comprehensive income of $0.6 million, at January 1, 2010.  These differences are outlined in our annual audited consolidated financial statements for the year ended December 31, 2009 in note 19. A reconciliation of the differences from U.S GAAP to Canadian GAAP is contained in note 12 to our consolidated interim financial statements as at and for the three and six months ended June 30, 2010 and are described in our Canadian supplement to the MD&A as of August 9, 2010.

Our functional currency changed to U.S. dollars from Canadian dollars on January 1, 2010 based on our analysis of the primary economic environment in which we operate. The change in functional currency is accounted for prospectively from January 1, 2010 and prior year financial statements have not been restated for the change in functional currency. As a result of the change, foreign operations have been translated to U.S. dollars using the temporal method on a prospective basis. Monetary assets and liabilities are translated into U.S. dollars using the exchange rate in effect at the end of the period, and non-monetary assets and liabilities are translated into U.S. dollars using the exchange rate in effect at the date of the transaction. Revenues and expenses are translated at the average rate during the period. Foreign exchange gains and losses are included in our consolidated statement of operations and comprehensive income (loss).

We have also elected to adopt U.S. dollars as our reporting currency effective January 1, 2010 to better reflect our business and to improve comparability of our financial information with other publicly traded businesses in the life sciences industry. Prior year financial statements and all comparative financial information contained in our interim consolidated financial statements have been recast to reflect our results as if they had been historically reported in U.S. dollars. All revenues, expenses and cash flows for each period were translated into the reporting currency using average rates for the period, or the rates in effect at the date of the transaction for significant transactions. Assets and liabilities were translated using the exchange rate at the end of the period and shareholders’ equity was translated at historical rates. The resulting translation adjustment is recorded as cumulative translation adjustment (CTA) in accumulated other comprehensive income.

The cumulative impact of the change in reporting currency was to increase accumulated other comprehensive income by $18.2 million as at December 31, 2009.

Impact of Accounting Pronouncements Affecting Future Periods

International Financial Reporting Standards:

In 2008, the U.S. Securities and Exchange Commission (SEC) issued a proposed roadmap regarding the potential use of International Financial Reporting Standards (IFRS) by SEC issuers. Under this proposed roadmap, SEC issuers could be required to prepare financial statements under IFRS in fiscal 2014. We expect to adopt IFRS as our primary reporting standard when the SEC requires its domestic registrants in the U.S. to transition to IFRS. The SEC will make a determination in 2011 regarding the mandatory adoption of IFRS. We have not assessed the impact of this potential change on our consolidated financial statements.

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CARDIOME PHARMA CORP.

Multiple-Deliverable Revenue Arrangements:

In October 2009, the Financial Accounting Standards Board (FASB) provided amendments to the criteria for separating consideration in multiple-deliverable arrangements, established a selling price hierarchy for determining the selling price of a deliverable, and eliminated the residual method of allocation of consideration by requiring that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. FASB also requires expanded disclosures related to multiple-deliverable revenue arrangements, including information about the significant judgments made and changes to those judgments, as well as how the application of the relative selling-price method affects the timing and amount of revenue recognition. These amendments will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. We do not expect the adoption of the amendments to have a material impact on the Company’s financial position, results of operations or cash flows.

Milestone method of revenue recognition:

In April 2010, FASB published guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if the milestone is judged to meet certain criteria to be considered substantive. Milestones should be considered substantive in their entirety and may not be bifurcated. An arrangement may contain both substantive and nonsubstantive milestones that should be evaluated individually. The amendments are effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Early adoption is permitted. We are currently evaluating the impact of adoption of the amendments on the Company’s financial position, results of operations and cash flows.

RESULTS OF OPERATIONS

We recorded a net income of $4.6 million ($0.08 per common share and $0.07 diluted) for the three months ended June 30, 2010 (Q2-2010), compared to a net loss of $0.7 million ($(0.01) per common share, basic and diluted) for the three months ended June 30, 2009 (Q2-2009).  On a year-to-date basis, we recorded net income of $20.0 million ($0.33 per common share, basic and diluted) for the six months ended June 30, 2010, compared to a net loss of $10.0 million ($0.16 per common share, basic and diluted) for the six months ended June 30, 2009. The net income for the current quarter and year-to-date was largely due to revenue recognized from the payments from Merck in 2009 pursuant to the collaboration and licence agreement and decreased research and development expenditures related to vernakalant (iv), vernakalant (oral) and GED-aPC clinical activities. The deferred revenue related to the payments received pursuant to the Merck collaboration and license agreement has been fully recognized. We may earn revenue from milestones and royalties in the second half of 2010. 

Operating costs are expected to remain at current levels throughout the year as we will continue to incur costs related to our portion of the ongoing ACT 5 trial, as well as conducting early stage research.

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CARDIOME PHARMA CORP.

Revenues

Revenue for Q2-2010 was $12.4 million, an increase of $5.1 million from $7.3 million in Q2-2009.  Revenue in Q2-2010 consisted of $12.2 million (Q2-2009 - $7.0 million) in licensing fees and $0.2 million (Q2-2009 - $0.3 million) in research and collaborative fees. On a year-to-date basis, revenue for the six months ended June 30, 2010 and 2009 was $35.5 million and $7.6 million respectively. Year-to-date revenue consisted of $35.2 million (2009 - $7.0 million) in licensing and $0.3 million (2009 - $0.6 million) in research and collaboration fees.

Licensing fees represent recognition of deferred revenue from Merck related to the upfront payment and the MAA milestone payment, as well as proceeds from shipment of clinical supplies received in 2009. In Q2-2010, we recorded the final amortization of deferred revenue from Merck. In Q2-2009, we recorded the initial amortization of deferred revenue from Merck related to the upfront payment and shipment off clinical supplies. No milestone payments were received during the three and six months ended June 30, 2010 and 2009.

Research and collaborative fees are comprised of contract research fees and project management fees from our collaborative partners.

In future periods, we may earn additional milestone revenue from our collaboration and license agreement with Merck for the development of vernakalant.  We may also begin earning royalty revenue from our collaborative partner Merck from the sale of vernakalant (iv), if it is approved for marketing in Europe. In addition, depending on the results and timing of a decision by the FDA, we may earn additional milestone payments and royalties from Astellas.

Research and Development Expenditures

Research and development (R&D) expenditures were $3.7 million for Q2-2010 compared to $5.4 million for Q2-2009. We incurred total R&D expenditures of $7.4 million for the six months ended June 30, 2010, compared to $11.5 million for the same period in fiscal 2009.

(in millions of dollars)	For the Three Months Ended June 30				For the Six Months Ended June 30
Project		2010 $	2009 (Adjusted)(1) $			2010 $	2009 (Adjusted)(1) $
Vernakalant (oral)		0.6		1.6		0.6		4.5
Vernakalant (iv)		1.7		2.5		4.1		5.0
GED-aPC		0.3		1.0		0.7		1.4
Other projects		1.1		0.3		2.0		0.6
Total research and development expenses		3.7		5.4		7.4		11.5

(1) Adjustments relate to the adoption of U.S. GAAP as our primary reporting standard and U.S. dollars as our reporting currency as of January 1, 2010.

