40-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

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

OR

xANNUAL REPORT PURSUANT TO SECTION 13(A) OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016 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)

2834

(Primary Standard Industrial Classification Code Number (if applicable))

Not Applicable

(I.R.S. Employer Identification Number (if applicable))

1441 Creekside Drive, 6^th Floor
Vancouver, British Columbia, Canada V6J 4S7
(604) 677-6905

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

CT Corporation

111 Eighth Avenue

New York, New York 10011

(212) 894-8940

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

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, no par value	Nasdaq Stock Market

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

None

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:

xAnnual Information Form x Audited Annual Financial Statements

Indicate the 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:

The Registrant had 31,884,420 Common Shares outstanding as at December 31, 2016.

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  x             No  ¨

Indicate by check mark whether registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes  x             No  ¨

A. Disclosure Controls and Procedures

Disclosure controls and procedures are defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by the Securities and Exchange Commission (the “Commission”) as those controls and other procedures that are designed to ensure that information required to be disclosed by the Registrant in reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Registrant’s reports and filings is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Registrant’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Registrant’s disclosure controls and procedures and have concluded that such disclosure controls and procedures were effective as at December 31, 2016. See “Disclosure Controls and Procedure” in Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2016, filed as Exhibit No. 1.3 to this Annual Report on Form 40-F.

B. Management’s Annual Report on Internal Control over Financial Reporting

The Registrant’s management, including its Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) and has designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

The Registrant’s management has evaluated the design and operation of its internal control over financial reporting as of December 31, 2016 and has concluded that such internal control over financial reporting was effective as of December 31, 2016. This assessment was based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. See “Internal Control over Financial Reporting” in Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2016, filed as Exhibit No. 1.3 to this Annual Report on Form 40-F.

C. Attestation Report of the Registered Public Accounting Firm

The attestation report of KPMG LLP (the “Independent Auditors”), the Registrant's Independent Registered Public Accounting Firm, on management's assessment of the Registrant's internal control over financial reporting is included in the "Report of Independent Registered Public Accounting Firm" that accompanies the Registrant's Audited Consolidated Financial Statements for the fiscal year ended December 31, 2016, filed as Exhibit 1.2 to this Annual Report on Form 40-F.

D. Changes in Internal Control over Financial Reporting

There were no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this Annual Report on Form 40-F that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

E. Notice of Pension Fund Blackout Period

The Registrant was not required by Rule 104 of Regulation BTR to send any notice to any of its directors or executive officers during the fiscal year ended December 31, 2016.

F. Audit Committee Financial Expert

The Board has determined that Mr. Arthur H. Willms is an audit committee financial expert within the meaning of General Instruction B(8)(b) of Form 40-F under the Exchange Act. Mr. Willms is “independent” within the meaning of Rule 10A-3 under the Exchange Act and the listing standards of the Nasdaq Stock Market (“Nasdaq”).

The Commission has indicated that the designation or identification of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose any duties, obligations or liability on such person that are greater than those imposed on members of the Audit Committee and the Board who do not carry this designation or identification, or affect the duties, obligations or liability of any other member of the Audit Committee or the Board.

G. Code of Ethics

The Registrant’s code of ethics, the “Code of Business Conduct and Ethics”, is applicable to all of its employees including the Chief Executive Officer, Chief Financial Officer, other senior officers and members of the Board. The Code of Business Conduct and Ethics can be viewed on the Registrant’s website at www.cardiome.com under “Investors – Overview – Corporate Governance”.

H. Principal Accountant Fees and Services

(all amounts are in Canadian dollars unless otherwise indicated)

Audit Fees

The aggregate fees billed by the Independent Auditors for professional services rendered for the audit of the Registrant’s annual financial statements, including services related thereto and services provided in connection with the statutory and regulatory filings for those fiscal years, were $574,500 for the fiscal year ended December 31, 2016 and $583,300 for the fiscal year ended December 31, 2015.

Audit-Related Fees

The aggregate fees billed by the Independent Auditors for assurance and related services that are reasonably related to the performance of the audit or review of the Registrant’s financial statements and are not reported as “Audit Fees” were $45,200 for the fiscal year ended December 31, 2016 for services related to a Swiss limited statutory examination and $nil for the fiscal year ended December 31, 2015.

Tax Fees

The aggregate fees billed by the Independent Auditors for professional services rendered for tax compliance, tax advice and tax planning were $nil for the fiscal year ended December 31, 2016 and $42,200 for the fiscal year ended December 31, 2015 for services related to income tax compliance and advice.

All Other Fees

The aggregate fees billed by the Independent Auditors for services other than those reported in the preceding three paragraphs were $nil for the fiscal year ended December 31, 2016 and $nil for the fiscal year ended December 31, 2015.

Audit Committee Pre-Approval Policies and Procedures

All audit and non-audit services performed by the Independent Auditors for the fiscal year ended December 31, 2016 were pre-approved by the Audit Committee of the Registrant. It is the Registrant’s policy that all audit and non-audit services performed by the Independent Auditors will continue to be pre-approved by the Audit Committee.

I. Off-Balance Sheet Arrangements

The Registrant does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on its results of operations, financial condition, changes in financial condition, revenues or expenses, liquidity, capital expenditures or capital resources that is material to investors.

J. Tabular Disclosure of Contractual Obligations

See “Contractual Obligations” in Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2016, filed as Exhibit 1.3 to this Annual Report on Form 40-F.

K. Identification of Audit Committee

The Registrant has established a separately-designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act. Each of the following directors serves on the audit committee: Arthur H. Willms, Richard M. Glickman, and W. James O'Shea. The Board has determined that all of the members of the Audit Committee are “independent” within the meaning of Rule 10A-3 under the Exchange Act and the listing standards of the Nasdaq. See “Directors and Executive Officers” and “Audit Committee Information” in the Registrant’s Annual Information Form for the fiscal year ended December 31, 2016, which is filed as Exhibit 1.1 to this Annual Report on Form 40-F.

L. Nasdaq Exemption

On April 12, 2004, the Registrant informed the Nasdaq that, as permitted by Rule 4350(a)(1) of the Nasdaq Marketplace Rules, it intended to follow federal Canadian practice with respect to quorum requirements in lieu of those required by Rule 4350(f) of the Nasdaq Marketplace Rules (which provides that a quorum for a shareholder meeting of a Nasdaq-listed company must be at least 33-1/3% of the outstanding common shares of the company). The Registrant’s by-laws provide that the minimum quorum for a meeting of shareholders of common shares is two or more shareholders representing at least 20% of the common shares entitled to vote at the meeting. The Registrant’s quorum requirements are not prohibited by the requirements of the Business Corporations Act (Canada) and the Registrant intends to continue to comply with the requirements of the Business Corporations Act (Canada). The rules of the Toronto Stock Exchange, upon which the common shares are also listed, do not contain specific quorum requirements.

M. Interactive Data File

The Registrant has submitted to the Commission in Exhibit 101 to this Form 40-F, and concurrently posted on its corporate website, an Interactive Data File.

N. Disclosures Under the Iran Threat Reduction and Syria Human Rights Act of 2012

The Registrant is a global, innovation-driven pharmaceutical business with worldwide operations (directly and through distributors). Prior to the acquisition of Correvio LLC (“Correvio”), the Registrant did not have operations in the United States and was not subject to U.S. export controls and economic sanctions regulations, such as those instituted by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). Correvio, however, does have operations in the United States, and in 2012 it voluntarily reported to OFAC that it had made inadvertent sales of AGGRASTAT®, which treats chest pain and certain heart conditions, into Iran by a third-party Lebanese distributor, and paid reimbursement costs to another third-party Iranian distributor. Along with the voluntary report, Correvio applied for a specific license to sell AGGRASTAT® through specified intermediaries and distributors into certain hospitals in Iran. Although OFAC has not yet acted on the voluntary report, OFAC did grant Correvio the requested license. The Registrant (or any of its subsidiaries) may generate revenue in the future by way of sales into sanctioned countries (e.g., Iran, Syria and Russia) as permitted by OFAC under general or specific licenses.

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A. Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities in relation to which the obligation to file an annual report on Form 40-F arises or transactions in said securities.

B. Consent to Service of Process

The Registrant has previously filed with the Commission a written irrevocable consent and power of attorney on Form F-X in connection with its common shares. Any change to the name or address of the agent for service of process shall be communicated promptly to the Commission by an amendment to the Form F-X.

EXHIBITS

The following exhibits are filed as part of this report:

Exhibit No.	Description
1.1	Annual Information Form for the fiscal year ended December 31, 2016.
1.2	Audited Consolidated Financial Statements for the fiscal year ended December 31, 2016.
1.3	Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2016.
23.1	Consent of KPMG LLP.
31.1	Certifications of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data File.

Exhibits 1.1, 1.2 and 1.3 are incorporated by reference into the Registration Statement on Form F-10 of the Registrant (File No. 333-209606), and the Registration Statements on Form S-8 of the Registrant (File No. 333-199091 and File No. 333-199092). 

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.

Date: March 28, 2017

CARDIOME PHARMA CORP.
By:	/s/ William Hunter
	Name: William Hunter
	Title: President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
1.1	Annual Information Form for the fiscal year ended December 31, 2016.
1.2	Audited Consolidated Financial Statements for the fiscal year ended December 31, 2016.
1.3	Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2016.
23.1	Consent of KPMG LLP.
31.1	Certifications of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data File.

Exhibits 1.1, 1.2 and 1.3 are incorporated by reference into the Registration Statement on Form F-10 of the Registrant (File No. 333-209606), and the Registration Statements on Form S-8 of the Registrant (File No. 333-199091 and File No. 333-199092). 

EX-1.1

Exhibit 1.1

 

CARDIOME PHARMA CORP.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2016

March 28, 2017

TABLE OF CONTENTS

	Page
REFERENCE INFORMATION	2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	2
CORPORATE STRUCTURE	6
GENERAL DEVELOPMENT OF THE BUSINESS	7
Three Year History	7
narrative description of the business	10
General	10
Summary of Our Products and Product Candidates	11
Our Strategy	11
Our Products and Product Candidates	12
Production Methods and Components	18
Specialized Skill and Knowledge	18
Foreign Operations	18
U.S. Export Controls and Economic Sanctions	18
Competition	18
Patents and Proprietary Protection	19
Regulatory Environment	19
Employees	23
RISK FACTORS	23
dividends AND DISTRIBUTIONS	39
CAPITAL structure	39
MARKET FOR SECURITIES	40
Prior Sales	40
DIRECTORS AND EXECUTIVE OFFICERS	41
CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS	45
conflicts of interest	46
AUDIT COMMITTEE INFORMATION	46
legal proceedings AND REGULATORY ACTIONS	47
interest of management and others in material transactions	47
transfer agents and registrars	48
material contracts	48
interests of experts	48
ADDITIONAL INFORMATION	49
SCHEDULE “A” AUDIT committee MANDATE	50

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CARDIOME PHARMA CORP.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2016

March 28, 2017

REFERENCE INFORMATION

In this annual information form, a reference to the “Corporation”, “Company”, “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 “$” are to U.S. dollars, unless otherwise indicated. All references to “Cdn.$” are to Canadian dollars. On March 27, 2017, the exchange rate for conversion of U.S. dollars into Canadian dollars was $1.00 = Cdn.$1.3368 based upon the Bank of Canada noon rate.

Unless otherwise stated, the information set forth in this annual information form is as of December 31, 2016.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements and information in this annual information form are not based on historical facts and constitute forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation (“forward-looking statements”), including, without limitation, statements containing the words “believe”, “may”, “plan”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect” and similar expressions.

Forward-looking statements are necessarily based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate. Forward-looking statements in this annual information form include but are not limited to statements relating to:

· our intention to expand the indications for which we may market AGGRASTAT^®;

· our expected commercialization of XYDALBA^TM in Belgium, Nordic nations, Canada, certain other European countries and select countries in the Middle East;

· our plans to develop and commercialize product candidates and the timing of these development programs;

· the expected commercialization of BRINAVESS^TM in Canada;

· whether we will receive, and the timing and costs of obtaining, regulatory approvals in the United States, Canada, Europe and other countries;

· our intended use of proceeds raised from equity and debt financings;

· the cost of post-market regulation if we receive necessary regulatory approvals;

· our ability to meet certain revenue milestones under the Term Loan Agreement with CRG (as defined below);

· clinical development of our product candidates, including the results of current and future clinical trials;

· our ability to enroll patients in our clinical trials;

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· the benefits and risks of our product candidates as compared to others;

· our maintenance and establishment of intellectual property rights in our product candidates;

· our need for additional financing and our estimates regarding our capital requirements and future revenues and profitability;

· our estimates of the size of the potential markets for our product candidates;

· our selection and licensing of product candidates;

· our potential relationships with distributors and collaborators with acceptable development, regulatory and commercialization expertise and the benefits to be derived from such collaborative efforts;

· our distributors’ and licensees’ compliance with the terms of their agreements and with relevant regulations and licenses;

· sources of revenues and anticipated revenues, including contributions from distributors and collaborators, product sales, license agreements and other collaborative efforts for the development and commercialization of product candidates;

· our creation and maintenance of an effective direct sales and marketing infrastructure for approved products we elect to market and sell directly;

· our creation and maintenance of an effective logistics infrastructure for supply and delivery of our approved products;

· the rate and degree of market acceptance of our products;

· the pricing of our products;

· whether we will receive and the timing and amount of reimbursement for our products;

· the success and pricing of other competing therapies that may become available;

· our retention and hiring of qualified employees in the future;

· the manufacturing capacity of third-party manufacturers for our product candidates;

· our ability to negotiate and maintain third-party manufacturing and supply contracts and the party’s performance under contract;

· our ability to maintain or reduce third-party manufacturing costs;

· the competition we face from other companies, research organizations, academic institutions and government agencies, and the risks such competition pose to our products;

· the confidential information we possess about patients, customers and core business functions, and the information technologies we use to protect it;

· our intention to continue directing a significant portion of our resources into international sales expansion;

· our ability to get our products approved for use in hospitals; and

· government legislation in all countries in which we already, or hope to, sell our products, and its effect on our ability to set prices, enforce patents and obtain product approvals or reimbursements.

Such forward-looking statements reflect our current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies, many of which, with respect to future events, are subject to change. The factors and assumptions used by us to develop such forward-looking statements include, but are not limited to, the assumption that we will be able to reach agreements with regulatory agencies on executable development programs, the assumption that recruitment to clinical trials will continue at rates similar to our completed trials, the assumption that the regulatory requirements, including patient exposure, for approval of marketing authorization applications/new drug approvals will be maintained, the assumption that genericisation of markets for AGGRASTAT^® will proceed according to estimates, the assumption that the time required to analyze and report the results of our clinical studies will be consistent with past timing, the assumption that market data and reports reviewed by us are accurate, the assumption that our current good relationships with our suppliers and service providers will be maintained, the assumptions relating to the availability of capital on terms that are favourable to us and the assumptions relating to the feasibility of future clinical trials.