The decrease of $1.7 million in R&D expenditures in Q2-2010 compared to Q2-2009 was primarily due to the reduction of expenditures related to vernakalant (oral) as future costs of development for this program are paid by Merck. In Q2-2010, spending on vernakalant (iv) primarily related to our funding of the ACT 5 clinical trial and was $0.8 million lower in amount compared to R&D costs in Q2-2009, which were primarily related to the AVRO comparator trial.  Spending on other projects in both periods was largely related to internal pre-clinical research and development work.

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CARDIOME PHARMA CORP.

The decrease of $4.1 million in R&D expenditures for the six months ended June 30, 2010 compared to the same period in 2009 was primarily due to the completion of the vernakalant (iv) AVRO comparator trial and the payment by Merck of the remaining costs of development related to vernakalant (oral). This was partially offset by an increase in spending on vernakalant (iv) related to our funding of the ACT 5 clinical trial.

For the remainder of the year, we expect to incur costs related to the ACT 5 trial for vernakalant (iv). We will also continue to incur costs related to the continued development of other pre-clinical projects.

General and Administration Expenditures

General and administration (G&A) expenditures for Q2-2010 were $3.3 million compared to $4.2 million in Q2-2009. On a year-to-date basis, we incurred total G&A expenditures of $6.6 million for the six months ended June 30, 2010, compared to $7.5 million for the same period in 2009. The decrease of $0.9 million in G&A expenditures in the current quarter and on a year-to-date basis, compared to prior periods, was primarily due to costs incurred in 2009 associated with closing the collaboration and license agreement with Merck. This was partially offset by an increase in stock-based compensation of $0.7 million and $1.2 million for Q2-2010 and the six months ended June 30, 2010, respectively, compared to the same periods in 2009. For the remainder of the year, we expect our G&A expenditures to remain at current levels.

Other Income and Expense

Net interest expense for Q2-2010 and six months ended June 30, 2010 was $0.6 million and $0.8 million respectively, and related to interest payable on our $25 million advance on the Merck long-term debt. Net interest income in the same periods in 2009 was not significant.

Foreign exchange loss was $0.2 million, compared to foreign exchange gain of $1.8 million in Q2-2009. On a year-to-date basis, foreign exchange loss was $0.3 million for the six months ended June 30, 2010, compared to foreign exchange gain of $2.0 million in the same period in 2009.  Foreign exchange gains (losses) were primarily attributable to the translation of foreign currency denominated net monetary assets into our functional currency at period end.

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CARDIOME PHARMA CORP.

SUMMARY OF QUARTERLY RESULTS

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

	2nd Quarter ended			1st Quarter ended			4th Quarter ended (Adjusted)(1)			3rd Quarter ended (Adjusted)(1)
(In thousands of United States dollars except per share amounts)	June 30, 2010			March 31, 2010			December 31, 2009			September 30, 2009
Total revenue		12,424			23,045			23,437			19,199
Research and development		3,682			3,754			5,788			9,290
General and administration		3,272			3,358			3,366			4,193
Net income for the period		4,560			15,473			12,102			229
Income per common share
Basic		0.08			0.26			0.20			0.00
Diluted		0.07			0.26			0.20			0.00
	2nd Quarter ended (Adjusted)(1)			1st Quarter ended (Adjusted)(1)			4th Quarter ended (Adjusted)(1)			3rd Quarter ended (Adjusted)(1)
	June 30, 2009			March 31, 2009			December 31, 2008			September 30, 2008
Total revenue		7,345			220			338			515
Research and development		5,376			6,162			7,877			8,059
General and administration		4,226			3,320			3,116			4,771
Net loss for the period		(732	)		(9,244	)		(5,905	)		(10,769	)
Loss per common share
Basic		(0.01	)		(0.14	)		(0.09	)		(0.17	)
Diluted		(0.01	)		(0.14	)		(0.09	)		(0.17	)

(1) Adjustments relate to the adoption of U.S. GAAP as our primary reporting standard and U.S. dollars as our reporting currency as of January 1, 2010.

The primary factors affecting the magnitude of our net income or net losses in the various quarters were licensing fee revenue, R&D expenditures associated with clinical development programs, and foreign exchange gains and losses.

Net income in the Q2-2010, Q1-2010, Q4-2009 and Q3-2009 compared to net losses in other quarters is primarily due to licensing fee revenue recognized during these quarters. In addition, reduced R&D expenses in Q4-2009, Q1-2010 and Q2-2010 added to the income for those periods. Revenue in Q2-2010 was lower than the preceding three quarters due to the inclusion of the final 1.5 months of amortization compared to a full quarter’s amortization of deferred revenue from Merck related to the upfront payment and the MAA milestone payment, as well as proceeds from shipment of clinical supplies. R&D costs were higher in Q3-2008 due to costs associated with the Phase 2b clinical trial for vernakalant (oral). R&D costs in Q3-2009 were primarily due to costs associated with the AVRO trial for vernakalant (iv). The Q3-2009 net income included a foreign exchange loss of $5.2 million. The fluctuation in G&A costs over the various quarters is primarily due to corporate governance activities, business development initiatives, stock-based compensation expense and our strategic review process.

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CARDIOME PHARMA CORP.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Our operational activities during the quarter were financed mainly by working capital carried forward from the preceding fiscal year and a $25 million advance on our line of credit from Merck. We believe that our cash position as of June 30, 2010, the anticipated cash inflows from our collaborative partners, and available credit facilities will be sufficient to finance our operational and capital needs for at least 24 months. Our future cash requirements may vary materially from those now expected due to a number of factors, including the costs associated with clinical trials, revenues associated with collaborative and license arrangements with third parties and strategic opportunities.

At June 30, 2010, we had working capital of $55.0 million compared to $6.2 million at December 31, 2009. We had available cash reserves comprised of cash and cash equivalents of $57.7 million at June 30, 2010 compared to cash and cash equivalents of $47.3 million at December 31, 2009.

Cash used in operating activities for Q2-2010 was $6.8 million, a decrease of $54.0 million from cash provided by operating activities of $47.2 million for Q2-2009. Cash used in operating activities for the six months ended June 30, 2010 was $15.7 million, a decrease of $52.6 million from cash provided by operating activities of $36.9 million for the same period in 2009. The decrease in cash provided by operating activities in Q2-2010 and the six months ended June 30, 2010 compared to the same periods in 2009, was primarily due to receipts of $60 million upfront payment from Merck in Q2-2009, partially offset by higher R&D expenditures and costs associate with closing the collaboration and license agreement with Merck in the six months ended June 30, 2009.

Cash used in investing activities for the three and six months ended June 30, 2010 and 2009 was not significant and consisted mainly of patents fees, as well as purchases of lab and computer equipment.

Cash provided by financing activities was $1.5 million for Q2-2010, and $26.6 million for the six months ended June 30, 2010.The primary source of cash in Q2-2010 was from the issuance of common shares upon exercise of stock options.

In the six months ended June 30, 2010, we received $25 million of secured, interest bearing long-term debt pursuant to the credit facility which is part of our collaboration and licence agreement with Merck.  We may, at our option, repay all or a portion of the advance from time to time without premium or penalty.  This advance must be repaid in full by December 31, 2016. Cash provided by financing activities in Q2-2009 and the six months ended June 30, 2009 was not significant.

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CARDIOME PHARMA CORP.

CONTRACTUAL OBLIGATIONS

As of June 30, 2010 and in the normal course of business we have the following obligations to make future payments, representing contracts and other commitments that are known and committed.