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By their very nature, forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, events or developments, or industry results, to be materially different from any future results, events or developments expressed or implied by such forward-looking statements or information. In evaluating these forward-looking statements, prospective purchasers should specifically consider various factors, including the risks outlined under the heading “Risk Factors” in the annual information form. Specifically, certain risks and uncertainties that could cause such actual events or results expressed or implied by such forward-looking statements and information to differ materially from any future events or results expressed or implied by such statements and information include, but are not limited to, the risks and uncertainties related to the fact that:

· we will have significant additional future capital needs and there are uncertainties as to our ability to raise additional funding;

· we have a history of significant losses and a significant accumulated deficit;

· we have a history of negative operating cash flow and may continue to experience negative operating cash flow;

· we may not realize the anticipated benefits of past or future acquisitions or product licenses and integration of these acquisitions and any products acquired or licensed may disrupt our business and management;

· if we are unable to make our regularly scheduled payments under our term loan, we could have a covenant violation;

· we are subject to certain restrictive covenants;

· we are dependent on two products for substantially all of our current revenues;

· we are exposed to generic product risk which may result in a decline in sales of AGGRASTAT^®;

· we have substantial competition in the life sciences industry and with respect to our products;

· we are subject to the risks associated with product liability claims, insurance and recalls;

· we rely on third parties for the supply and manufacture of our products, which can be unpredictable in terms of quality, cost and availability;

· we rely on our supply chain and the supply chain of third parties to provide our products, and supply chains may fail due to inadequacies in their systems and processes, in execution and for unforeseen reasons;

· we rely on third parties for the execution of a significant portion of our regulatory, pharmacovigilance, medical information and logistical responsibilities and such third parties may fail to meet their obligations as a result of inadequacies in their systems and processes or execution failure;

· we rely on third party distributors in many markets to sell our products and such third parties may fail to meet their obligations;

· government legislation could adversely impact our ability to obtain product reimbursement and economically price our products and may be difficult to interpret or comply with, resulting in additional costs to conduct our business in certain countries;

· compulsory licensing and/or generic competition may affect our business in certain countries;

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· if we are not able to convince public payors and hospitals to include our products on their approved formulary lists, our revenues may not meet expectations and our business, results of operations and financial condition may be adversely affected;

· our hospital customers may be late in their payments and in some cases may not pay monies owed;

· our business may be materially adversely affected by new legislation, new regulatory requirements, and the continuing efforts of governmental and third party payors to contain or reduce the costs of healthcare through various means;

· we rely on proprietary technology, the protection of which can be unpredictable and costly;

· there may be an unauthorized disclosure of a significant amount of confidential information under our control;

· clinical trials for our product candidates are expensive and time-consuming, and their outcome is uncertain;

· 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 trials or in the commercial setting;

· our industry is subject to health and safety risks;

· our approved products may not achieve or maintain expected levels of market acceptance;

· we are dependent upon our key personnel to achieve our business objectives;

· we are exposed to concentration of credit risk relating to major distribution relationships and customers in certain geographic regions;

· our policies and estimates regarding returns, allowances and chargebacks may reduce revenue in future periods;

· our inventory has a limited shelf life and may require write-downs;

· we are exposed to risks relating to the write-down of intangible assets, which comprises a significant portion of our total assets;

· we may face exposure to adverse movements in foreign currency exchange rates;

· if we were to lose our foreign private issuer status under United States federal securities laws, we would likely incur additional expenses associated with compliance with the United States securities laws applicable to United States domestic issuers;

· we are subject to risks inherent in foreign operations;

· there are uncertainties with respect to data protection laws in Europe;

· failure to comply with the United States Foreign Corrupt Practices Act (the “FCPA”), as well as the anti-bribery laws of the nations in which we conduct business (such as the United Kingdom’s Bribery Act or the Corruption of Foreign Public Officials Act of Canada) (the “CFPOA”) could subject us to penalties and other adverse consequences;

· legislative actions, potential new accounting pronouncements, and higher insurance costs are likely to impact our future financial position or 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;

· any of our product candidates that receive regulatory approval could be subject to extensive post-market obligations that can affect sales, marketing and profitability;

· obtaining regulatory approval in the European Union does not ensure we will obtain regulatory approval in other countries; and

· our business depends heavily on the use of information technologies.

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Other factors are described in detail in this annual information form and our filings with the United States Securities and Exchange Commission (the “SEC”) (available through the SEC’s Electronic Document Gathering and Retrieval System (“EDGAR”) at http://www.sec.gov) and the Canadian securities regulatory authorities (available on the Canadian Securities Administrators System for Electronic Document Analysis and Retrieval (“SEDAR”) at http://www.sedar.com).

Should one or more of these risks or uncertainties or a risk that is not currently known to us materialize, or should assumptions underlying those forward-looking statements prove incorrect, actual results may vary materially from those described herein. These forward-looking statements are made as of the date of this annual information form and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law. Investors are cautioned that forward-looking statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward-looking statements due to their inherent uncertainty.

In addition to the disclosure contained in this annual information form, readers are encouraged to review our Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2016, 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 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 (the “CBCA”) and effected a four-to-one share consolidation. On March 1, 2009, we amalgamated with Cardiome Research and Development (Barbados), Inc. (previously our wholly-owned subsidiary). On March 20, 2009, we registered under the Business Corporations Act (British Columbia) as an extra-provincial company. On April 9, 2013, we effected a five-to-one share consolidation of our common shares and began trading on a post-consolidation basis on April 12, 2013. Our common shares trade on the Toronto Stock Exchange (the “TSX”) under the symbol “COM” and on the NASDAQ Stock Market (the “NASDAQ”) under the symbol “CRME”.

The following table lists the principal subsidiaries of Cardiome and their jurisdictions of incorporation or organization. All such entities are 100% owned, directly or indirectly, by Cardiome:

Subsidiary Name	Jurisdiction of Incorporation or Organization
Cardiome International SA	Switzerland
Cardiome UK Limited	United Kingdom
Correvio LLC	Delaware, U.S.A.
Correvio International S.a.r.l.	Switzerland
Correvio (UK) Ltd.	United Kingdom

Our registered office is located at Suite 2600, 595 Burrard Street, Three Bentall Centre, Vancouver, British Columbia, Canada, V7X 1L3 and our head office and principal place of business are located at 1441 Creekside Drive, 6^th Floor, Vancouver, British Columbia, Canada, V6J 4S7.

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GENERAL DEVELOPMENT OF THE BUSINESS

We are a specialty pharmaceutical company dedicated to offering patients and healthcare providers innovative therapeutic options that effectively, safely, and conveniently manage acute medical conditions to improve health and quality of life. We strive to find innovative, differentiated medicines that provide therapeutic and economic value to patients, physicians and healthcare systems. We currently have two marketed, in-hospital cardiology products, BRINAVESS^TM and AGGRASTAT^®, which are commercially available in markets outside of the United States. We have licensed an approved antibiotic, XYDALBA^TM (dalbavancin) that we launched in Germany and the United Kingdom in the fourth quarter of 2016 and in France in the first quarter of 2017. We expect to commercialize in Belgium, Nordic nations, Canada, certain other European countries and select countries in the Middle East over time. In addition, we have also licensed commercialization rights to a pre-registration drug/device combination product, TREVYENT^®, for the treatment of pulmonary arterial hypertension (“PAH”) in certain regions outside the United States and commercialization rights to cardiology products ESMOCARD^® and ESMOCARD LYO^® (esmolol hydrochloride) in certain European countries.

Three Year History

Acquisition of Correvio

On November 18, 2013, we completed the acquisition of Correvio LLC (“Correvio”), a privately held pharmaceutical company headquartered in Geneva, Switzerland, focused on the worldwide marketing, excluding the United States, of AGGRASTAT^®, a branded prescription pharmaceutical. We acquired 100% of Correvio in exchange for 19.9% of our outstanding common shares (pro forma ownership of approximately 16.6%) and a deferred cash consideration of $12.0 million. The deferred cash consideration is being repaid monthly at an amount equal to 10% of cash receipts from product sales and any applicable interest accrued at 10% compounded annually. The deferred cash consideration must be repaid in full by December 1, 2019. The Company filed a business acquisition report on Form 51-102F4 dated January 29, 2014 in respect of the acquisition of Correvio.

Prospectus Offerings

On February 18, 2014, we filed a prospectus supplement in each of the provinces of Canada, other than Québec, and the United States to qualify and register the distribution of common shares for aggregate gross proceeds of up to $8.9 million in “at the market” distributions effected from time to time pursuant to an At Market Issuance Sales Agreement (the “Sales Agreement”) that we entered into on the same day with MLV & Co. LLC (“MLV”) as agent. We did not issue any common shares under the Sales Agreement for the year ended December 31, 2016. During the year ended December 31, 2015, we issued 554,247 of our common shares under the Sales Agreement for gross proceeds of $5.3 million.

On March 11, 2014, we completed a prospectus offering of 1,500,000 common shares from treasury at Cdn.$10.00 per common share for net proceeds of Cdn.$12.4 million.  Additionally, 1,500,000 common shares were sold in a secondary offering from CarCor Investment Holdings LLC (“CarCor”), the shareholder from which we purchased Correvio, at Cdn.$10.00 per common share. We did not receive any of the proceeds of the sale of common shares by CarCor.  This short form prospectus offering was made on a bought deal basis pursuant to an underwriting agreement with Canaccord Genuity Corp., acting as sole bookrunner and co-lead underwriter, and Cormark Securities Inc., acting as co-lead underwriter.

Senior Secured Term Loan Facility

On July 18, 2014, we announced the closing of the term loan facility with MidCap Financial, LLC (“Midcap”) for up to $22.0 million in two tranches bearing interest at a rate of LIBOR plus 8%. The first tranche of $12.0 million was drawn and was used for working capital and general corporate purposes. The second tranche of up to $10.0 million was available to support a product or company acquisition. The second tranche was never drawn. The Term Loan Facility carried a term of 48 months and was secured by substantially all of our assets. We extinguished this term loan facility with Midcap on June 13, 2016.

Board and Management

On February 16, 2015, we announced the resignation of Karim Lalji as Chief Commercial Officer. On June 1, 2015, we announced the appointment of David Dean as Vice President, Investor Relations and Business Development. On June 22, 2015, we announced the resignation of Robert W. Rieder and Peter W. Roberts from the board of directors and announced the appointment of Arthur H. Willms and Mark H. Corrigan to the board of directors. On September 8, 2015, we announced the addition of Robert James Meyer to our board of directors.

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Commercialization Agreement for ESMOCARD^® and ESMOCARD LYO^®

On May 12, 2015, we entered into a Commercialization Agreement with AOP Orphan Pharmaceuticals AG (“AOP”) to sell AOP’s cardiovascular products, ESMOCARD^® and ESMOCARD LYO^® (esmolol hydrochloride) in Italy, France and Belgium. The addition of the ESMOCARD^® franchise increases our offering of cardiovascular products in these countries.

Exclusive License and Supply Agreement with SteadyMed Ltd. for TREVYENT^®

On June 28, 2015, we entered into an Exclusive License and Supply Agreement with SteadyMed Ltd. (“SteadyMed”) to commercialize TREVYENT^® in Europe, Canada and the Middle East. We made an upfront payment of $3.0 million upon execution of the agreement.

United Kingdom BRINAVESS^TM Pricing Approval

On August 10, 2015, we announced that the Secretary of State for the U.K. Department of Health approved pricing for BRINAVESS^TM. The approved amount represents a maximum price per vial of BRINAVESS^TM in the United Kingdom. It is consistent with pricing in other territories and our economic forecasts. Pricing approval is a step on the path to formulary coverage.

Prospectus Offering

On August 13, 2015, we completed an offering of 2,875,000 common shares at $8.00 per common share for gross proceeds of $23.0 million. We used the net proceeds for business development and growth opportunities, including potential product licensing opportunities, the advancement of our business objectives, and working capital and general corporate purposes. The majority of proceeds were put toward selling, general and administration (“SG&A”) expenses.

Co-Promotion Agreement with Mitsubishi Tanabe Pharma Europe

On September 30, 2015, we entered into a Co-Promotion Agreement with Mitsubishi Tanabe Pharma Europe Ltd. (“MTPE”), a subsidiary of Mitsubishi Tanabe Pharma Corporation headquartered in Japan, to co-promote Cardiome’s AGGRASTAT^® and MTPE’s EXEMBOL^® (argatroban monohydrate) in the United Kingdom. Cardiome and MTPE will co-promote the two products, thereby leveraging the existing sales force and investments in this market for an initial term of three years.

New Drug Submission for Intravenous Vernakalant with Health Canada

On December 22, 2015, we announced the filing of a New Drug Submission (“NDS”) with Health Canada’s Therapeutic Products Directorate (the “TPD”) seeking Canadian approval of vernakalant (IV) for the rapid conversion of recent onset atrial fibrillation (“AF”) to sinus rhythm in adults with AF for up to seven days. Following completion of screening in May 2016, the TPD initiated a detailed review of the NDS. On March 14, 2017, we announced that BRINAVESS^TM received a Notice of Compliance from Health Canada which enables us to begin commercializing BRINAVESS^TM in Canada.

Centralized Review of TREVYENT^® by the European Medicines Agency

On January 6, 2016, we announced that the European Medicines Agency (the “EMA”) has approved our request to review TREVYENT^® under the Centralised Authorisation Procedure drug review process. This procedure results in a single marketing authorization that is valid in all 28 European Union countries as well as three European Economic Area countries.

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Base Shelf Prospectus Filings

On March 1, 2016, we filed a short form base shelf prospectus with the securities regulatory authorities in Canada, other than Quebec, and the SEC in the United States under a registration statement on Form F-10 (together, the “Base Shelf Prospectuses”). The Base Shelf Prospectuses provide for the potential offering in Canada and the United States of up to an aggregate of $250.0 million of our common shares, preferred shares, debt securities, warrants, subscription receipts and units from time to time over a 25-month period.

Purchase Agreement

We filed a prospectus supplement on January 12, 2016 pertaining to sales under a Purchase Agreement dated January 12, 2016 (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”). We may terminate the Purchase Agreement at any time, at our sole discretion, without any monetary cost or penalty to us upon one business day’s written notice to LPC. Under the terms of the agreement, LPC will not cause or engage, in any manner whatsoever, any direct or indirect short selling or hedging of our common shares and is obligated to purchase our common shares at such times and in such amounts as determined by us in accordance with the terms and conditions of the Purchase Agreement.  In consideration for entering into the agreement, we issued 48,856 common shares to LPC as a commitment fee. We plan to use the net proceeds, if any, for general corporate purposes. In connection with the filing of the Base Shelf Prospectuses, we filed a new prospectus supplement pertaining to the Purchase Agreement on March 7, 2016.

Amendment to the Purchase Agreement

On December 22, 2016, we filed an amendment to our prospectus supplement dated March 7, 2016 to the Base Shelf Prospectuses in connection with an amendment to the Purchase Agreement with LPC.

Under the terms of the amended Purchase Agreement, we may sell to LPC, at our sole discretion from time to time, up to 4,027,453 common shares for an aggregate offering amount of up to $20.0 million until December 31, 2018, subject to the conditions and limitations set forth in the Purchase Agreement. The purchase price of any common shares sold to LPC will be based on the then prevailing market prices of the common shares. We may terminate the Purchase Agreement at any time, at our sole discretion, without any monetary cost or penalty to us upon one business day’s written notice to LPC. Our closing share price must be equal to or greater than $1.00 in order for a purchase to be effected. We plan to use the net proceeds, if any, for general corporate purposes. As of the date of this annual information form, we have sold 160,000 common shares to LPC for gross proceeds of $0.8 million.

Amended and Restated Sales Agreement

We also filed a new prospectus supplement dated March 7, 2016 pertaining to sales under an amended and restated Sales Agreement dated March 7, 2016 with FBR Capital Markets & Co. (“FBR”) and MLV. Under the terms of the amended and restated Sales Agreement, we may sell, from time to time, through “at-the-market” offerings with FBR and MLV as agents, such common shares as would have an aggregate offer price of up to $30.0 million. FBR and MLV, at our discretion and instruction, will use their commercially reasonable efforts to sell the common shares at market prices from time to time. The amended and restated Sales Agreement amends and restates the Sales Agreement. We entered into the amended and restated Sales Agreement only as a result of the acquisition by FBR of MLV. We did not issue any common shares under the amended and restated Sales Agreement for the year ended December 31, 2016.

License Agreement

On May 5, 2016, we announced the execution of a license agreement with Allergan plc (“Allergan”), for the rights to commercialize dalbavancin (branded DALVANCE^® in the United States and XYDALBA^TM in the rest of the world) in the United Kingdom, Germany, France, Denmark, Iceland, Finland, Malta, Norway, Sweden, Belgium, the Netherlands, Luxemburg, Ireland, Switzerland, Canada and certain countries in the Middle East. As consideration for the rights and licenses granted, we made non-refundable payments to Allergan of $13.0 million. Additional non-refundable milestone payments will be due to Allergan upon our achievement of various milestones. Royalty payments may also be due to Allergan based on achievement of pre-determined levels of annual net sales. We began our commercial launch of XYDALBA^TM in the United Kingdom and Germany in the fourth quarter of 2016 and in France in the first quarter of 2017.

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Term Loan Agreement with CRG Servicing LLC

On June 13, 2016, we entered into a term loan agreement (the “Term Loan Agreement”) with CRG Servicing LLC as administrative and collateral agents (“CRG”) among other lenders as parties thereto, for up to $30 million consisting of three tranches bearing interest at 14% per annum (the “CRG Term Loan”). The first tranche of $20 million has been drawn and was used to extinguish existing long-term debt from Midcap and for general corporate purposes. The second and third tranches of $5 million each are available to us if we reach certain revenue milestones, as at December 2016 and June 2017, respectively. We reached the revenue milestone at December 31, 2016 and the second tranche of $5 million is available to us. The loan matures on March 31, 2021. Under the terms of the agreement, an interest-only period is provided such that principal repayment begins in June 2019; interest is payable on a quarterly basis through the full term of the loan. If we meet certain revenue milestones, the interest-only period may be extended such that principal repayment begins in June 2020. We expect to begin principal repayment in June 2019.

We are required to meet certain annual revenue covenants, starting for the year ending December 31, 2016. If the revenue covenants are not met, we may exercise a cure right by issuing additional common shares in exchange for cash or by borrowing subordinated debt in an amount equal to two times the difference between the minimum required revenue and our revenue. The cash received from the cure right would be considered repayment of principal. We were in compliance with this revenue covenant for the year ended December 31, 2016.

Common Share Offering

On July 29, 2016, we closed an underwritten public offering (the “Offering”) of 11,500,000 common shares from treasury, including the underwriters' full exercise of their option to purchase 1,500,000 common shares, at a price to the public of $3.00 per common share, for aggregate gross proceeds of $34.5 million before deducting the underwriting commission and estimated Offering expenses payable by us.

We used some of the net proceeds from the Offering for the payment of the upfront licensing fee pursuant to the exclusive license agreement with Allergan, for the in-licensing of dalbavancin, and for general corporate purposes. Any remaining net proceeds from the Offering will be used for milestone payments related to pricing reimbursements and launches of dalbavancin and for general corporate purposes.

narrative description of the business

General

We are a specialty pharmaceutical company dedicated to offering patients and healthcare providers innovative therapeutic options that effectively, safely, and conveniently manage acute medical conditions to improve health and quality of life. We strive to find innovative, differentiated medicines that provide therapeutic and economic value to patients, physicians and healthcare systems. We currently have two marketed, in-hospital cardiology products, BRINAVESS^TM and AGGRASTAT^®, which are commercially available in markets outside of the United States. We have licensed an approved antibiotic, XYDALBA^TM (dalbavancin) that we launched in Germany and the United Kingdom in the fourth quarter of 2016 and in France in the first quarter of 2017. We expect to commercialize in Belgium, Nordic nations, Canada, certain other European countries and select countries in the Middle East over time. In addition, we have also licensed commercialization rights to a pre-registration drug/device combination product, TREVYENT^®, for the treatment of PAH in certain regions outside the United States and commercialization rights to cardiology products ESMOCARD^® and ESMOCARD LYO^® (esmolol hydrochloride) in certain European countries.

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Summary of Our Products and Product Candidates

BRINAVESS^TM (vernakalant (IV)) was approved in the European Union in September 2010 and is currently registered and approved in approximately 50 countries for the rapid conversion of recent onset AF to sinus rhythm in adults (for non-surgery patients with AF of seven days or less) and for use in post-cardiac surgery patients with AF of three days or less. BRINAVESS^TM is mentioned as a first-line therapy in the European Society of Cardiology AF guidelines for the cardioversion of recent onset AF in patients with no, or minimal/moderate, structural heart disease.

AGGRASTAT^® (tirofiban hydrochloride) is a reversible GP IIb/IIIa inhibitor (an intravenous anti-platelet drug) for use in patients with Acute Coronary Syndrome (“ACS”). AGGRASTAT^® is currently registered and approved in more than 60 countries worldwide. We acquired the marketing rights outside of the United States to AGGRASTAT^® as part of the transaction in which we also acquired Correvio in November 2013.

Both BRINAVESS^TM and AGGRASTAT^® are available commercially outside of the United States either directly through our own sales force in Europe or via our global distributor and partner network. We have a comprehensive global distributor and partner network that allows our products to be commercialized in many countries worldwide.

XYDALBA^TM (dalbavancin) was centrally approved by the EMA in February 2015 as a treatment for Acute Bacterial Skin and Skin Structure Infections in adults. Dalbavancin is commercialized under the trade name XYDALBA^TM in certain countries outside the United States and DALVANCE^® in the United States. Cardiome launched XYDALBA^TM in Germany and the United Kingdom in December 2016 and in France in February 2017.

TREVYENT^® (treprostinil sodium) is a development stage drug product that combines SteadyMed’s PatchPump technology, a drug delivery device, with treprostinil, a vasodilatory prostacyclin analogue to treat PAH. PatchPump is a proprietary, disposable, parenteral drug administration platform that is prefilled and preprogrammed at the site of manufacture.

ESMOCARD^® is indicated for the treatment of supraventricular tachycardia (except for pre-excitation syndromes) and for the rapid control of the ventricular rate in patients with AF or atrial flutter in perioperative, postoperative, or other circumstances where short-term control of the ventricular rate with a short-acting agent is desirable. ESMOCARD^® is also indicated for tachycardia and hypertension occurring in the perioperative phase and non-compensatory sinus tachycardia where, in the physician’s judgement, the rapid heart rate requires specific intervention. ESMOCARD^® is not intended for use in chronic settings.

Our Strategy

Our core strategy is to offer patients and healthcare providers innovative therapeutic options that effectively, safely, and conveniently manage acute medical conditions to improve health and quality of life. We strive to find innovative, differentiated medicines that provide therapeutic and economic value to patients, physicians and healthcare systems. Key elements of our strategy include:

· Successfully commercializing XYDALBA^TM in currently approved countries and seeking approvals in additional countries. We intend to launch XYDALBA^TM in countries where we have received approval to sell. Initially, we intend to focus our sales efforts on launching XYDALBA^TM in the United Kingdom, Germany and France through our direct sales force. We also intend to commercialize XYDALBA^TM in countries where the product has not yet launched, including the Nordic nations, Belgium, Ireland, and certain European countries, and to pursue approvals and subsequently launch XYDALBA^TM in Canada and select countries in the Middle East.

· Continuing to support the worldwide marketing of AGGRASTAT^®. We intend to continue to sell AGGRASTAT^® in countries where it is presently approved, marketed and reimbursed for as long as these markets are economically viable. Further, we are seeking to expand the indications for which we may market AGGRASTAT^® through extension of the indication statement for AGGRASTAT^® to include “the reduction of major cardiovascular events in patients with acute myocardial infarction (ST-elevated myocardial infarction) intended for primary percutaneous coronary intervention.” AGGRASTAT^® has already been granted this expanded label in some countries.

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· Attaining Approval to Commercialize TREVYENT^® in Europe, Canada and the Middle East. We licensed TREVYENT^® from SteadyMed and anticipate preparing the marketing authorization application dossiers in Europe, Canada and the Middle East in 2017. Cardiome anticipates filing a marketing authorization application in 2017.

· Successfully commercializing BRINAVESS^TM in currently approved countries. We intend to continue to sell BRINAVESS^TM in countries where it is presently approved, marketed and reimbursed. We intend to focus our sales efforts on promoting BRINAVESS^TM product sales in Europe via a fully dedicated direct sales force in Europe. We also intend to seek reimbursement in countries where the product has regulatory approval but has not launched in order to broaden the commercial opportunities for BRINAVESS^TM.

· Successfully obtaining approval for vernakalant worldwide. We intend to seek the approval of the U.S. Food and Drug Administration (the “FDA”) to restart the development program for vernakalant (IV) in the United States (which is currently on clinical hold) and to continue to advance the approval and development of vernakalant (IV) elsewhere. We intend to pursue a regulatory strategy to further develop intravenous vernakalant in order to achieve its maximum potential in the treatment of acute forms of atrial fibrillation.

· Launching ESMOCARD^® in Italy, France and Belgium. We have licensed commercial rights for Italy, France and Belgium from AOP. We anticipate commercializing ESMOCARD^® using our existing infrastructure.

· Expanding our product offering and product pipeline through in-licensing and/or acquisitions. We continuously evaluate in-licensing and acquisition opportunities that complement our product and operational capabilities. At any given time, we may have entered into confidentiality agreements, non-binding letters of intent or may be in the process of conducting due diligence with respect to potential opportunities.  Priority will be given to later-stage or approved product opportunities that could be sold through our existing European in-hospital acute care sales force.

· Building Product Offerings in Canada. We intend to continue to sell AGGRASTAT^® in Canada and to extend the indication to better align AGGRASTAT^®’s Canadian label with its label in Europe, and to more accurately reflect the most recent evidence and actual clinical use, while making the drug more competitive. Further, we intend to build on our Canadian presence through advancing NDS for XYDALBA^TM and TREVYENT^® in Canada. On March 14, 2017, we announced that BRINAVESS^TM received a Notice of Compliance from Health Canada which enables us to begin commercializing BRINAVESS^TM in Canada. We hope to add additional products to our Canadian commercial effort through business development activities.

· Leveraging external resources. We focus our internal resources on those activities that we believe add or create the most value. We maintain a core team of professionals, consultants and staff with the necessary skill base for our operations, and contract out the specialized work required, such as pharmacovigilance, regulatory, medical information systems, commercial manufacturing and distribution to external organizations.

Our Products and Product Candidates

We currently have two marketed, in-hospital cardiology products, BRINAVESS^TM and AGGRASTAT^®, which are commercially available in markets outside of the United States. We have licensed a European-approved antibiotic, XYDALBA^TM (dalbavancin) that we have launched commercially in Germany and the United Kingdom in the fourth quarter of 2016 and in France in the first quarter of 2017. We expect to commercialize in Belgium, Nordic nations, Canada, certain other European countries and select countries in the Middle East over time. In addition, we have also licensed commercialization rights to a pre-registration drug/device combination product, TREVYENT^®, for the treatment of PAH in certain regions outside the United States and commercialization rights to cardiology products ESMOCARD^® and ESMOCARD LYO^® (esmolol hydrochloride) in certain European countries.

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Vernakalant for Atrial Fibrillation

AF is the most common cardiac arrhythmia (abnormal heart rhythm). It is characterized by an erratic and often rapid heart rate where the electrical activity of the heart's two small upper chambers (the atria) are not coordinated, resulting in inefficient pumping of blood and an increased risk of developing a blood clot in the heart, which could lead to embolic stroke. If a blood clot in the atria leaves the heart, enters the circulation, and becomes lodged in an artery in the brain, a stroke may result. Approximately 15% of all strokes occur in people with AF.

The risk of developing AF increases with age. The lifetime risk of developing AF at age 55 has been estimated at 24% in men and 22% in women. In addition, during the past 20 years, there has been a 60% increase in hospital admissions for atrial fibrillation independent of changes in known risk factors. Third party research estimates that 5.5 million patients are treated for atrial fibrillation in the seven leading industrialized nations each year.

Vernakalant is a chemical entity designed by Cardiome’s scientists to treat AF by converting the heart back into normal rhythm and possesses the potential to overcome several limitations of current drugs and devices which are currently utilized to treat AF. Its mechanism of action involves the selective blockade of multiple ion channels in the heart that are known to be active during episodes of AF. The drug is being developed for two potential applications: (a) vernakalant (IV) was developed as an intravenous pharmacological converting agent designed to terminate an atrial fibrillation episode and return the heart to normal rhythm; and (b) vernakalant (oral) is being evaluated as an oral maintenance therapy for the long-term prevention of AF recurrence in patients who have had one or more previous episodes of AF.

BRINAVESS^TM (Vernakalant (IV))

We have exclusive, global development and marketing rights to BRINAVESS^TM, the intravenous formulation of vernakalant, and are responsible for all and future development and commercialization of the product, subject to ongoing transfer of certain rights from Merck, Sharpe & Dohme (“Merck”) and its affiliates. Transfers have been delayed in certain jurisdictions due to routine regulatory requirements.