Contractual Obligations	Payment due by period
(In thousands of dollars)	2010 $	2011 $	2012 $	2013 $	2014 $	There-after $	Total $
Other long-term obligations	12	27	30	33	6	Nil	108
Operating lease obligations	683	1,356	1,393	1,401	292	Nil	5,125
Commitments for clinical research agreements and other agreements	202	10	Nil	Nil	Nil	Nil	212
Long-term debt	Nil	Nil	Nil	Nil	Nil	25,000	25,000
Interest expense on long-term debt	1,131	2,244	2,244	2,244	2,244	4,488	14,595
Total	2,028	3,637	3,667	3,678	2,542	29,488	45,040

OUTSTANDING SHARE CAPITAL

As of August 9, 2010, we had 60,963,904 common shares issued and outstanding, and 5,800,368 common shares issuable upon the exercise of outstanding stock options (of which 3,633,643 were exercisable) at a weighted average exercise price of CAD $7.65 per share.

RELATED PARTY TRANSACTIONS

Included in accounts payable and accrued liabilities as of June 30, 2010 was $0.3 million (December 31, 2009 - $0.2 million) owing to a legal firm where our corporate secretary is a partner. The amounts charged were recorded at their exchange amounts and are subject to normal trade terms. For the six months ended June 30, 2010, we incurred approximately $0.4 million (2009 - $0.5 million) of legal fees for services provided by this legal firm.

OFF-BALANCE SHEET ARRANGEMENTS

We have no material undisclosed off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our results of operations or financial condition.

FINANCIAL INSTRUMENTS AND RISKS

We are exposed to market risks related to changes in interest rates and foreign currency exchange rates, each of which could affect the value of our current assets and liabilities. 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.  At June 30, 2010, our cash and cash equivalents were primarily held as cash. We do not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates relative to our investment portfolio, due to the relative short-term nature of the investments and our current ability to hold fixed income investments to maturity. At June 30, 2010, we hold a $25 million long term advance on the Merck credit facility, which is interest bearing at a variable rate. As a result, interest rate changes could have a material effect on future operating results or cash flows. 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 flows.

- 11 -

Consolidated Financial Statements

(Expressed in thousands of United States (U.S.) dollars)

(Prepared in accordance with generally accepted accounting principles used in the United States of America (U.S. GAAP))

CARDIOME PHARMA CORP.

Periods ended June 30, 2010 and 2009

(Unaudited)

CARDIOME PHARMA CORP.

Consolidated Balance Sheets

(Unaudited)

(Expressed in thousands of U.S. dollars, except share amounts)

(Prepared in accordance with U.S. GAAP)

	As at
	June 30,			December 31,
	2010			2009
				(Adjusted-
				notes 2(a) & (c))
Assets
Current assets:
Cash and cash equivalents	$	57,707		$	47,270
Accounts receivable		1,116			1,428
Prepaid expenses and other assets		701			495
		59,524			49,193
Property and equipment		2,347			2,646
Intangible assets		1,673			1,666
	$	63,544		$	53,505
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities (note 5)	$	4,357		$	7,618
Deferred revenue		-			35,197
Current portion of deferred leasehold inducement		213			212
		4,570			43,027
Deferred leasehold inducement		589			696
Long-term debt (note 6)		25,000			-
		30,159			43,723
Stockholders’ equity:
Common stock		260,264			256,711
Authorized - unlimited number with no par value
Issued and outstanding - 60,901,572 (2009 - 60,513,911)
Additional paid-in capital		29,686			29,669
Deficit		(274,750	)		(294,783	)
Accumulated other comprehensive income		18,185			18,185
		33,385			9,782
	$	63,544		$	53,505

Related party transactions (note 10)

See accompanying notes to the consolidated financial statements.

Approved on behalf of the Board:

/s/ Peter W. Roberts	/s/ Harold H. Shlevin
Director	Director

CARDIOME PHARMA CORP.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(Expressed in thousands of U.S. dollars, except share and per share amounts)

(Prepared in accordance with U.S. GAAP)

	Three months ended						Six months ended
	June 30,			June 30,			June 30,			June 30,
	2010			2009			2010			2009
				(Adjusted-						(Adjusted-
				notes 2(a) & (c))						notes 2(a) & (c))
Revenue:
Licensing fees	$	12,225		$	7,011		$	35,146		$	7,011
Research collaborative fees		199			334			323			554
		12,424			7,345			35,469			7,565
Expenses:
Research and development		3,682			5,376			7,436			11,538
General and administration		3,272			4,226			6,630			7,546
Amortization		295			286			599			567
		7,249			9,888			14,665			19,651
Operating income (loss)		5,175			(2,543	)		20,804			(12,086	)
Other income and expenses:
Interest income (expense)		(557	)		1			(847	)		15
Other income		189			42			347			53
Foreign exchange gain (loss)		(247	)		1,768			(271	)		2,042
		(615	)		1,811			(771	)		2,110
Net income (loss) for the period		4,560			(732	)		20,033			(9,976	)
Other comprehensive income for the period:
Foreign currency translation adjustment		-			1,401			-			612
Comprehensive income (loss) for the period		4,560			669			20,033			(9,364	)
Income (loss) per common share (note 7)
Basic		0.08			(0.01	)		0.33			(0.16	)
Diluted		0.07			(0.01	)		0.33			(0.16	)
Weighted average common shares outstanding during the period
Basic		60,691,572			63,794,632			60,605,641			63,778,553
Diluted		61,712,846			63,794,632			61,142,919			63,778,553

See accompanying notes to the consolidated financial statements.

CARDIOME PHARMA CORP.

Consolidated Statements of Stockholders’ Equity

For the three and six months ended June 30, 2010

(Unaudited)

(Expressed in thousands of U.S. dollars)

(Prepared in accordance with U.S. GAAP)

For the three months ended June 30, 2010	Common stock		Preferred stock		Additional paid-in capital			Deficit			Accumulated other comprehensive income		Total stockholders’ equity
Balance at March 31, 2010	$	256,900	$	-	$	30,427		$	(279,310	)	$	18,185	$	26,202
Net income		-		-		-			4,560			-		4,560
Common stock issued upon exercise of options(1)		1,509		-		-			-			-		1,509
Reallocation of additional paid-in capital arising from stock-based compensation  related to exercise of options		1,855		-		(1,855	)		-			-		-
Stock option expense recognized		-		-		1,114			-			-		1,114
Balance at June 30, 2010	$	260,264	$	-	$	29,686		$	(274,750	)	$	18,185	$	33,385

For the six months ended June 30, 2010	Common stock		Preferred stock		Additional paid-in capital			Deficit			Accumulated other comprehensive income		Total stockholders’ equity
Balance at December 31, 2009 - Adjusted	$	256,711	$	-	$	29,669		$	(294,783	)	$	18,185	$	9,782
Notes 2(a) & (c) Net income		-		-		-			20,033			-		20,033
Common stock issued upon exercise of options(1)		1,644		-		-			-			-		1,644
Reallocation of additional paid-in capital arising from stock-based compensation  related to exercise of options		1,909		-		(1,909	)		-			-		-
Stock option expense recognized		-		-		1,926			-			-		1,926
Balance at June 30, 2010	$	260,264	$	-	$	29,686		$	(274,750	)	$	18,185	$	33,385

(1) During the three months ended June 30, 2010, the Company issued 83,149 shares in exchange for 275,700 stock options in cashless exercise transactions.

See accompanying notes to the consolidated financial statements.

CARDIOME PHARMA CORP.