North America

In December 2006, our former partner, Astellas Pharma US, Inc. (“Astellas”), filed a New Drug Application (“NDA”) for vernakalant with the FDA. In August 2008, 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 was approvable. The letter requested additional information associated with the risk of previously identified events experienced by a subset of patients during the clinical trials as well as a safety update from ongoing or completed studies of vernakalant (IV), regardless of indication, dosage form or dose level. The action letter further indicated that if the response to their requests was not satisfactory, additional clinical studies may be required.

In August 2009, we, together with our former partner Astellas, announced that Astellas would undertake a single confirmatory additional Phase 3 clinical trial (“ACT 5”) under a Special Protocol Assessment. The decision to conduct another trial was reached following extended discussions between Astellas and the FDA to define the best regulatory path forward for vernakalant (IV). ACT 5 began enrolment of recent onset AF patients without a history of heart failure in October 2009.

In October 2010, a clinical hold was placed on the ACT 5 study by the FDA following a single unexpected serious adverse event of cardiogenic shock experienced by a patient with AF who received vernakalant (IV). The ACT 5 study was terminated. The FDA-mandated clinical hold on the vernakalant (IV) program remains in effect in the United States.

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In 2013, when sponsorship of the U.S. Investigational New Drugs (“INDs”) for vernakalant (IV) and vernakalant (oral) and the NDA for vernakalant (IV) were transferred to us from Merck, we initiated discussions with the FDA to determine the next steps for the development of vernakalant (IV) in the United States. The program remains on clinical hold pending agreement of a suitable development path. In pursuit of alternative development scenarios, and after dialogue with the FDA, Cardiome has initiated additional nonclinical studies. Upon completion of these studies, it is Cardiome’s intention to re-engage with the Cardiorenal Division to discuss paths forward.

In December 2015, we announced the filing of a NDS with Health Canada’s Therapeutic Products Directorate (the “TPD”) seeking Canadian approval of vernakalant (IV) for the rapid conversion of recent onset AF to sinus rhythm in adults with AF for up to seven days. Following completion of screening in May 2016, the TPD initiated a detailed review of the NDS. On March 14, 2017, we announced that BRINAVESS^TM received a Notice of Compliance from Health Canada which enables us to begin commercializing BRINAVESS^TM in Canada.

Rest of World (Outside North America)

In April 2009, we entered into two collaboration and license agreements (the “Collaboration Agreements”) with Merck for the development and commercialization of vernakalant. The Collaboration Agreements provided an affiliate of Merck with exclusive rights outside of North America to vernakalant (IV).

Under the terms of the Collaboration Agreements, Merck paid us an initial fee of $60 million. In addition, we were eligible to receive up to an additional $200 million in payments, of which we received $45 million. In July 2009, Merck submitted a Marketing Authorization Application (“MAA”) to the European Medicines Agency (“EMA”) seeking marketing approval for vernakalant (IV) in the European Union. In September 2010, vernakalant (IV) received marketing approval under the trade name BRINAVESS^TM in the European Union, Iceland and Norway. After receipt of marketing approval, Merck began its commercial launch of BRINAVESS^TM in a number of European countries.

In September 2012, Merck gave notice to us of its termination of the Collaboration Agreements. In April 2013 we took responsibility for worldwide sales, marketing, and promotion of vernakalant (IV) and in September 2013 we completed the transfer of commercialization responsibility for BRINAVESS^TM in the European Union and of the responsibility to complete the post-marketing study for BRINAVESS^TM. Since this date, we have been supplying BRINAVESS^TM under our own trade dress.

In September 2013, we entered into an agreement with Merck for the continued transfer of marketing authorizations. On a per country basis, regulatory and commercialization responsibilities have been transferred to us upon agencies’ approvals of marketing authorization transfers. As a result of routine regulatory requirements, the transfers have been delayed in certain jurisdictions.

In December 2014, Eddingpharm (Asia) Macao Commercial Offshore Limited (“Eddingpharm”) acquired rights to develop and commercialize BRINAVESS™ in China, Taiwan, and Macau and to re-launch BRINAVESS^TM in Hong Kong. Eddingpharm will be responsible for any clinical trials and regulatory approvals required to commercialize BRINAVESS™ in the countries covered by the agreement. Under the terms of the agreement, Eddingpharm agreed to an upfront payment of $1 million and specific annual commercial goals for BRINAVESS™. We are also eligible to receive regulatory milestone payments of up to $3 million.

In August 2015, we announced that the Secretary of State for the U.K. Department of Health approved pricing for BRINAVESS^TM. The approved amount represents a maximum price per vial of BRINAVESS^TM in the United Kingdom. It is consistent with pricing in other territories and our economic forecasts. Pricing approval is a step on the path to formulary coverage.

In January and March 2016, we filed MAAs with the Kingdom of Saudi Arabia’s Saudi Food and Drug Authority and the United Arab Emirates’ Ministry of Health, respectively, seeking approval of BRINAVESS^TM.

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Clinical Trials

The clinical effect of BRINAVESS^TM in the treatment of patients with atrial fibrillation has been evaluated in three, randomised, double-blind, placebo-controlled Phase 3 studies (ACT I, ACT II and ACT III) and in an active comparator trial versus intravenous amiodarone. Based on data from 1,203 patients in nine Phase 2 and Phase 3 trials, BRINAVESS^TM has been approved in the European Union, Canada and countries in Central America, South America, Asia and the Middle East for the rapid conversion of recent onset atrial fibrillation to sinus rhythm in adults who have experienced atrial fibrillation for the following periods:

· For non-surgery patients: ≤ 7 days duration

· For post-cardiac surgery patients: ≤ 3 days duration.

In August 2010, Merck initiated a 615 patient Phase 3 Asia Pacific vernakalant (IV) study that was expected to support regulatory applications in additional territories for which marketing approval has not yet been obtained. In 2013, the study was terminated as part of the transfer of rights and responsibilities under the collaboration and license agreements from Merck to us. In November 2014, we announced results from this clinical trial. The study was originally planned to recruit 615 patients, however the study was completed after randomising 123 patients. The study remained sufficiently powered and showed that of the 111 treated patients with recent onset AF lasting three hours to seven days, 53% of those receiving an intravenous dose of BRINAVESSTM converted to normal heart rhythm within 90 minutes, compared to 12% of placebo patients.

Since transfer of rights for BRINAVESS^TM from Merck to Cardiome, in China, our partner Eddingpharm has completed a Phase 1 study and planning is underway for a Phase 3 clinical trial.

In 2011, Merck initiated a 2,000 patient post-approval study for vernakalant (IV). This non-interventional prospective study is a post-authorization safety study of vernakalant (IV) conducted to collect information about normal conditions of use and appropriate dosing, and to quantify possible medically significant risks associated with the use of vernakalant in real-world clinical practice. In 2013, the transfer of this post-approval safety study (“PASS”) from Merck to us was completed. After the transfer, we recognized that the study had enrolled less quickly than initially anticipated and we filed an application to reduce the number of patients required for this study to 1,300. Our application to the EMA was unsuccessful and we are exploring methods to accelerate recruitment of the full complement of patients.

Vernakalant (oral)

Vernakalant (oral) is being developed as an oral maintenance therapy for the long-term prevention of AF recurrence. Two Phase 2 clinical trials have been completed. As part of the Collaboration Agreements, Merck acquired exclusive rights for the development and commercialization of vernakalant (oral). In March 2012, Merck informed us of its decision to discontinue further development and in September 2012, Merck returned global marketing and development rights to us. The IND was transferred to us in 2013. In January 2016, we submitted an application for orphan drug designation for vernakalant (oral) for the prevention of post-operative AF in patients undergoing coronary artery bypass graft surgery to the FDA's Office of Orphan Products Development (the “OOPD”). In June 2016, we received notification from the OOPD that we were unsuccessful with our application.

AGGRASTAT^® for Acute Coronary Syndrome

AGGRASTAT^® contains tirofiban hydrochloride, which is a reversible GP IIb/IIIa inhibitor for use in indicated ACS patients. AGGRASTAT^® is used to help assist the blood flow to the heart and to prevent chest pain and/or heart attacks (both STEMI – ST-elevation myocardial infarction, and NSTE-ACS – non-ST-elevation acute myocardial infarction). It works by preventing platelets, cells found in the blood, from forming into blood clots within the coronary arteries and obstructing blood flow to the heart muscle which can result in a heart attack. The medicine may also be used in patients whose heart vessels are dilated with a balloon (percutaneous coronary intervention), a procedure used to open up blocked or obstructed arteries in the heart in order to improve the blood flow to the heart muscle (myocardium) with or without the placement of a coronary stent. AGGRASTAT^® is administered intravenously, and has been on the market for many years.

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AGGRASTAT^® contains tirofiban hydrochloride, which is a reversible GP IIb/IIIa inhibitor for use in indicated Acute Coronary Syndrome patients. AGGRASTAT^® is used to help assist the blood flow to the heart and to prevent chest pain and/or heart attacks (both STEMI – ST-elevation myocardial infarction, and NONSTEMI – non-ST-elevation myocardial infarction). It works by preventing platelets, cells found in the blood, from forming into blood clots within the coronary arteries and obstructing blood flow to the heart muscle which can result in a heart attack. The medicine may also be used in patients whose heart vessels are dilated with a balloon (percutaneous coronary intervention (“PCI”), a procedure used to open up blocked or obstructed arteries in the heart in order to improve the blood flow to the heart muscle (myocardium)) with or without the placement of a coronary stent. AGGRASTAT^® is administered intravenously, and has been on the market for many years with an excellent safety and efficacy profile.

Cardiome has exclusive global marketing rights to AGGRASTAT^® outside of the United States. Tirofiban hydrochloride was first approved in the United States in 1998, and to date is authorised in more than 70 countries worldwide, including almost all European Union and European Economic Area (“EEA”) member states.

The original indication approved for AGGRASTAT^® was for the management of patients with unstable angina or non-Q-wave myocardial infarction, including patients who may subsequently undergo percutaneous transluminal coronary angioplasty, to decrease the rate of refractory ischemic conditions, new myocardial infarction and death.

Extension of Indication

Since the original approvals of tirofiban hydrochloride, evidence emerged as result of a number of independent studies indicating that a higher degree of platelet inhibition was beneficial for patients in need of an urgent PCI and thus at a high risk for ischaemic events. When PCI is performed urgently, as in high risk non-ST elevation acute coronary syndrome (“NSTE-ACS”) or STEMI patients, platelet inhibition must be achieved rapidly and to a high degree. Consequently, a number of investigator-initiated studies demonstrated the clinical benefit of tirofiban hydrochloride using a high dose bolus (“HDB”) regimen employing a bolus of 25 mcg/kg administered over three minutes followed by a maintenance infusion of 0.15 mcg/kg/min in patients with ACS who undergo PCI early.

The original indication terminology was no longer in common use and described a population of ACS patients including those with unstable angina and NONSTEMI, but not STEMI. Therefore, in the interest of aligning the current label for tirofiban hydrochloride with the most recent evidence and actual clinical use, Correvio extended the therapeutic indication to include treatment of patients with STEMI intended for primary PCI and to add HDB as the appropriate dosing regimen.

In the European Union, a variation for the introduction of the HDB tirofiban hydrochloride regimen and concomitant use of oral antiplatelet drugs was approved in September 2010. The data for the approval of the HDB regimen was derived from independent investigator-initiated studies including patients with UA/NONSTEMI and STEMI. The European Union approval of the indication for patients suffering from STEMI with the intention to undergo primary PCI was granted in October 2013. In Switzerland, a combined variation extending the indication to STEMI patients and recommending the HDB regimen for NSTE-ACS patients undergoing PCI within four hours and STEMI primary PCI patients, was approved by Swiss regulatory authorities in December 2014.

In October 2013, the United States AGGRASTAT^® label was updated to include the HDB posology. At the same time, the indication statement was refined to “AGGRASTAT is indicated to reduce the rate of thrombotic cardiovascular events (combined endpoint of death, myocardial infarction, or refractory ischemia/repeat cardiac procedure) in patients with NSTE-ACS.

Applications for the extension of the indication statement for AGGRASTAT^® are continuing worldwide, most recently with the submission of a supplemental NDS in Canada in July 2015. In September 2015, we entered into an agreement with Mitsubishi Tanabe Pharma Europe Ltd. (“MTPE”), a subsidiary of Mitsubishi Tanabe Pharma Corporation headquartered in Japan, to co-promote AGGRASTAT^® and MTPE’s EXEMBOL^® (argatroban monohydrate) in the United Kingdom. EXEMBOL^® is indicated for anticoagulation in adult patients with heparin-induced thrombocytopenia type II who require parenteral antithrombotic therapy. The co-promotion agreement is for an initial term of three years.

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XYDALBA^TM

In May 2016, we announced the execution of an exclusive license agreement with Allergan plc (“Allergan”), for the rights to commercialize dalbavancin (branded DALVANCE^® in the United States, where it is marketed by Allergan, and XYDALBA^TM in the rest of the world) in the United Kingdom, Germany, France, Denmark, Iceland, Finland, Malta, Norway, Sweden, Belgium, the Netherlands, Luxemburg, Ireland, Switzerland, Canada and certain countries in the Middle East. XYDALBA^TM fits Cardiome’s commercial footprint as a differentiated specialty pharmaceutical company focused on commercializing proprietary growth pharmaceuticals in Europe and Canada. In December 2016, we initiated the launch of XYDALBA™ in the United Kingdom and Germany and expect to continue to commercialize in other countries over time.

XYDALBA™ is a second generation, semi-synthetic lipoglycopeptide. XYDALBA™ is the first and only IV antibiotic approved in Europe for the treatment of ABSSSI with a single dose regimen of 1500 mg administered over 30 minutes or a two-dose regimen of 1000 mg followed one week later by 500 mg, each administered over 30 minutes. This dosing regimen makes it possible to treat patients with ABSSSI in an outpatient setting, avoiding hospitalization or potentially allowing earlier discharge, without compromising efficacy. XYDALBA™ demonstrates bactericidal activity in vitro against a range of Gram-positive bacteria, such as Staphylococcus aureus (including methicillin-resistant, also known as MRSA, strains) and Streptococcus pyogenes, as well as certain other streptococcal species.

TREVYENT^®

In June 2015, we entered into an exclusive license and supply agreement (the “License Agreement”) with SteadyMed to commercialize the development-stage product TREVYENT^® (treprostinil) in Europe, Canada and the Middle East.

Pursuant to the License Agreement, SteadyMed granted us an exclusive royalty-bearing license to commercialize TREVYENT^® in Europe, Canada and the Middle East if TREVYENT^® is approved for the treatment of pulmonary arterial hypertension (“PAH”) in such regions. Under the License Agreement, SteadyMed will receive up to $12.3 million in connection with regulatory and sales milestones, including an upfront payment of $3 million. We have agreed to pay to SteadyMed a transfer price on finished goods and a scaling double-digit royalty on future TREVYENT^® sales.

PAH is a type of high blood pressure that occurs in the right side of the heart and in the arteries that supply blood to the lungs. PAH worsens over time and is life-threatening because the pressure in a patient’s pulmonary arteries rises to dangerously high levels, putting a strain on the heart. There is no cure for PAH, but several medications are available to treat symptoms, such as Remodulin® (treprostinil sodium), the market-leading prostacyclin PAH therapy produced by United Therapeutics Corporation.

TREVYENT^® is a development stage drug product that combines SteadyMed’s PatchPump technology with treprostinil, a vasodilatory prostacyclin analogue to treat PAH. PatchPump is a proprietary, disposable, parenteral drug administration platform that is prefilled and preprogrammed at the site of manufacture.

In January 2016, we announced that the EMA approved our request to review TREVYENT^® under the Centralised Authorisation Procedure drug review process. This procedure results in a single marketing authorization that is valid in all 28 European Union countries and three European Economic Area countries.

ESMOCARD^® and ESMOCARD LYO^®

In May 2015, we entered a commercialization agreement with AOP Orphan Pharma (“AOP”) to sell AOP’s cardiovascular products, ESMOCARD^® and ESMOCARD LYO^® in Italy, France, Spain and Belgium.

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Supraventricular tachycardia refers to a rapid heart rhythm of the upper heart chambers (atria). Electrical signals in the atria fire abnormally, which interferes with electrical signals coming from the sinoatrial node - the heart’s natural pacemaker. A series of early beats in the atria speeds up the heart rate. The rapid heartbeat does not allow enough time for the heart to fill before it contracts so blood flow to the rest of the body is compromised.

ESMOCARD^® is indicated for the treatment of supraventricular tachycardia (except for pre-excitation syndromes) and for the rapid control of the ventricular rate in patients with AF or atrial flutter in perioperative, postoperative, or other circumstances where short-term control of the ventricular rate with a short-acting agent is desirable. ESMOCARD^® is also indicated for tachycardia and hypertension occurring in the perioperative phase and non-compensatory sinus tachycardia where, in the physician’s judgement the rapid heart rate requires specific intervention. ESMOCARD^® is not intended for use in chronic settings.

Production Methods and Components

All of our products are manufactured by third parties and require the use of raw materials obtained by third parties. The sources and quantities of such raw materials may be limited. See “Risk Factors – We rely on third parties for the supply and manufacture of our products, which can be unpredictable in terms of quality, cost and availability.”

Specialized Skill and Knowledge

We focus our internal resources on those activities that we believe add or create the most value. We maintain a core team of professionals, consultants and staff with the necessary skill base for our operations, and contract out the specialized work required, such as pharmacovigilance, regulatory, medical information services, commercial manufacturing, and distribution to external organizations. In addition, we support our pre-clinical programs by collaborating with external researchers, many of whom have extensive knowledge and understanding of these programs. This collective knowledge, experience and expertise helps ensure that the ideas pursued are of a high caliber and are therefore more likely to result in a drug which impacts a specific disease state. See “Risk Factors – We are dependent upon our key personnel to achieve our business objectives.”

Foreign Operations

We have operations in Canada, the United States, as well as various countries in Europe. Our direct sales force responsible for the sale and promotion of all our products are primarily based in Europe. See “Risk Factors – We are subject to risks inherent in foreign operations.”

U.S. Export Controls and Economic Sanctions

Cardiome is a global, innovation-driven pharmaceutical business with worldwide operations (directly and through distributors). Prior to the acquisition of Correvio, Cardiome did not have operations in the United States and was not subject to U.S. export controls and economic sanctions regulations, such as those instituted by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). Correvio, however, does have operations in the United States, and in 2012 it voluntarily reported to OFAC that it had made inadvertent sales of AGGRASTAT®, which treats chest pain and certain heart conditions, into Iran by a third-party Lebanese distributor, as well as reimbursement costs which were paid to another third-party Iranian distributor. Along with the voluntary report, Correvio applied for a specific license to sell AGGRASTAT® through specified intermediaries and distributors into certain hospitals in Iran. Although OFAC has not yet acted on the voluntary report, OFAC did grant Correvio the requested license. Cardiome (or any of our subsidiaries) may generate revenue in the future by way of sales into Iran through a third-party distributor. To the extent required, such sales would be made as permitted by OFAC under either a general or specific license.

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 United States 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.

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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 our products. In addition, AGGRASTAT^® is a mature product which is beginning to face generic competition. See “Risk Factors – We are exposed to generic product risk which may result in a decline in sales of AGGRASTAT^®” and “Risk Factors – We have substantial competition in the life sciences industry and with respects to our products.”

Patents and Proprietary Protection

We consider our patent portfolio to be an important contributor to our business and therefore devote resources 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 the maximum duration of patent protection available. Accordingly, for novel compounds or therapeutic use claims for the compound, we have made or will make claims related to composition, manufacturing, mechanism of action, dosing, plasma levels, combination with other drugs and therapeutic use. We plan to protect our technology, inventions and improvements to our inventions by filing patent applications in selected key countries according to industry standards in a timely fashion. See “Risk Factors – We rely on proprietary technology, the protection of which can be unpredictable and costly.”

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 currently have no royalty obligations associated with any of the patents and patent applications in our portfolio relating to vernakalant.

Regulatory Environment

The research, development, manufacture, distribution, sale, and marketing of pharmaceutical products are subject to extensive regulation. A comprehensive regulatory scheme requires licensing of manufacturing facilities, carefully controlled research and testing products, governmental review and approval of results prior to marketing of therapeutic products, adherence to Good Manufacturing Practices, (“GMP”), during production, and compliance with comprehensive post-approval requirements. In the United States, Europe and Canada, these activities are subject to rigorous regulation by the FDA, the EMA, and the Therapeutic Products Directorate (“TPD”), respectively. In addition, the research, manufacturing, distribution, sale, and promotion of pharmaceutical products are also potentially subject to regulation by various regional, national, and local authorities where the products are being developed and marketed.

Our success is ultimately dependent on obtaining marketing approval for drugs currently under development by and with our collaborative partners, and our ability to comply with the regulations in the regions and countries where we conduct clinical trials and market products. 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. See “Risk Factors – We rely on third parties for the execution of a significant portion of our regulatory, pharmacovigilance and medical information responsibilities and such third parties may fail to meet their obligations as a result of inadequacies in their systems and processes or execution failure.”

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The principal activities that must be completed after initial drug discovery and synthesis work and before obtaining approval for marketing of a product 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;

· Phase 1 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;

· Phase 2 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; and

· Phase 3 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.

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.

In the United States, an IND application must be filed and accepted by the FDA before clinical trials may begin. The IND application must contain specified information including the results of the pre-clinical studies or clinical studies completed in other regions at the time of the IND application. The degree of information on the safety and efficacy of the drug must be adequate for the phase of the proposed clinical investigation and allow the FDA to make an informed risk and benefit decision at each stage of investigational drug testing. 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.

In the United States, 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 effects 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 labelling. 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 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.

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Under the Prescription Drug User Fee Act, as amended, applicants may be required to pay a substantial fee to the FDA for an NDA and any supplements requiring clinical data thereto, as well as annual fees for commercial manufacturing establishments and for approved products.

Under applicable laws and FDA regulations, each NDA submitted for FDA approval is reviewed for administrative completeness and reviewability within 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 ten months for regular applications. However, the FDA is not legally required to complete its review within these periods. Moreover, the outcome of the review, even if generally favourable, not uncommonly is not an actual approval but a complete response 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 labelling, require that warning statements be included in the product labelling, require that further studies be conducted as a condition of approval (sometimes called Phase 4 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 labelling or manufacturing process. The FDA also enforces the requirements of the United States Prescription Drug Marketing Act which, among other things, imposes various requirements in connection with the distribution of product samples to physicians.

In the United States, the research, manufacturing, distribution, sale, and promotion of drug and biological products are 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 United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of Justice and individual United States 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 United States Medicare-Medicaid Anti-Fraud and Abuse Act, as amended, the United States False Claims Act, as amended, the privacy provisions of the United States Health Insurance Portability and Accountability Act and similar state laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the United States Omnibus Budget Reconciliation Act of 1990, as amended, and the United States Veterans Health Care Act of 1992, as amended. If products are made available to authorized users of the United States 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.

In the European Union, clinical trial applications must be filed with and approved by the competent authority and ethics committee(s) of each member state where the trial will be conducted prior to initiating the study. The information contained within a clinical trial application is similar to that of an IND to the FDA, although the format of the application is quite different.

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Once the clinical trial applications are accepted, clinical studies can commence. Clinical trial regulations are similar to those in the United States with respect to the degree of information required to support each stage of investigational drug testing. However, there are region and national specific differences and approval to conduct clinical trials in one region or country does not guarantee approval in others. Similar to the FDA, European agencies may refuse to approve clinical trials if they conclude that subjects may be exposed to an unacceptable risk. In addition to placebo-controlled trials, the European authorities may recommend a comparator study be completed as part of the development program depending on the indication and availability of current treatments. A comparator study is one where the reference control is a product already approved for the treatment of the disease or condition under study.

Following the completion of clinical studies, and sufficient data has been collected to demonstrate an adequate benefit and risk profile, a MAA is built for submission and review. A medicinal product may only be placed on the market in the EEA, where a marketing authorisation holder is established within the EEA and after one of the following types of authorisations is obtained:

· national authorisation when the marketing authorisation has been issued by the competent authority of a member state, or EEA country, for its own territory; or

· community authorisation, when an authorisation has been granted for the entire community.

Depending on the medicinal product and objectives of the applicant, there are separate and distinct approval processes for obtaining these marketing authorisations.

A national marketing authorisation may be obtained through the submission of an application to the competent authority of the member state where approval is sought. In cases where national authorisations are requested for the same medicinal product in more than one member state and the marketing authorisation holder has received a marketing authorisation in a member state, the applicant would submit an application in the member states concerned using the procedure of mutual recognition. The member states concerned would then recognise the marketing authorisation already granted by the reference member state and authorise the marketing of the product on their national territory. If no marketing authorisation has been granted in the community, the applicant may make use of a decentralised procedure and submit an application in all the member states where it intends to obtain a marketing authorisation at the same time, and choose one of them as reference member state. Based on the assessment report prepared by the reference member state and any comments made by the concerned member state, marketing authorisation should be granted in accordance with the decision taken by the reference member state and concerned member state in this decentralised procedure.

Alternatively, community authorisation, valid throughout the EEA, may be obtained through the submission of an application to the EMA, via the centralised procedure. This process is required for medicinal products which fall within the mandatory scope of the centralised procedure, and discretionary for products that fall under the optional scope, such as vernakalant (IV). Under the centralised procedure, the scientific evaluation of the application is carried out within the Committee for Medicinal Products for Human Use (“CHMP”), and a scientific opinion is prepared. For each application, a Rapporteur and Co-Rapporteur are appointed from amongst the members of the CHMP or CHMP alternate members. This appointment is made on the basis of objective criteria, which ensures the provision of objective scientific opinions and allows the use of the best and available expertise in the EEA on the relevant scientific area. The role of the Rapporteur is to perform the scientific evaluation and to prepare an assessment report to the CHMP according to the timetable agreed for the evaluation procedure. The Rapporteur is supported by a Co-Rapporteur whose responsibility is to conduct a second scientific evaluation and prepare a separate full assessment report or critique of the Rapporteur's report at the discretion of the CHMP.

Following submission of the application to the EMA under the centralised procedure, the application is validated from both a technical and business perspective to ensure the technical components and content of the submission are complete and accurate. The EMA is responsible for ensuring that the opinion of the CHMP is given within 210 days, less any clock-stops for the applicant to provide answers to questions from the CHMP. The CHMP scientific opinion will contain the conclusions on the quality, the safety and the efficacy of the medicinal product and will take into account appropriate benefit and risk scenarios on the populations and conditions of use as documented with clinical data by the applicant. The opinion is sent to the European Commission, or Commission, who, if satisfied with the conclusion, is responsible for drafting a decision to recommend approval of the medicinal product. The Commission will adopt the decision and grant a marketing authorisation after consultation with the member states through the relevant standing committees. Such a marketing authorisation is valid throughout the community and confers the same rights and obligations in each of the member states as a marketing authorisation granted by that member state. Following the granting of marketing authorisation, the product can then be made commercially available in Europe.

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Once a medicinal product is granted with a community authorisation, the medicinal product can no longer be the subject of a subsequent national marketing authorisation. In order to maintain coherence, and to preserve the unity of a single market within the community, a marketing authorisation holder wishing to market another medicinal product with the same active substance already included in a community authorisation must use the centralised procedure.

Similar to the process in the United States, the authorities may limit the approved therapeutic uses for the product as described in the product labelling, require that warning statements be included in the product labelling, require that further studies be conducted as a condition of approval, 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 approval to market in Europe. These include, among other things, requirements related to adverse event and other reporting, product advertising and promotion, and ongoing adherence to GMP, as well as the need to submit appropriate variations to approval for certain changes to the approved product, product labelling or manufacturing process.

Employees

As of December 31, 2016, we had approximately 120 employees located in Vancouver, British Columbia, Chadds Ford, Pennsylvania, and various countries in Europe. None of our employees are represented by a collective bargaining agreement and we have never experienced any work stoppage. We consider our relations with our employees to be good. In addition, we view our employees as an important competitive advantage. Thus far, we have been successful in retaining our key employees including members of our management team. See “Risk Factors – We are dependent upon our key personnel to achieve our business objectives.”

RISK FACTORS

Investing in our securities involves a high degree of risk. You should carefully consider the following risks in addition to the other information included in this annual information form and 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 results of operations could materially suffer. As a result, the trading price of our common shares could decline and you could lose part or all of your investment. The risks set out below are not the only risks we face; risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition and results of operations. You should also refer to information set out in our consolidated financial statements and management’s discussion and analysis for the year ended December 31, 2016.