Consolidated Statements of Stockholders’ Equity

For the three and six months ended June 30, 2009

(Unaudited)

(Expressed in thousands of U.S. dollars)

(Prepared in accordance with U.S. GAAP)

For the three months ended June 30, 2009 (Adjusted- notes 2(a) & (c))	Common stock		Preferred stock		Additional paid-in capital			Deficit			Accumulated other comprehensive income		Total stockholders’ equity
Balance at March 31, 2009	$	255,657	$	24,698	$	22,457		$	(306,381	)	$	20,155	$	16,586
Net loss		-		-		-			(732	)		-		(732	)
Common stock issued upon exercise of options		276		-		-			-			-		276
Reallocation of additional paid-in capital arising from stock-based compensation  related to exercise of options		35		-		(35	)		-			-		-
Stock option expense recognized		-		-		299			-			-		299
Foreign currency translation adjustment		-		-		-			-			1,401		1,401
Balance at June 30, 2009	$	255,968	$	24,698	$	22,721		$	(307,113	)	$	21,556	$	17,830

For the six months ended June 30, 2009 (Adjusted- notes 2(a) & (c))	Common stock		Preferred stock		Additional paid-in capital			Deficit			Accumulated other comprehensive income		Total stockholders’ equity
Balance at December 31, 2008	$	255,657	$	24,698	$	22,112		$	(297,137	)	$	20,944	$	26,274
Net loss		-		-		-			(9,976	)		-		(9,976	)
Common stock issued upon exercise of options		276		-		-			-			-		276
Reallocation of additional paid-in capital arising from stock-based compensation  related to exercise of options		35		-		(35	)		-			-		-
Stock option expense recognized		-		-		644			-			-		644
Foreign currency translation adjustment		-		-		-			-			612		612
Balance at June 30, 2009	$	255,968	$	24,698	$	22,721		$	(307,113	)	$	21,556	$	17,830

See accompanying notes to the consolidated financial statements.

CARDIOME PHARMA CORP.

Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in thousands of U.S. dollars)

(Prepared in accordance with U.S. GAAP)

	Three months ended						Six months ended
	June 30, 2010			June 30, 2009 (Adjusted- notes 2(a) & (c))			June 30, 2010			June 30, 2009 (Adjusted- notes 2(a) & (c))
Cash flows from operating activities:
Net income (loss) for the period	$	4,560		$	(732	)	$	20,033		$	(9,976	)
Add items not affecting cash:
Amortization		295			286			599			567
Stock-based compensation		1,114			299			1,926			644
Deferred leasehold inducement		(58	)		(17	)		(106	)		(58	)
Unrealized foreign exchange (gain) loss		242			(1,886	)		96			(2,038	)
Changes in operating assets and liabilities:
Accounts receivable		(277	)		3			306			(197	)
Prepaid expenses and other assets		220			328			(206	)		(86	)
Accounts payable and accrued liabilities		(618	)		(1,676	)		(3,140	)		(2,510	)
Deferred revenue		(12,247	)		50,589			(35,197	)		50,589
Net cash provided by (used in) operating activities		(6,769	)		47,194			(15,689	)		36,935
Cash flows from investing activities:
Purchase of property and equipment		(104	)		(33	)		(143	)		(34	)
Purchase of intangible assets		(122	)		(54	)		(164	)		(88	)
Net cash used in investing activities		(226	)		(87	)		(307	)		(122	)
Cash flows from financing activities:
Issuance of common stock upon exercise of stock options		1,509			276			1,644			276
Proceeds from draws of long-term debt		-			-			25,000			-
Net cash provided by financing activities		1,509			276			26,644			276
Effect of foreign exchange rate changes on cash and cash equivalents		(312	)		3,710			(211	)		2,945
Increase (decrease) in cash and cash equivalents during the period		(5,798	)		51,093			10,437			40,034
Cash and cash equivalents, beginning of period		63,505			19,436			47,270			30,495
Cash and cash equivalents, end of period		57,707			70,529			57,707			70,529
Supplemental cash flow information:
Interest paid		847			3			850			6
Interest received		2			2			4			27

See accompanying notes to the consolidated financial statements.

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

1.   Basis of presentation:

These unaudited interim consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America (U.S. GAAP) and are presented in U.S. dollars. These policies are consistent with Canadian generally accepted accounting principles (Canadian GAAP) in all material respects for the Company, except as described in note 12 below.  Cardiome Pharma Corp (the Company) issued its audited annual consolidated financial statements for the year ended December 31, 2009 in accordance with Canadian GAAP in Canadian dollars and also provided a reconciliation of the differences between Canadian GAAP and U.S. GAAP in note 19 to those audited annual consolidated financial statements. The change in generally accepted accounting principles as well as changes in the Company’s functional and reporting currencies is described in note 2 below. These unaudited interim consolidated financial statements do not include all note disclosures required by U.S. GAAP on an annual basis, and therefore should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2009 filed with the appropriate securities commissions. The results of operations for the three and six month periods ended June 30, 2010 and 2009 are not necessarily indicative of the results for the full year.

The Company has financed its cash requirements primarily from share issuances, payments from research collaborators, licensing fees and credit facilities. 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.

2.   Changes affecting fiscal 2010 consolidated financial statements:

(a) Change in generally accepted accounting policies

The Company historically prepared its consolidated financial statements in conformity with Canadian GAAP and provided a supplemental reconciliation to U.S. GAAP. Effective January 1, 2010, the Company adopted U.S. GAAP as the reporting standard for its consolidated financial statements. These consolidated interim financial statements, including related notes, have therefore been prepared in accordance with U.S. GAAP. All comparative financial information contained herein has been recast to reflect the Company’s results as if the Company had historically reported in accordance with U.S. GAAP. These adjustments resulted in an increase in deficit of $13,748, a decrease in intangible assets of $13,855, an increase in common share capital of $446, an increase in additional paid-in capital of $80, and a decrease in accumulated other comprehensive income of $633, at January 1, 2010. These differences are outlined in our annual audited consolidated financial statements for the year ended December 31, 2009 in note 19. A reconciliation of the differences from U.S GAAP to Canadian GAAP is contained in note 12.

2

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

2.   Changes affecting fiscal 2010 consolidated financial statements (continued):

(b) Change in functional currency

The functional currency of the Company and its subsidiaries changed to U.S. dollars from Canadian dollars on January 1, 2010 based on management’s analysis of the primary economic environment in which the Company and its wholly owned subsidiaries operate. The change in functional currency is accounted for prospectively from January 1, 2010 and prior year financial statements have not been restated for the change in functional currency. As a result of this change, the Company’s foreign operations have been translated to U.S. dollars using the temporal method on a prospective basis. Monetary assets and liabilities are translated into U.S. dollars using the exchange rate in effect at the end of the period, and non-monetary assets and liabilities are translated into U.S. dollars using the exchange rate in effect at the date of the transaction. Revenues and expenses are translated at the average rate during the period. Foreign exchange gains and losses are included in the consolidated statement of operations and comprehensive income (loss).

(c) Change in reporting currency

The Company has also elected to adopt U.S. dollars as its reporting currency effective January 1, 2010 to better reflect its business and to improve comparability of its financial information with other publicly traded businesses in the life sciences industry. Prior year financial statements and all comparative financial information contained herein have been recast to reflect the Company’s results as if they had been historically reported in U.S. dollars. All revenues, expenses and cash flows for each period were translated into the reporting currency using average rates for the period, or the rates in effect at the date of the transaction for significant transactions. Assets and liabilities were translated using the exchange rate at the end of the period and stockholders’ equity was translated at historical rates. The resulting translation adjustment was recorded as accumulated foreign currency translation adjustment in accumulated other comprehensive income.