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

We will require significant additional capital resources to expand the commercialization and sales of BRINAVESS^TM, AGGRASTAT^®, XYDALBA^TM, and ESMOCARD^® and to further develop vernakalant (IV) in the United States (and elsewhere). Advancing our product candidates, market expansion of our currently marketed products or acquisition and development of any new products or product candidates 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:

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· we experience more generic competition for AGGRASTAT^® from other life sciences companies or in more markets than anticipated;

· we experience delays or unexpected increases in costs in connection with obtaining regulatory approvals or commercializing BRINAVESS^TM, XYDALBA^TM, and ESMOCARD^® in the various markets where we hope to sell our products;

· we experience unexpected or increased manufacturing or other supply chain costs;

· we experience unexpected or increased costs relating to preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, or other lawsuits, brought by either us or our competition;

· 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 are required to perform additional pre-clinical studies and clinical trials;

· we consummate suitable business development opportunities;

· we elect to develop, acquire or license new technologies, products or businesses; or

· we are required to conduct pharmacoeconomic studies for reimbursement and/or Phase 4 studies for assessment of real-world use and safety.

We could potentially seek additional funding through corporate collaborations and licensing arrangements, through public or private equity or debt financing or through other transactions. However, if sales are slow to increase or if capital market conditions in general, or with respect to life sciences companies such as ours, are unfavourable, our ability to obtain significant additional funding on acceptable terms, if at all, will be negatively affected. Additional financing that we may pursue may involve the sale of our common shares or financial instruments that are exchangeable for, or convertible into, our common shares which could result in significant dilution to our shareholders.

If we are unable to obtain financing to fund our operational and strategic business development activities, we may be required to delay, reduce the scope of, or eliminate one or more of our planned development and commercialization activities, which could have a material adverse effect on our business, financial condition and results of operations.

We have a history of significant losses and a significant accumulated deficit.

Although we have been involved in the life sciences industry since 1992, we had, prior to the launch of BRINAVESS^TM and the acquisition of AGGRASTAT^®, only been engaged in research and development. Before Merck, Sharp & Dohme obtained marketing approval for BRINAVESS^TM in the European Union, Iceland and Norway in September 2010, and launched BRINAVESS^TM in a number of European countries in 2010, none of our product candidates had been approved for marketing or commercialized. Accordingly, we have only recently begun to generate revenue from product sales and have incurred significant operating losses. Net losses for the years ended December 31, 2016 and 2015 were approximately $19.6 million and $24.5 million, respectively. At December 31, 2016, our accumulated deficit was $363.1 million. Our losses in 2016 resulted primarily from SG&A expenses associated with sales and marketing costs required to support the commercialization of BRINAVESS^TM and the continued sales of AGGRASTAT^® and costs associated with the launch of XYDALBA^TM in the fourth quarter of 2016 . We cannot assure you that we will generate sufficient revenues in the future or achieve profitable operations.

We have a history of negative operating cash flow and may continue to experience negative operating cash flow.

We had negative operating cash flow for the financial years ended December 31, 2016 and December 31, 2015. We anticipate that we will continue to have negative cash flow unless our product sales are able to generate a positive cash flow. To the extent that we have negative operating cash flow in future periods, we may need to allocate a portion of our cash reserves to fund such negative cash flow. We may also be required to raise additional funds through the issuance of equity or debt securities. There can be no assurance that we will be able to generate a positive cash flow from our operations, that additional capital or other types of financing will be available when needed or that these financings will be on terms favourable to us.

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We may not realize the anticipated benefits of past or future acquisitions or product licenses and integration of these acquisitions and any products acquired or licensed may disrupt our business and management.

As part of our business strategy, we may also continue to acquire additional companies, products or technologies principally related to, or complementary to, our current operations. At any given time, we may be evaluating new acquisitions of companies, products or technologies or may be exploring new licensing opportunities, and may have entered into confidentiality agreements, non-binding letters of intent or may be in the process of conducting due diligence with respect to such opportunities. Any such acquisitions will be accompanied by certain risks including, but not limited to:

· exposure to unknown liabilities of acquired companies and the unknown issues with any associated technologies or research;

· higher than anticipated acquisition costs and expenses;

· the difficulty and expense of integrating operations, systems, and personnel of acquired companies;

· disruption of our ongoing business;

· inability to retain key customers, distributors, vendors and other business partners of the acquired company;

· diversion of management’s time and attention; and

· possible dilution to shareholders.

We may not be able to successfully overcome these risks and other problems associated with acquisitions and this may adversely affect our business, financial condition or results of operations.

If we are unable to make our regularly scheduled payments under the CRG Term Loan, we could have a covenant violation.

Under the Term Loan Agreement, we are required to make regular quarterly payments. To the extent that we are unable to generate sufficient cash flow to make our regularly scheduled payments, this could result in a breach of the facility, which would require us to repay the entire amount of the CRG Term Loan outstanding. This could have a material adverse effect on our business, financial condition and results of operations.

We are subject to certain restrictive covenants.

Restrictive covenants in our Term Loan Agreement impose financial and other restrictions on us. Under our Term Loan Agreement, we must meet specified financial covenants, including carrying a minimum balance of unrestricted cash and cash equivalents or meeting certain annual revenue targets. To the extent that we are not able to satisfy the requirements in our Term Loan Agreement or if we are not in compliance with the specified financial covenants, including meeting certain annual revenue covenants, we may be in breach of the facility which would require us to exercise a cure right by issuing additional common shares in exchange for cash or by borrowing subordinated debt in an amount equal to two times the difference between the minimum required revenue and our revenue for the year or repay outstanding amounts. Exercising the cure right or repaying the entire amount of the CRG Term Loan outstanding could have a material adverse effect on our business, financial condition and results of operations.

We are dependent on two products for substantially all of our current revenues.

Sales of a limited number of our products represent substantially all of our current revenues. If the volume or pricing of our products decline in the future, or our cost to manufacture, distribute or market our products increase in the future, our business, financial condition and results of operations could be materially adversely affected and this could cause the market value of our common shares to decline. In addition, if these products were to become subject to any other issues, such as material adverse changes in prescription growth rates, unexpected side effects, regulatory proceedings, material product liability litigation, publicity affecting doctor or patient confidence or pressure from competitive products, the adverse impact on our business, financial condition, results of operations and the market value of our common shares could be significant.

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We are exposed to generic product risk which may result in a decline in sales of AGGRASTAT^®.

AGGRASTAT^® is a mature product which faces generic competition and may experience a decline in product sales in several markets. Competition from generic equivalents that would be sold at a price that is less than the price at which we currently sell AGGRASTAT^® could have a materially adverse impact on our business, financial condition and operating results. Our efforts to enhance the marketing of AGGRASTAT^® through our direct sales force and to expand the indications for which we may market AGGRASTAT^® may not be successful in addressing or mitigating the effect of generic competition.

We have substantial competition in the life sciences industry and with respect to our products.

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. GP IIb/IIIa inhibitors that AGGRASTAT^® competes with include ReoPro from Eli Lilly and Company and Johnson & Johnson/Centocor, Inc., Angiomax from The Medicines Company, and Integrilin from Merck. Antiarrhythmics that BRINAVESS^TM competes with include generic competitors such as flecainide, propafenone, ibutilide and amiodarone. Competitors of dalbavancin include Zyvox from Pfizer, Cubucin from Merck, Tygacil from Pfizer, and generic competitors such as Vancomycin and Targocid.

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, distribution 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 and that such competitors will commercialize products that will render our product candidates obsolete. We 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 positions of others. In addition, these companies and institutions also compete with us in recruiting and retaining qualified personnel. If we fail to develop new products or enhance our existing products in the face of such strong competition, such competition could have a material adverse effect on our business, financial condition or results of operations.

We are subject to the risks associated with product liability claims, insurance and recalls.

Our pharmaceutical products have undergone extensive clinical testing and have been approved by the applicable regulatory authorities prior to sale in the European Union and other countries or regions. Certain aspects of our clinical trials, including the design of the trials, the manufacture and storage of clinical trial material, the enrollment, dosing and follow-up of patients, the recording of trial data and the analysis of results, have been, and may in the future be, sponsored and conducted by third-party academic investigators who have not been under our supervision or control. We therefore may not have independently verified or audited the data or clinical trial sites, and may not do so in the future. Despite all reasonable efforts to ensure safety, it is possible that we, our suppliers or our distribution partners may sell products which are defectively manufactured or labeled, contain defective ingredient components or are misused. Our products may also fail to meet patient expectations or produce harmful side effects. Such unexpected quality, safety or efficacy issues may be caused by a number of factors, including manufacturing defects, harmful side effects, physician experience in prescribing our products, failure to adhere to approved labelling, failure to adhere to good clinical practices, good pharmacovigilance practices and good manufacturing practices, or the non-compliance with clinical protocols by us or our academic investigators, the presence of other harmful conditions in a clinical trial, inadequacies of product-related information conveyed to physicians or patients, or other factors or circumstances unique to the patient. Whether or not scientifically justified, such unexpected safety or efficacy concerns can arise and it may lead to product recalls, loss of or delays in market acceptance, market withdrawals, or declining sales, as well as product liability, consumer fraud and/or other claims. Additionally, we may be exposed to product liability claims as a result of the 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. Substantial damage awards and/or settlements have been handed down – notably in the United States and other common law jurisdictions – against pharmaceutical companies based on claims for injuries allegedly caused by the use of their products. The expenses of litigation or settlements, or both, 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, we may not be able to avoid significant product liability exposure even if we take appropriate precautions, including maintaining product liability coverage (subject to deductibles and maximum payouts) and obtaining indemnification from partners (subject to the terms of each specific agreement). Any liability that we may have as a result could have a material adverse effect on our business, financial condition and results of operations, to the extent insurance coverage for such liability is not available or that our reputation is negatively affected as a result.

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We rely on third parties for the supply and manufacture of our products, which can be unpredictable in terms of quality, cost and availability.

All of our products are manufactured by third parties. The production of our products also requires raw materials obtained from third parties, and the sources and quantities of such raw materials are limited. Aside from contractual rights and remedies pertaining to our agreements, there can be no assurance that our manufacturers or raw material providers will supply sufficient quantities of our products, the products supplied will meet our quality standards, or that the products supplied will be on commercially acceptable terms. Any delays or deficiencies in the supply of products will affect the marketing and sales of our products and might expose us to financial costs, penalties, lawsuits, product recalls or reputational harm. If we were to seek alternative sources of supply, we may not be able to find alternative supply arrangements with commercially reasonable terms or at all. Also, we have committed under certain licensing and collaboration arrangements to supply third party distributors with product. If we are unable to fulfill such obligations, we may be in breach of the respective arrangements and may face financial penalties, lawsuits or other claims, weakened negotiating position in future third party agreement negotiations or reputational harm.

In addition, our third-party drug, device and chemical manufacturers are subject to various regulatory inspections, including those conducted by the FDA, to ensure strict compliance with good manufacturing practices and other government mandated quality standards regulations. While we are obligated to audit the performance of our third-party contractors, we do not have complete control over their compliance. We could be adversely impacted if our third-party manufacturers do not comply with these standards and regulations. For non-compliance, the regulatory authority may commence enforcement actions, including public warning letters, costly inspections, fines, injunctions, civil penalties, failure of the government to grant review of submissions or market approval of drugs, or cause delays, suspension or withdrawal of approvals, product seizures or recalls, operating restrictions, facility closures and criminal prosecutions. Any of this will have a material adverse impact on our business, financial condition, and results of operations.

Our third parties may also be unable to produce required amounts of chemical, drug, and/or devices at a price that has been agreed upon, or which is commercially viable.

Our third parties may elect to discontinue manufacturing our products. As a result, we may need to enter into new arrangements with alternative third parties that may be costly. The time that it takes us to find alternative third parties may cause an interruption in supplies and we may not be able to fulfill existing or new product orders, which could subject us to contractual claims or adversely affect our business, financial condition or results of operations.

We rely on our supply chain and the supply chain of third parties to provide our products, and such supply chains may fail due to inadequacies in their systems and processes, in execution, and for unforeseen reasons.

We rely on our supply chain and the supply chain of third parties to provide our products (and ingredients or components thereof). These supply chains are complex, and may fail for a variety of reasons, including for example, failure to provide adequate quality control and/or quality assurance in supply chain systems and processes, a lack of coordination between various aspects of the supply chain, failure of logistics providers, and inadequate inventory management and/or order management.

In addition, our supply and the supply chain of third parties who provide our products (and ingredients or components thereof) are global in nature, and hence subject to unforeseen problems, including for example, local regulatory risks, currency fluctuations, natural disasters, and economic, social and/or political instability within a particular country or region. If any such supply chain issues occur, we may not be able to fulfill existing or new product orders, which could subject us to contractual claims or adversely affect our business, financial condition or results of operations.

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We rely on third parties for the execution of a significant portion of our regulatory, pharmacovigilance medical information, and logistical responsibilities and such third parties may fail to meet their obligations as a result of inadequacies in their systems and processes or execution failure.

We rely on third parties to perform critical services, including preclinical testing, clinical trial management, regulatory, pharmacovigilance, medical information and logistical services.

These third parties may not be available on acceptable terms when needed or, if they are available, may not comply with all regulatory and contractual requirements or may not otherwise perform their services in a timely or acceptable manner. This non-compliance may be due to a number of factors, including inadequacies in third-party systems and processes or execution failure. We may also experience unexpected cost increases that are beyond our control. As a result, we may need to enter into new arrangements with alternative third parties that may be costly. The time that it takes us to find alternative third parties may cause a delay, extension or termination of our preclinical studies, clinical trials or the commercialization of our product candidates and we may incur significant costs to replicate data that may be lost. These third parties may also have relationships with other commercial entities, some of which may compete with us. In addition, if such third parties fail to perform their obligations in compliance with regulatory requirements and our protocols, our preclinical studies or clinical trials may not meet regulatory requirements or may need to be repeated and our regulatory filings, such as our marketing authorizations or NDS, may not be completed correctly or within the applicable deadlines. As a result of our dependence on third parties, we may face delays or failures outside of our direct control in our efforts to develop and commercialize product candidates.

We rely on third party distributors in many markets to market and sell our products and such third parties may fail to meet their obligations.

We rely on third party distributors to market and sell our products in many markets. These distributors may not comply with all regulatory and contractual requirements or may not otherwise perform their services in a timely or acceptable manner. These distributors may not meet the minimum contractual sales requirement or the minimum sales target mutually agreed upon by both parties. The inability to meet minimum sales requirement or sales target may be due to a number of factors, including inadequate resources devoted to sell our products or failure in the distributor’s sales efforts. The distributors may be responsible for negotiating reimbursements from third party payers for the cost of our products. If our distributors cannot achieve acceptable profit margins on our products, they may reduce or discontinue the sale of our products. As a result of our dependence on third party distributors, our revenues may not meet expectations and our business, results of operations and financial condition may be adversely affected.

Government legislation could adversely impact our ability to obtain product reimbursement and economically price our products and may be difficult to interpret or comply with, resulting in additional costs to conduct our business in certain countries.

In many of the markets we sell to, 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 effectiveness of, and prices charged for, medical products and services, and therefore uncertainty exists as to the reimbursement of existing and newly approved healthcare products. The prices of our products are subject to direct price controls by law and to drug reimbursement programs with varying price control mechanisms.

In addition, as drug costs have increased, there have been more cost containment measures taken by government and third-party private payors, including limitations on both the number of products they list for reimbursements, the conditions under which they will reimburse, and the reimbursement drug prices. For example, we are seeking, but have not yet received reimbursement for BRINAVESS^TM in several major European markets, including Italy, the United Kingdom and France. There can be no assurance that we will be reimbursed or receive commercially viable pricing. Also, the current conditions and rules relating to the listing submissions to public and private formulary listings may change or become more onerous in the future. If we fail to achieve the listing of our products, it will affect the physicians’ decisions regarding the use of our products.

New and existing government legislation in the markets in which we sell or anticipate selling our products may also be difficult to interpret or comply with. Such difficulties may cause slower product introductions in new countries or the termination of sales of our products in existing countries. Violations of any such legislation may lead to financial penalties, product bans or claims brought by regulatory agencies or local or national governments, all of which would have adverse effects on our business, results of operations and financial condition.

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Compulsory licensing and/or generic competition may affect our business in certain countries.

In a number of countries, governmental authorities and other groups have suggested that companies which manufacture medical products (e.g., pharmaceuticals) should make products available at a low cost. In some cases, governmental authorities have held that where a pharmaceutical company does not do so, its patents might not be enforceable to prevent generic competition. Alternatively, some governmental authorities could require that we grant compulsory licenses to allow competitors to manufacture and sell their own versions of our products, thereby reducing our sales or the sales of our licensee(s). In all of these situations, the results of our operations in these countries could be adversely affected.

If we are not able to convince public payors and hospitals to include our products on their approved formulary lists, our revenues may not meet expectations and our business, results of operations and financial condition may be adversely affected.

Hospitals establish formularies, which are lists of drugs approved for use in the hospital. If a drug is not included on the hospital’s formulary, the ability of our distribution partners and key account managers to promote and sell our drugs may be limited or denied. If we fail to secure and maintain formulary inclusion for our drugs on favorable terms or are significantly delayed in doing so, we may have difficulty achieving market acceptance of our drugs and our business, results of operations and financial condition could be materially adversely affected.

Our hospital customers may be late in their payments and in some cases may not pay monies owed.

Hospital customers that may purchase our products and product candidates, if approved, generally bill public payors to cover all or a portion of the costs and fees associated with these purchases. Our revenue and financial condition depend on the extent to which our customers are reimbursed for these costs and fees, and the extent to which such payments are made to us according to the timelines required by our contracts or general terms and conditions. Such payments may be delayed or withheld for many reasons, including, but not limited to, regulatory requirements of local and national governments, reimbursement requirements of public payors, the financial condition or access to capital of our customers and public payors or the deterioration of general or local economic conditions. The non-payment or late payment of amounts due from our customers and public payors may impact the timing of receipt of cash, or we may not receive the cash at all which would negatively impact our financial condition. In addition, we may have to increase our allowance for doubtful accounts or write-off accounts receivable, which would also negatively impact our financial position and results of operations. If collectability is not reasonably assured at the time of sale, we may not be able to recognize revenue until cash is collected which would make it difficult to forecast our revenues accurately. We may, as a result, experience significant unanticipated fluctuations in our revenues from period to period. Any failure to achieve anticipated revenues in a period may also cause our stock price to decline.

In addition, many European countries have been severely impacted by the widespread economic recession that began in 2008, the effect of which continued in 2016. Conditions such as a tighter credit environment, declining business and consumer confidence, as well as increased unemployment have contributed to the economic volatility in these regions. As a result of the continued turbulence in Europe, account collection from hospitals in certain regions takes longer now than in the past. Any delay in collection or an inability to collect could have a material adverse effect on our business, financial condition and results of operations.

Our business may be materially adversely affected by new legislation, new regulatory requirements, and the continuing efforts of governmental and third party payors to contain or reduce the costs of healthcare through various means.

The government and regulatory authorities in the United States, and in Europe and other markets in which we sell our products may propose and adopt new legislation and regulatory requirements relating to pharmaceutical approval criteria and manufacturing requirements. Such legislation or regulatory requirements, or the failure to comply with such, could adversely impact our operations and could have a material adverse effect on our business, financial condition and results of operations.

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In recent years, national, 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 European Union, the United States 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 control. Furthermore, in certain foreign markets, the pricing or profitability of healthcare products is subject to government controls 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 existing and potential products. Significant changes in the healthcare system in the European Union and other countries may have a substantial impact on the manner in which we conduct our business. Such changes could also have a material adverse effect on our business, financial condition and results of operations.

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

Our success depends in part upon our ability to obtain patent protection or patent licenses for our technology and products. Obtaining such patent protection or patent licenses can be costly and the outcome of any such application for patent protection and patent licenses can be unpredictable.

Our patent portfolio related to vernakalant contains issued United States and European patents (as well as other patents issued worldwide) with composition of matter claims specific to vernakalant and/or claims specific to the use of vernakalant to treat arrhythmia. Our patent portfolio related to tirofiban hydrochloride is much more limited, in that most of our patents related to the compound in a formulation have already expired or will be expiring within the next few years. We will not have any patent protection on tirofiban hydrochloride once all of the patents expire.

It is impossible to anticipate the breadth or degree of protection that patents will afford products developed by us or their underlying technology. Further, countries in which we sell our products may not protect our intellectual property to the same extent as the laws of Europe or the United States, and may lack rules and procedures required for defending our patents. Third parties may attempt to circumvent our patents by means of alternative designs and processes. Third parties may also independently develop similar products, duplicate any of our products not under patent protection, or design around the inventions we claim in any of our existing patents, existing patent applications or future patents or patent applications. There is a risk that any patents issued relating to our products or any patents licensed to us may be successfully challenged or that the practice of our products might infringe the patents of third parties. If the practice of our products infringes 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. In addition, disputes may arise as to the rights to know-how and inventions among our employees and consultants who use intellectual property owned by others for the work performed for our company. 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 causing 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 that 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. 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 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 or selling 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.

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There may be an unauthorized disclosure of a significant amount of confidential information under our control.

We maintain and manage personal information obtained from our customers, as well as confidential information relating to our technology, research and development, production, marketing and business operations and those of our customers and collaborators, in various forms. Although we have implemented controls to protect the confidentiality of such information, there can be no assurance that such controls will be effective. Unauthorized disclosures of such information could subject us to complaints or lawsuits for damages or could otherwise have a negative impact on our business, financial condition, results of operations, reputation and credibility.

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

Before we or our partners can obtain regulatory approval for the commercial sale of any product candidate currently under development, we are required to complete extensive clinical trials to demonstrate its safety and efficacy. Clinical trials are very expensive and difficult to design and implement. The clinical trial process is also time-consuming. The ACT 5 trial for vernakalant (IV) was terminated following a single unexpected serious adverse event of cardiogenic shock experienced by a patient in the study and the development program is currently on clinical hold in the United States. If the FDA removes the clinical hold in the United States and allows us to initiate clinical trials, the proposed scope and duration of the vernakalant (IV) clinical program required to obtain regulatory approval must be agreed to by the FDA. Even if we are able to restart the development program, there can be no assurance that the trials will be feasible or successful. Clinical trials, including the post approval safety study for vernakalant (IV), may be subject to significant delays and their outcome may be negatively affected due to various causes, including:

· our inability to find collaboration partners;

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

· 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 imposed by 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;

· 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;

· delays in enrolling patients in the trial;

· scheduling conflicts with participating clinicians and clinical institutions;

· difficulty in maintaining contact with subjects after treatment, which results 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.

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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 trials or in the commercial setting.

Pre-clinical tests and Phase 1 and Phase 2 clinical trials are primarily designed to test safety, to study pharmacokinetics and pharmacodynamics and to understand the side effects of 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.

A number of companies in the life sciences industry, including Cardiome, 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. Additionally, sizing of a trial is based on previous experience of response rates in the control group to vernakalant. Failure to accurately predict event rates may lead to a clinical trial being inadequately powered resulting in an insignificant result. Pre-clinical data and the clinical results we have obtained for vernakalant (IV) and other products may not predict results from studies in larger numbers of subjects drawn from more diverse populations or in a commercial setting, and also may not predict the ability of our products to achieve their intended goals, or to do so safely.

If vernakalant (IV) fails to demonstrate sufficient safety and efficacy in ongoing or future clinical trials, we could experience potentially significant delays in, or be required to abandon development of, our product candidates currently under development.

In October 2010, we announced that patient enrollment in the ACT 5 study of vernakalant (IV) had been suspended and the vernakalant (IV) clinical development program had been placed on clinical hold by the FDA following a single unexpected serious adverse event of cardiogenic shock experienced by a patient with atrial fibrillation who received vernakalant (IV). We are continuing discussions with the FDA regarding the potential path for vernakalant (IV) in the United States; however, we have yet to reach agreement with the FDA. Until such time that we reach a resolution, vernakalant (IV) remains on clinical hold. In the event that we are unable to agree on an executable and mutually acceptable development path, vernakalant (IV) will not receive marketing approval in the United States.

Our industry is subject to health and safety risks.

We produce products for human ingestion. While we take substantial precautions such as laboratory and clinical testing, toxicology studies, quality control and assurance testing and controlled production methods, the associated health and safety risks cannot be eliminated. Products produced by us may be found to be, or to contain substances that are harmful to the health of our patients and customers and which, in extreme cases, may cause serious health conditions or death. This sort of finding may expose us to substantial risk of litigation and liability.

Further, we could be forced to discontinue production of certain products, which would harm our profitability. Cardiome maintains product liability insurance coverage; however, there is no guarantee that our current coverage will be sufficient or that we can secure insurance coverage in the future at commercially viable rates or with the appropriate limits and could have a significant adverse effect on our reputation.

Our approved products may not achieve or maintain expected levels of market acceptance.

Even if we are able to obtain regulatory approvals for our product candidates, the success of those products is dependent upon achieving and maintaining market acceptance. New product candidates that appear promising in development may fail to reach the market or may have only limited or no commercial success. Levels of market acceptance for our products could be impacted by several factors, many of which are not within our control, including but not limited to:

· safety, efficacy, convenience and cost-effectiveness of our products compared to products of our competitors;

· scope of approved uses and marketing approval;

· timing of market approvals and market entry;

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· difficulty in, or excessive costs to, manufacture;

· infringement or alleged infringement of the patents or intellectual property rights of others;

· availability of alternative products from our competitors;

· acceptance of the price of our products; and

· ability to market our products effectively at the retail level.

In addition, the success of any new product will depend on our ability to either successfully build our in-house sales capabilities or to secure new, or to realize the benefits of existing, arrangements with third-party marketing or distribution partners. Seeking out, evaluating and negotiating marketing or distribution agreements may involve the commitment of substantial time and effort and may not ultimately result in an agreement. In addition, the third-party marketing or distribution partners may not be as successful in promoting our products as we had anticipated. If we are unable to commercialize new products successfully, whether through a failure to achieve market acceptance, a failure to build our own in-house sales capabilities, a failure to secure new marketing partners or to realize the benefits of our arrangements with existing marketing partners, there may be a material adverse effect on our business, financial condition and results of operations and it could cause the market value of our common shares to decline.

In addition, by the time any products are ready to be commercialized, what we believe to be the market for these products may have changed. Our estimates 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 are dependent upon our key personnel to achieve our business objectives.

As a technology-driven company, intellectual input from key management and personnel is critical to achieve our 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 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 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, even though our collaborators are required to sign confidentiality agreements prior to working with us, they may have arrangements with other companies to assist such other companies in developing technologies that may prove competitive to us.

Incentive provisions for our key executives include the granting of stock options that vest over time, designed to encourage such individuals to stay with us. However, a low share price, whether as a result of disappointing progress in our sales or 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. If we are unable to attract and retain key personnel our business, financial conditions and results of operations may be adversely affected.

We are exposed to concentration of credit risk relating to major distribution relationships and customers in certain geographic regions.

We have distribution contracts with certain third parties that contribute to a significant portion of our revenue. Due to the concentration of sales and receivables in these certain distributors, the credit risk associated with these accounts are of particular significance to us. If one or several of these distributors fails to fulfill its payment obligations or reduces their business with us, there may be a material adverse effect on our business, financial condition and results of operations.

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Our policies and estimates regarding returns, allowances and chargebacks may reduce revenue in future periods.

Reserves on sales are calculated based on prior experience and best estimates of the impact in subsequent period in accordance with our established policy. We cannot ensure that the adequacy of the reserves or actual product returns, allowances and chargebacks will not exceed the estimates. Inadequate reserves could have a material adverse effect on our business, financial condition, and results of operations.

Our inventory has a limited shelf life and may require write-downs.

We value inventory for accounting purposes at the lower of cost determined on a first-in, first-out basis, and net realizable value. For inventory which has reached its expiration or that is close to expiration and not expected to the sold, we establish the associated reserve to reflect such inventory cost as it is not expected to be recoverable. Even though on a regular basis, management reviews the amount of inventory on hand, reviews the remaining shelf life and estimates the time required to manufacture and sell such inventory, write-down of inventory may still be required. Any write-down could have a material adverse effect on our business, financial condition, and results of operations.

We are exposed to risks relating to the write-down of intangible assets, which comprises of a significant portion of our total assets.

A significant amount of our total assets relate to our marketing rights, trade name and patents associated with BRINAVESS^TM, AGGRASTAT^® and XYDALBA^TM. As of December 31, 2016, the carrying value of our intangible assets was approximately $24.4 million. In accordance with U.S. generally accepted accounting principles, we are required to review the carrying value of our intangible assets for impairment periodically or when certain triggers occur. In case of events such as generic competition, our inability to manufacture, or our inability to obtain sufficient raw materials, sales of the related product may decline and impairment in the carrying value of the intangible asset may have occurred. Such impairment will result in a write-down of the intangible asset and the write-down is charged to earnings during the period in which the impairment occurs. The write-down of any intangible assets could have a material adverse effect on our business, financial condition, and results of operations.

We may face exposure to adverse movements in foreign currency exchange rates.

Our loans and a portion of our revenue are denominated in U.S. dollars. However, our business has expanded internationally and, as a result, a significant portion of our revenues and expenses are denominated in Euros, Canadian dollars and other foreign currencies. A decrease in the value of such foreign currencies relative to the U.S. dollar could result in losses from currency exchange rate fluctuations. To date, we have not hedged against risks associated with foreign exchange rate exposure. We cannot be sure that any hedging techniques we may implement in the future will be successful or that our business, financial condition, and results of operations will not be materially adversely affected by exchange rate fluctuations.

If we were to lose our foreign private issuer status under United States federal securities laws, we would likely incur additional expenses associated with compliance with the United States securities laws applicable to United States domestic issuers.