The cumulative impact of the change in reporting currency was to increase accumulated other comprehensive income by $18,185 as at December 31, 2009.

3

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

3.   Future changes in accounting policies:

(a) International Financial Reporting Standards:

In 2008, the U.S. Securities and Exchange Commission (SEC) issued a proposed roadmap regarding the potential use of International Financial Reporting Standards (IFRS) by SEC issuers. Under this proposed roadmap, SEC issuers could be required to prepare financial statements under IFRS in fiscal 2014. The Company expects to adopt IFRS as its reporting standard when the SEC requires its domestic registrants in the U.S. to transition to IFRS. The SEC will make a determination in 2011 regarding the mandatory adoption of IFRS. The Company has not assessed the impact of this potential change on its consolidated financial statements.

(b) Multiple-Deliverable Revenue Arrangements:

In October 2009, the Financial Accounting Standards Board (FASB) provided amendments to the criteria for separating consideration in multiple-deliverable arrangements, established a selling price hierarchy for determining the selling price of a deliverable, and eliminated the residual method of allocation of consideration by requiring that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. FASB also requires expanded disclosures related to multiple-deliverable revenue arrangements, including information about the significant judgments made and changes to those judgments, as well as how the application of the relative selling-price method affects the timing and amount of revenue recognition. These amendments will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. We do not expect the adoption of the amendments to have a material impact on the Company’s financial position, results of operations or cash flows.

(c) Milestone method of revenue recognition:

In April 2010, FASB published guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions.Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if the milestone is judged to meet certain criteria to be considered substantive.Milestones should be considered substantive in their entirety and may not be bifurcated. An arrangement may contain both substantive and nonsubstantive milestones that should be evaluated individually.The amendments are effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Early adoption is permitted. We are currently evaluating the impact of adoption of the amendments on the Company’s financial position, results of operations and cash flows.

4

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

4.   Financial instruments:

The fair values of cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate carrying values because of their short-term nature.

5.   Accounts payable and accrued liabilities:

Accounts payable and accrued liabilities comprise of:

	June 30,		December 31,
	2010		2009
Trade accounts payable	$	268	$	920
Accrued contract research		2,275		4,400
Employee-related accruals		510		893
Other accrued liabilities (1)		1,304		1,405
	$	4,357	$	7,618

(1) Included in other accrued liabilities at June 30, 2010 is an amount of $306 (December 31, 2009 - $162) owing to a related party (note 10).

6.   Long-term debt:

Pursuant to a collaboration and license agreement with Merck & Co., Inc. (Merck), Merck has granted the Company an interest-bearing credit facility of up to $100 million, secured by a first priority interest to the Company’s patents and all associated proceeds. This credit facility can be accessed in amounts of up to $25 million annually, subject to certain minimums, from January 1, 2010 to December 31, 2013, with each advance to be fully repaid six years after the year of the advance on December 31st. Interest accrues at LIBOR plus 8% per annum and is payable at the end of each calendar quarter.

The Company borrowed $25 million under this facility in the six month period ended June 30, 2010. The Company may at its option, repay all or a portion of the advance from time to time without premium or penalty. This advance must be repaid in full by December 31, 2016.

The long-term debt has been recorded at amortized cost. Based on current market borrowing rates, the carrying value of the Company’s long-term debt approximates its fair value.

5

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

7.   Basic and diluted income (loss) per share:

Basic income (loss) per share is calculated using the weighted average number of common shares outstanding during the period.

Diluted income (loss) per share is calculated using the weighted average number of common shares outstanding during the period, adjusted to include the number of incremental common shares that would have been outstanding if all dilutive potential common shares had been issued. The incremental common shares related to stock options are calculated using the treasury stock method, whereby the potential proceeds from the exercise of dilutive stock options are used to purchase the Company’s common shares at the average market price during the period.

Of the 5,927,946 stock options outstanding at June 30, 2010, the number of potentially dilutive common shares excluded from the income per share calculation due to their anti-dilutive effect for the three and six months ended June 30, 2010 was 2,815,290 and 3,926,492 options, respectively. As the Company incurred a loss for the three and six months ended June 30, 2009, all stock options and convertible preferred shares were anti-dilutive and were excluded from the diluted weighted average shares outstanding for that period.

Reconciliations of the income (loss) and weighted average number of common shares used in the calculations are set forth below:

	For the Three Months Ended June 30					For the Six Months Ended June 30
	2010		2009			2010		2009
Income (loss) available to common stockholders	$	4,560	$	(732	)	$	20,033	$	(9,976	)
Weighted average number of common shares for basic income (loss) per share		60,691,572		63,794,632			60,605,641		63,778,553
Dilutive effect of options		1,021,274		-			537,278		-
Diluted weighted average number of common shares for diluted income (loss) per share		61,712,846		63,794,632			61,142,919		63,778,553
Basic income (loss) per share	$	0.08	$	(0.01	)	$	0.33	$	(0.16	)
Diluted income (loss) per share	$	0.07	$	(0.01	)	$	0.33	$	(0.16	)

6

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

8.   Stockholders’ equity:

(a)  Stock options:

On May 26, 2010, the shareholders approved amendments to the 2001 Stock Option Plan (“2001 Plan”). These amendments (i) permit the cashless exercise of options without payment of cash consideration, where the option holder receives the intrinsic value of the exercised options in the form of common shares issued from treasury, and (ii) provide option holders, at the discretion of the Board of Directors or Chief Executive Officer, with a cash surrender right which entitles the holder to surrender options and receive the intrinsic value of the surrendered options in cash.

Details of the stock option transactions for the six months ended June 30, 2010 are summarized as follows:

	Number of stock options outstanding			Weighted average exercise price (CAD$)
Balance, December 31, 2009		6,339,031		$	7.45
Options granted		221,200			8.15
Options exercised(1)		(580,212	)		5.92
Options forfeited		(22,073	)		4.80
Options expired		(30,000	)		7.52
Balance, June 30, 2010		5,927,946		$	7.64

(1) During the six months ended June 30, 2010, the Company issued 83,149 shares in exchange for 275,700 stock options in cashless exercise transactions.

At June 30, 2010, stock options to executive officers and directors, employees and consultants, which expire at various dates from July 9, 2010 and June 2, 2015, were outstanding as follows:

	Options outstanding						Options exercisable
Range of exercise prices (CAD$)	Number of common shares issuable		Weighted average remaining contractual life (years)		Weighted average exercise price (CAD$)		Number of common shares issuable		Weighted average exercise price (CAD$)
$4.15 - $6.20		2,776,603		3.54	$	4.68		879,766	$	4.66
$6.29 - $8.95		1,295,253		1.32		8.39		1,198,103		8.37
$8.98 - $11.15		945,792		2.38		10.14		827,242		10.17
$11.26 - $14.50		910,298		2.46		12.98		794,472		13.03
		5,927,946		2.70	$	7.64		3,699,583	$	8.89

7

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

8.   Stockholders’ equity (continued):

(a)  Stock options (continued):

A summary of the Company’s non-vested stock option activity and related information for the six month period ended June 30, 2010 is as follows:

	Number			Weighted average
	of			grant-date fair value
Non-vested options	options			(U.S.$)
Non-vested at December 31, 2009		2,567,398			2.82
Granted		221,200			3.91
Vested		(538,525	)		3.52
Forfeited		(21,710	)		2.10
Non-vested at June 30, 2010		2,228,363			2.76

As of June 30, 2010, there was $2,410 of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted average period of 1.5 years.

The aggregate intrinsic value of stock options outstanding at June 30, 2010 was $11,263.

The aggregate intrinsic value of the vested and exercisable stock options at June 30, 2010 was $3,964.

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2010 was $1,404. There were no stock options exercised during the six months ended June 30, 2009.

The aggregate fair value of vested options during the six months ended June 30, 2010 was $1,896 (2009 - $1,927).

The weighted average remaining contractual life of vested and exercisable stock options at June 30, 2010 was 2.2 years.

Cash received during the six months ended June 30, 2010 related to the exercise of stock options was $1,644.

8

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

8.   Stockholders’ equity (continued):

 (b) Stock-based compensation:

The estimated fair value of options granted from December 1, 2002 to officers, directors, employees and consultants is amortized over the vesting period. Compensation expense is recorded in research and development expenses and general and administration expenses as follows:

	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2010		2009		2010		2009
Research and development	$	317	$	109	$	626	$	217
General and administration		797		190		1,300		427
Total	$	1,114	$	299	$	1,926	$	644

The weighted average fair value of stock options granted during the three and six months ended June 30, 2010 was $4.06 and $3.91 per option respectively. The Company did not grant any stock options during the three and six months ended June 30, 2009. The estimated fair value of the stock options granted was determined using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Three months ended					Six months ended
	June 30,			June 30,		June 30,			June 30,
	2010			2009		2010			2009
Dividend yield		0	%		-		0	%		-
Expected volatility		62.7	%		-		62.6	%		-
Risk-free interest rate		2.4	%		-		2.4	%		-
Expected average life of the options	4.1 years				-	4.1 years				-

The Company estimates forfeitures for unvested options as a percentage of stock-based compensation.  For the period ended June 30, 2010, the Company applied an estimated percentage of 13.9%, which management considered to be a reasonable estimate of actual forfeitures.

There is no dividend yield as the Company has not paid, and does not plan to pay, dividends on its common shares. The expected volatility is based on the historical share price volatility of the Company’s daily share closing prices over a period equal to the expected life of each option grant. The risk-free interest rate is based on yields from Canadian government bond yields with a term equal to the expected term of the options being valued. The expected life of options represents the period of time that the options are expected to be outstanding based

9

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

8.   Stockholders’ equity (continued):

(b)  Stock-based compensation (continued):

on the contractual term of the options and on historical data of option holder exercise and post-vesting employment termination behaviour.

9.   License agreement:

Under the terms of the October 21, 2005 acquisition of Artesian Therapeutics, Inc (Artesian), the Company initially had an obligation to advance the development of at least one drug candidate by October 21, 2007 and subsequently continue its development.  On October 19, 2007, the Company amended its Stock Purchase Agreement with Artesian Therapeutics Inc. to extend this period to March 31, 2009, otherwise the Company would be required to transfer ownership to or license the acquired intellectual property to the former shareholders of Artesian. The Company did not meet the obligation of drug advancement and in March 2010, the former shareholders of Artesian exercised their right to reclaim the acquired intellectual property assets.

10. Related party transactions:

The Company has incurred expenses for services provided by a law firm in which an officer is a partner. The amounts charged are recorded at their exchange amounts and are subject to normal trade terms. For the six months ended June 30, 2010, the Company has incurred legal fees of $381 (2009 - $462) for services provided by the law firm relating to general corporate matters and review of partnership opportunities. Included in accounts payable and accrued liabilities at June 30, 2010 is an amount of $306 (December 31, 2009 - $162) owing to the legal firm.

11. Accounting for tax uncertainties:

The Company recognizes interest and penalties related to income taxes in interest income (expense). To date, the Company has not incurred any significant interest and penalties.

12. Reconciliation of Generally Accepted Accounting Principles:

The Company prepares its consolidated financial statements in accordance with U.S. GAAP which, as applied in these consolidated financial statements, conform in all material respects to Canadian GAAP, except as summarized below:

10

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

I. Reconciliation of consolidated balance sheets:

As at June 30, 2010 (in thousands of U.S. dollars)
	Stated in			Adjustments				Stated in
	accordance			from U.S. to				accordance
	with U.S.			Canadian				with Canadian
	GAAP			GAAP			Note	GAAP
Assets
Current assets:
Cash and cash equivalents	$	57,707		$	-			$	57,707
Accounts receivable		1,116			-				1,116
Prepaid expenses and other assets		701			-				701
		59,524			-				59,524
Property and equipment		2,347			-				2,347
Intangible assets		1,673			12,790		a & b		14,463
	$	63,544		$	12,790			$	76,334
Liabilities & Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	4,357		$	-			$	4,357
Current portion of deferred leasehold inducement		213			-				213
		4,570			-				4,570
Deferred leasehold inducement		589			-				589
Long-term debt		25,000			-				25,000
		30,159			-				30,159
Stockholders’ equity:
Common stock		260,264			(673	)	c, d(ii)		259,591
Additional paid-in capital		29,686			177		d(i), d(ii)		29,863
Deficit		(274,750	)		12,653		a,b,c & d(i)		(262,097	)
Accumulated other comprehensive income		18,185			633		a & b		18,818
		33,385			12,790				46,175
	$	63,544		$	12,790			$	76,334

11

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

I. Reconciliation of consolidated balance sheets (continued):

December 31, 2009 (in thousands of U.S. dollars)
												Stated in
									Stated in			accordance
	Stated in			Adjustments					accordance			with
	accordance			from U.S. to					with			Canadian
	with U.S.			Canadian					Canadian			GAAP and
	GAAP			GAAP			Note		GAAP			in CAD$
Assets
Current assets:
Cash and cash equivalents	$	47,270		$	-				$	47,270		$	49,680
Accounts receivable		1,428			-					1,428			1,501
Prepaid expenses and other assets		495			-					495			521
		49,193			-					49,193			51,702
Property and equipment		2,646			-					2,646			2,782
Intangible assets		1,666			13,855		a & b			15,521			16,312
	$	53,505		$	13,855				$	67,360		$	70,796
Liabilities & Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	7,618		$	-				$	7,618		$	8,007
Deferred revenue		35,197			-					35,197			36,992
Current portion of deferred leasehold inducement		212			-					212			223
		43,027			-					43,027			45,222
Deferred leasehold inducement		696			-					696			732
		43,723			-					43,723			45,954
Stockholders’ equity:
Common stock		256,711			(446	)		c		256,265			322,329
Additional paid-in capital		29,669			(80	)		d(i)		29,589			33,192
Deficit		(294,783	)		13,748		a,b,c,& d(i)			(281,035	)		(330,679	)
Accumulated other comprehensive income		18,185			633		a & b			18,818			-
		9,782			13,855					23,637			24,842
	$	53,505		$	13,855				$	67,360		$	70,796

12

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

II. Reconciliation of consolidated statements of operations and comprehensive income (loss):

For the three months ended June 30, 2010: (in thousands of U.S. dollars, except share and per share amounts)
									Stated in
	Stated in			Adjustments					accordance
	accordance			from U.S. to					with
	with U.S.			Canadian					Canadian
	GAAP			GAAP			Note		GAAP
Revenue:
Licensing fees	$	12,225		$	-				$	12,225
Research collaborative fees		199			-					199
		12,424			-					12,424
Expenses:
Research and development		3,682			122		a & d(i)			3,804
General and administration		3,272			(45	)		d(i)		3,227
Amortization		295			451		a & b			746
		7,249			528					7,777
Operating income		5,175			(528	)				4,647
Other income and expenses:
Interest expense		(557	)		-					(557	)
Other income		189			-					189
Foreign exchange loss		(247	)		-					(247	)
		(615	)		-					(615	)
Net income		4,560			(528	)				4,032
Income per common share
Basic	$	0.08		$	(0.01	)			$	0.07
Diluted		0.07			(0.01	)				0.06
Weighted average number of common shares outstanding
Basic		60,691,572			-					60,691,572
Diluted		61,712,846			-					61,712,846

13

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

II. Reconciliation of consolidated statements of operations and comprehensive income (loss):

For the six months ended June 30, 2010: (in thousands of U.S. dollars, except share and per share amounts)
									Stated in
	Stated in			Adjustments					accordance
	accordance			from U.S. to					with
	with U.S.			Canadian					Canadian
	GAAP			GAAP			Note		GAAP
Revenue:
Licensing fees	$	35,146		$	-				$	35,146
Research collaborative fees		323			-					323
		35,469			-					35,469
Expenses:
Research and development		7,436			192		a & d(i)			7,628
General and administration		6,630			2			d(i)		6,632
Amortization		599			901		a & b			1,500
		14,665			1,095					15,760
Operating income		20,804			(1,095	)				19,709
Other income and expenses:
Interest expense		(847	)		-					(847	)
Other income		347			-					347
Foreign exchange loss		(271	)		-					(271	)
		(771	)		-					(771	)
Net income		20,033			(1,095	)				18,938
Basic and diluted income per common share	$	0.33		$	(0.02	)			$	0.31
Weighted average number of common shares outstanding
Basic		60,605,641			-					60,605,641
Diluted		61,142,919			-					61,142,919

14

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

II. Reconciliation of consolidated statements of operations and comprehensive loss (continued):

For the three months ended June 30, 2009:  (in thousands of U.S. dollars, except share and per share amounts)
												Stated in
									Stated in			accordance
	Stated in			Adjustments					accordance			with
	accordance			from U.S. to					with			Canadian
	with U.S.			Canadian					Canadian			GAAP and in
	GAAP			GAAP			Note		GAAP			CAD$
Revenue:
Licensing fees	$	7,011		$	-				$	7,011		$	8,182
Research collaborative fees		334			-					334			390
		7,345			-					7,345			8,572
Expenses:
Research and development		5,376			54		a & d(i)			5,430		$	6,338
General and administration		4,226			33			d(i)		4,259			4,970
Amortization		286			413		a & b			699			816
		9,888			500					10,388			12,124
Operating loss		(2,543	)		(500	)				(3,043	)		(3,552	)
Other income and expenses:
Interest income		1			-					1			3
Other income		42			-					42			48
Foreign exchange gain		1,768			-					1,768			2,064
		1,811			-					1,811			2,115
Net loss		(732	)		(500	)				(1,232	)		(1,437	)
Other comprehensive income
Foreign currency translation adjustment		1,401			1,084		a & b			2,485			-
Comprehensive loss	$	669		$	584				$	1,253		$	(1,437	)
Basic and diluted loss per common share	$	(0.01	)	$	(0.01	)			$	(0.02	)	$	(0.02	)
Weighted average number of common shares outstanding -basic and diluted		63,794,632			-					63,794,632			63,794,632

15

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

II. Reconciliation of consolidated statements of operations and comprehensive loss (continued):

For the six months ended June 30, 2009:  (in thousands of U.S. dollars, except share and per share amounts)
												Stated in
									Stated in			accordance
	Stated in			Adjustments					accordance			with
	accordance			from U.S. to					with			Canadian
	with U.S.			Canadian					Canadian			GAAP and in
	GAAP			GAAP			Note		GAAP			CAD$
Revenue:
Licensing fees	$	7,011		$	-				$	7,011		$	8,182
Research collaborative fees		554			-					554			664
		7,565			-					7,565			8,846
Expenses:
Research and development		11,538			88		a & d(i)			11,626		$	14,053
General and administration		7,546			35			d(i)		7,581			9,107
Amortization		567			800		a & b			1,367			1,648
		19,651			923					20,574			24,808
Operating loss		(12,086	)		(923	)				(13,009	)		(15,962	)
Other income and expenses:
Interest income		15			-					15			19
Other income		53			-					53			63
Foreign exchange gain		2,042			-					2,042			2,405
		2,110			-					2,110			2,487
Net loss		(9,976	)		(923	)				(10,899	)		(13,475	)
Other comprehensive income
Foreign currency translation adjustment		612			618		a & b			1,230			-
Comprehensive loss	$	(9,364	)	$	(305	)			$	(9,669	)	$	(13,475	)
Basic and diluted loss per common share	$	(0.16	)	$	(0.01	)			$	(0.17	)	$	(0.21	)
Weighted average number of common shares outstanding - basic and diluted		63,778,553			-					63,778,553			63,778,553

16

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

III. Reconciliation of consolidated statements of cash flows:

For the three months ended June 30, 2010 (in thousands of U.S. dollars)
	Stated in			Adjustments					Stated in
	accordance			from U.S. to					accordance
	with U.S.			Canadian					with Canadian
	GAAP			GAAP			Note		GAAP
Cash flows from operating activities:
Net income for the period	$	4,560		$	(528	)			$	4,032
Add items not affecting cash:
Amortization		295			451		a & b			746
Stock-based compensation		1,114			(45	)		d(i)		1,069
Deferred leasehold inducement		(58	)		-					(58	)
Unrealized foreign exchange loss		242			-					242
Write-off of property and equipment		-			-					-
Changes in operating assets and liabilities:
Accounts receivable		(277	)		-					(277	)
Prepaid expenses and other assets		220			-					220
Accounts payable and accrued liabilities		(618	)		-					(618	)
Deferred revenue		(12,247	)		-					(12,247	)
Net cash used in operating activities		(6,769	)		(122	)				(6,891	)
Cash flows from investing activities:
Purchase of property and equipment		(105	)		-					(104	)
Purchase of intangible assets		(122	)		122			a		-
Net cash used in investing activities		(226	)		122					(104	)
Cash flows from financing activities:
Issuance of common stock upon exercise of stock options		1,509			-					1,509
Proceeds from issuance of long-term debt		-			-					-
Net cash provided by financing activities		1,509			-					1,509
Effect of foreign exchange rate changes on cash and cash equivalents		(312	)		-					(312	)
Increase in cash and cash equivalents during the period		(5,798	)		-					(5,798	)
Cash and cash equivalents, beginning of period		63,505			-					63,505
Cash and cash equivalents, end of period	$	57,707		$	-				$	57,707

17

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

III. Reconciliation of consolidated statements of cash flows:

For the six months ended June 30, 2010 (in thousands of U.S. dollars)
	Stated in			Adjustments					Stated in
	accordance			from U.S. to					accordance
	with U.S.			Canadian					with Canadian
	GAAP			GAAP			Note		GAAP
Cash flows from operating activities:
Net income for the period	$	20,033		$	(1,095	)			$	18,938
Add items not affecting cash:
Amortization		599			901		a & b			1,500
Stock-based compensation		1,926			30			d(i)		1,956
Deferred leasehold inducement		(106	)		-					(106	)
Unrealized foreign exchange loss		96			-					96
Changes in operating assets and liabilities:
Accounts receivable		306			-					306
Prepaid expenses and other assets		(206	)		-					(206	)
Accounts payable and accrued liabilities		(3,140	)		-					(3,140	)
Deferred revenue		(35,197	)		-					(35,197	)
Net cash used in operating activities		(15,689	)		(164	)				(15,853	)
Cash flows from investing activities:
Purchase of property and equipment		(143	)		-					(143	)
Purchase of intangible assets		(164	)		164			a		-
Net cash used in investing activities		(307	)		164					(143	)
Cash flows from financing activities:
Issuance of common stock upon exercise of stock options		1,644			-					1,644
Proceeds from issuance of long-term debt		25,000			-					25,000
Net cash provided by financing activities		26,644			-					26,644
Effect of foreign exchange rate changes on cash and cash equivalents		(211	)		-					(211	)
Increase in cash and cash equivalents during the period		10,437			-					10,437
Cash and cash equivalents, beginning of period		47,270			-					47,270
Cash and cash equivalents, end of period	$	57,707		$	-				$	57,707

18

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

III. Reconciliation of consolidated statements of cash flows:

For the three months ended June 30, 2009: (in thousands of U.S. dollars)
												Stated in
									Stated in			accordance
	Stated in			Adjustments					accordance			with
	accordance			from U.S. to					with			Canadian
	with U.S.			Canadian					Canadian			GAAP and in
	GAAP			GAAP			Note		GAAP			CAD $
Cash flows from operating activities:
Net loss for the period	$	(732	)	$	(500	)			$	(1,232	)	$	(1,437	)
Add items not affecting cash:
Amortization		286			413		a & b			699			816
Stock-based compensation		299			33			d(i)		332			388
Deferred leasehold inducement		(17	)		-					(17	)		(20	)
Unrealized foreign exchange gain		(1,886	)		-					(1,886	)		(2,202	)
Write-off of property and equipment		5			-					5			5
Changes in operating assets and liabilities:
Accounts receivable		3			-					3			3
Prepaid expenses and other assets		328			-					328			384
Accounts payable and accrued liabilities		(1,676	)		-					(1,676	)		(1,956	)
Deferred revenue		50,589			-					50,589			59,044
Net cash provided by operating activities		47,194			(54	)				47,140			55,020
Cash flows from investing activities:
Purchase of property and equipment		(33	)		-					(33	)		(39	)
Purchase of intangible asset		(54	)		54			a		-			-
Net cash used in investing activities		(87	)		-					(33	)		(39	)
Cash flows from financing activities:
Issuance of common stock upon exercise of stock options		276			-					276			322
Net cash provided by financing activities		276			-					276			322
Effect of foreign exchange rate changes on cash and cash equivalents		3,710			-					3,710			2,207
Increase in cash and cash equivalents during the period		51,093			-					51,093			57,510
Cash and cash equivalents, beginning of period		19,436			-					19,436			24,515
Cash and cash equivalents, end of period	$	70,529		$	-				$	70,529		$	82,025

19

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

III. Reconciliation of consolidated statements of cash flows:

For the six months ended June 30, 2009: (in thousands of U.S. dollars)
												Stated in
									Stated in			accordance
	Stated in			Adjustments					accordance			with
	accordance			from U.S. to					with			Canadian
	with U.S.			Canadian					Canadian			GAAP and in
	GAAP			GAAP			Note		GAAP			CAD $
Cash flows from operating activities:
Net loss for the period	$	(9,976	)	$	(923	)			$	(10,899	)	$	(13,475	)
Add items not affecting cash:
Amortization		567			800		a & b			1,367			1,648
Stock-based compensation		644			35			d(i)		679			820
Deferred leasehold inducement		(58	)		-					(58	)		(71	)
Unrealized foreign exchange gain		(2,038	)		-					(2,038	)		(2,391	)
Changes in operating assets and liabilities:
Accounts receivable		(197	)		-					(197	)		(246	)
Prepaid expenses and other assets		(86	)		-					(86	)		(132	)
Accounts payable and accrued liabilities		(2,510	)		-					(2,510	)		(2,995	)
Deferred revenue		50,589			-					50,589			59,044
Net cash provided by operating activities		36,935			(88	)				36,847			42,202
Cash flows from investing activities:
Purchase of property and equipment		(34	)		-					(34	)		(40	)
Purchase of intangible asset		(88	)		88			a		-			-
Net cash used in investing activities		(122	)		-					(34	)		(40	)
Cash flows from financing activities:
Issuance of common stock upon exercise of stock options		276			-					276			322
Net cash provided by financing activities		276			-					276			322
Effect of foreign exchange rate changes on cash and cash equivalents		2,945			-					2,945			2,399
Increase in cash and cash equivalents during the period		40,034			-					40,034			44,883
Cash and cash equivalents, beginning of period		30,495			-					30,495			37,142
Cash and cash equivalents, end of period	$	70,529		$	-				$	70,529		$	82,025

(i)

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CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)

(Prepared in accordance with U.S. GAAP)

As at and for the three and six months ended June 30, 2010 and 2009

12. Reconciliation of Generally Accepted Accounting Principles (continued):

IV. Reconciliation of U.S. GAAP to Canadian GAAP - Notes:

(a)   Patents

Under U.S. GAAP, patent costs related to internally generated assets developed from research activities are capitalized and amortized on a straight line basis over the estimated useful life of the patent. Under Canadian GAAP, these costs are expensed as incurred.

(b)  In-process research and development:

Under U.S. GAAP, the Company’s acquired license for a clinical-stage drug candidate is classified as in-process research and development and written off immediately as it has no alternative use.  Under Canadian GAAP, in-process research and development is amortized over its estimated useful life.

(c)  Preferred shares:

Under U.S. GAAP, the Series A convertible preferred shares contain an embedded beneficial conversion feature of $446 in favor of CR Intrinsic Investments, LLC (the holder). The beneficial conversion feature represents the difference between the conversion price and the fair value of the Company’s common stock on the commitment date, which was also the issuance date.  Under U.S. GAAP, the beneficial conversion feature was measured at its intrinsic value at the date of issuance of the shares and was recognized as a return to the preferred shareholders through a charge to deficit, over the period from the date of issuance to October 25, 2008, which was the earliest date when the conversion became exercisable by the holder. The beneficial conversion feature of $446 was fully amortized in 2008.

(d)  Stock-based compensation:

(i) The amount of stock-based compensation expense for U.S. GAAP purposes differs from the amount for Canadian GAAP purposes, representing the impact of estimated employee award forfeitures. Under U.S. GAAP, the Company estimates forfeitures for unvested options as a percentage of stock-based compensation.  Under Canadian GAAP, no estimate forfeitures of unvested options are made. Instead, forfeitures are recorded when they occur.

(ii) Under U.S. GAAP, cashless exercises of stock options have been recorded in share capital at their grant-date fair value. Under Canadian GAAP, the Company accounted for the 192,551 shares not issued on exercise of the options as a deemed re-purchase of these shares at the market value on the date of exercise and recognized $227, being the excess of their carrying value over the deemed cost, as a debit to contributed surplus.

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