As a foreign private issuer, as defined in Rule 3b-4 under the U.S. Securities Exchange Act of 1934, as amended, we are exempt from certain of the provisions of the United States federal securities laws. For example, the United States proxy rules and the Section 16 reporting and “short swing” profit rules do not apply to foreign private issuers. However, if we were to lose our status as a foreign private issuer, these regulations would immediately apply and we would also be required to commence reporting on forms required of United States companies, such as Forms 10-K, 10-Q and 8-K, rather than the forms currently available to us, such as Forms 40-F and 6-K. Compliance with these additional disclosure and timing requirements under these securities laws would likely result in increased expenses and would require our management to devote substantial time and resources to comply with new regulatory requirements. Further, to the extent that we were to offer or sell our securities outside of the United States, we would have to comply with the more restrictive Regulation S requirements under the U.S. Securities Act of 1933, as amended (the “Securities Act”), that apply to U.S. companies, and we would no longer be able to utilize the multijurisdictional disclosure system forms for registered offerings by Canadian companies in the United States, which could limit our ability to access the capital markets in the future.

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We are subject to risks inherent in foreign operations.

We intend to continue to pursue international market growth opportunities, such that international sales are likely to continue, at least in the near future, to account for a significant portion of our revenue. We have committed, and intend to commit, significant resources to our international sales and marketing activities. We are subject to a number of risks associated with our international business operations and sales and marketing activities that may increase liability, costs, lengthen sales cycles and require significant management attention. These risks include:

· compliance with the laws of the United States, Canada, Europe and other countries that apply to our international operations, including import and export legislation;

· increased reliance on third parties to establish and maintain foreign operations;

· the complexities and expenses of administering a business abroad;

· complications in compliance with, and unexpected changes in, foreign regulatory requirements;

· instability in economic or political conditions, including inflation, recession and actual or anticipated military conflicts, social upheaval or political uncertainty;

· foreign currency fluctuations;

· foreign exchange controls and cash repatriation restrictions;

· tariffs and other trade barriers;

· difficulties in collecting accounts receivable;

· differing tax structures and related potential adverse tax consequences;

· uncertainties of laws and enforcement relating to the protection of intellectual property or secured technology;

· litigation in foreign court systems;

· unauthorized copying or use of our intellectual property;

· cultural and language differences;

· difficulty in managing a geographically dispersed workforce in compliance with local laws and customs that vary from country to country; and

· other factors, depending upon the country involved.

There can be no assurance that the policies and procedures we implement to address or mitigate these risks will be successful, that our personnel will comply with them or that we will not experience these factors in the future or that they will not have a material adverse effect on our business, results of operations and financial condition.

There are uncertainties with respect to data protection laws in Europe.

From 1998 to 2000, “Safe Harbour Privacy Principles” were developed in order to prevent private organizations within the European Union or the United States, which store customer data, from accidentally disclosing or losing customer information. In July 2000, the European Commission decided that U.S. companies complying with these principles and which met European Union requirements would fall under the Safe Harbour Privacy Principles.

In October 2015, the Court of Justice for the European Union nullified the Safe Harbor Privacy Principles. In early 2016, German authorities initiated legal proceedings against several companies that were still transferring personal data to the United States under the now invalidated Safe Harbor Privacy Principles. On February 29, 2016, the European Commission unveiled new legal texts which, if approved, would create the EU–U.S. Privacy Shield, which will impose stronger obligations on companies in the United States to protect the personal data of Europeans and stronger monitoring and enforcement by the U.S. Department of Commerce and Federal Trade Commission. These new legal texts are still subject to public comment, and have not been enacted.

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Cardiome is headquartered in Vancouver, Canada, and has offices in many European countries, as well as an office in the United States. Given the uncertainty associated with the current legal environment for data protection in Europe, it is possible that, despite best efforts, we or any of our third-party distributors, suppliers, manufacturers or regulatory service providers might run afoul of currently developing laws associated with data privacy in Europe. Violations of such laws might subject us to lawsuits, fines, penalties or injunctions that could negatively affect our business, financial condition or results of operations.

Failure to comply with the FCPA, as well as the anti-bribery laws of the nations in which we conduct business (such as the United Kingdom’s Bribery Act or the CFPOA, could subject us to penalties and other adverse consequences.

Our business is subject to the FCPA which generally prohibits companies and company employees from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. The FCPA also requires companies to maintain accurate books and records and internal controls, including at foreign-controlled subsidiaries. In addition, we are subject to other anti-bribery laws of the nations in which we conduct business that apply similar prohibitions as the FCPA (e.g. the United Kingdom’s Bribery Act, the CFPOA and the Organization for Economic Co-operation and Development Anti-Bribery Convention). Our employees or other agents may, without our knowledge and despite our efforts, engage in prohibited conduct under our policies and procedures and the FCPA or other anti-bribery laws that we may be subject to for which we may be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

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. Compliance with changing regulations of corporate governance and public disclosure may result in additional expenses. All of these uncertainties are leading generally toward increasing insurance costs, which may adversely affect our business, results of operations and our ability to purchase any such insurance, at acceptable rates or at all, in the future.

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 and clinical trials of any products developed by us or our future collaborative partners, if any, and the manufacturing, labelling, 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. Our product candidates are principally regulated in the United States by the FDA, in Canada by the TPD, in the European Union by the EMA, and by other similar regulatory authorities in other jurisdictions. Government regulation substantially increases the cost and risk of researching, developing, manufacturing and selling products. Following several widely publicized issues in recent years, the FDA and similar regulatory authorities in other jurisdictions have become increasingly focused on product safety. This development has led to requests for more clinical trial data, for the inclusion of a significantly higher number of patients in clinical trials and for more detailed analysis of trial results. Consequently, the process of obtaining regulatory approvals, particularly from the FDA, has become more costly, time consuming and challenging than in the past. Any product developed by us or our future collaborative partners, 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.

In connection with our pre-clinical studies and clinical trials for vernakalant (IV) and other product candidates, we are required to adhere to extensive regulations established by the applicable regulatory authorities. In general, these regulatory authorities and the regulatory process 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 future collaborative partner, if any, 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 is subject to good clinical practice and other requirements. Failure to adhere to these requirements could invalidate our data. In addition, the relevant regulatory authority or independent review board may modify, suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the benefits.

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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, such as refusals from regulatory authorities to accept our marketing applications for review. We may have limits imposed on us, or clinical trials or our product candidates. Unfavourable results from our clinical data may require us to limit the indications sought in connection with the product candidate or otherwise limit our ability 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 or views during the period of product marketing, product development or the period of review of any 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, 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. Accordingly, despite our expenditures and investment of time and effort, we may be unable to receive required regulatory approvals for 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 approvals will be obtained for the products we develop or, in the case of products that have been approved in one or more jurisdictions, that those products will be approved in other jurisdictions as well. 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.

Any of our product candidates that receive regulatory approval could be subject to extensive post-market obligations that can affect sales, marketing and profitability.

With respect to any drug candidates for which we obtain regulatory approval, we will be subject to post-marketing regulatory obligations, including the requirements by the FDA, TPD, EMA and similar agencies in other jurisdictions to maintain records regarding product safety and to report to regulatory authorities serious or unexpected adverse events. Any post-approval commitments required by the regulatory agencies as a condition of approval, such as registration studies, may not be feasible. The occurrence of unanticipated serious adverse events or other safety problems could cause the governing agencies to 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 require potentially costly post-approval studies. In addition, post-market discovery of previously unknown safety problems or increased severity or significance of a pre-existing safety signal could result in withdrawal of the product from the market and product recalls. Compliance with extensive post-marketing record keeping and reporting requirements requires a significant commitment of time and funds, which may limit our ability to successfully commercialize approved products.

In addition, manufacturing of approved drug products must comply with extensive regulations governing current good manufacturing practices. Manufacturers and their facilities are subject to continual review and periodic inspections. Failure to comply with good manufacturing practices requirements could result in a suspension of manufacturing, product recalls or even withdrawals from the market. As we will be dependent on third parties for manufacturing, we will have limited ability to ensure that any entity manufacturing products on our behalf is doing so in compliance with applicable good manufacturing practices requirements. Failure or delay by any manufacturer of our products to comply with good manufacturing practices regulations or to satisfy regulatory inspections could have a material adverse effect on us, including potentially preventing us from being able to supply products for clinical trials or commercial sales. In addition, manufacturers may need to obtain approval from regulatory authorities for product, manufacturing, or labelling changes, which requires time and money to obtain and can cause delays in product availability. We are also required to comply with good distribution practices such as maintenance of storage and shipping conditions, as well as security of products, in order to ensure product quality determined by good manufacturing practices is maintained throughout the distribution network. In addition, we are subject to regulations governing the import and export of our products.

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Sales and marketing of pharmaceutical products are subject to extensive federal and state laws governing on-label and off-label advertising, scientific/educational grants, gifts, consulting and pricing. Sales, marketing and pricing activities are also potentially subject to federal and state consumer protection and unfair competition laws. Compliance with extensive regulatory requirements requires training and monitoring of the sales force, which imposes a substantial cost on us and our collaborators. To the extent our products are marketed by our collaborators, our ability to ensure their compliance with applicable regulations will be limited. In addition, we are subject to regulations governing the design, testing, control, manufacturing, distribution, labeling, quality assurance, packaging, storage, shipping, import and export of our products and product candidates. Failure to comply with applicable legal and regulatory requirements may result in negative consequences to us, including but not limited to:

· 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 United States, Europe or Canada;

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

· product recalls or seizures.

In the future, the regulatory climate might change due to changes in the FDA and other regulatory authorities’ staffing, policies or regulations and such changes could impose additional post-marketing obligations or restrictions and related costs. While it is impossible to predict future legislative or administrative action, if we are not able to maintain regulatory compliance, we will not be able to market our drugs and our business could suffer.

Obtaining regulatory approval in the European Union does not ensure we will obtain regulatory approval in other countries.

We aim to obtain regulatory approval for our drug candidates in the United States and the European Union, as well as in other countries. To obtain regulatory approval to market any FDA or EMA approved products outside of the United States or European Union, as the case may be, we must comply with numerous and varying regulatory requirements in 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 or EMA approval. The regulatory approval process in other countries may include all of the risks associated with FDA or EMA 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 United States or the European Union, including the risk that our product candidates may not be approved for all indications requested or that such approval may be subject to limitations on the indicated uses for which the product may be marketed. In addition, any approved products will be subject to post-marketing regulations related to manufacturing standards, facility and product inspections, labelling and possibly sales and marketing.

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Failure to comply with applicable regulatory requirements in other countries 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 or criminal prosecution.

Our business depends heavily on the use of information technologies.

Several key areas of our business depend on the use of information technologies, including sales and marketing, production, manufacturing and logistics, as well as clinical and regulatory matters. Despite our best efforts to prevent such behaviour, third parties may nonetheless attempt to hack into our systems and obtain data relating to our pre-clinical studies, clinical trials, patients using our products or our proprietary information on BRINAVESS^TM, AGGRASTAT^®, XYDALBA^TM or any of our other products. If we fail to maintain or protect our information systems and data integrity effectively, we could lose existing customers, have difficulty attracting new customers, have problems in determining product cost estimates and establishing appropriate pricing, have difficulty preventing, detecting, and controlling fraud, have disputes with customers, physicians, and other health care professionals, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach, or suffer other adverse consequences. While we have invested in the protection of data and information technology, there can be no assurance that our efforts, or those of our third-party collaborators, if any, or manufacturers, to implement adequate security and quality measures for data processing would be sufficient to protect against data deterioration or loss in the event of a system malfunction, or to prevent data from being stolen or corrupted in the event of a security breach. Any such loss or breach could have a material adverse effect on our business, operating results and financial condition.

dividends AND DISTRIBUTIONS

We have never declared or paid any dividends on our common shares. Subject to the discretion of our board of directors to declare a dividend, we expect that, for the foreseeable future, to retain our future earnings, if any, to finance our commercial activities and further research and the expansion of our business. The payment of future dividends, if any, will be subject to the discretion of our board of directors and will depend upon, among other things, conditions then existing including earnings, financial conditions, cash on hand, financial requirements to fund our commercial activities, development and growth, and other factors that our board of directors may consider appropriate in the circumstances.

CAPITAL structure

Our authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, of which, Series A Preferred Shares have been assigned special rights and restrictions. As of March 27, 2017, we had 31,913,172 common shares and no preferred shares of any series issued and outstanding. In addition, as of March 27, 2017, there were 2,986,197 common shares issuable upon the exercise of outstanding stock options at a weighted-average exercise price of Cdn.$5.25 per common share and 1,002,950 common shares reserved for future grant or issuance under our 2014 Incentive Stock Option Plan (the “Incentive Stock Option Plan”). There are also 124,852 common shares issuable upon the vesting of restricted share units (“RSUs”) of the Company.

All of our common shares are of the same class and, once issued, rank equally as to entitlement to dividends (if, as and when declared by the board of directors), voting powers (one vote per common share) and participation in assets upon dissolution, liquidation or winding-up. No common shares have been issued subject to call or assessment. Our 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 our articles and by-laws and in the CBCA.

We may issue our preferred shares 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.

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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. The listing standards of the NASDAQ, require a quorum for shareholder meetings to be not less than 33⅓% 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 the NASDAQ quorum requirement.

MARKET FOR SECURITIES

Our common shares are listed on the TSX in Canada (trading symbol: “COM”) and on the NASDAQ in the United States (trading symbol: “CRME”).

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

Month	High		Low		Close		Total Monthly Volume
January 2016		11.00		6.78		9.25		56,320
February 2016		9.11		6.25		6.95		53,944
March 2016		6.97		4.75		5.38		127,002
April 2016		6.68		5.43		5.54		83,098
May 2016		8.15		5.32		6.16		150,044
June 2016		7.35		6.02		6.65		90,870
July 2016		7.15		3.96		4.08		341,658
August 2016		4.36		3.80		3.82		283,566
September 2016		4.21		3.60		4.10		159,407
October 2016		4.20		3.65		3.70		702,486
November 2016		4.10		3.25		3.55		206,733
December 2016		4.09		3.42		3.75		191,405

Prior Sales

There were no common shares issued upon the exercise of options granted under our Incentive Stock Option Plan during the year ended December 31, 2016.

The following table sets forth information in respect of our common shares that we issued upon the vesting of RSUs granted under our 2014 Restricted Share Unit Plan during the year ended December 31, 2016:

Vesting Date	Number of Common Shares
January 13, 2016		500
February 24, 2016		500
June 22, 2016		33,859
August 11, 2016		833
September 14, 2016		500
November 8, 2016		9,324
December 18, 2016		4,166
Total		49,682

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The following table sets forth information in respect of options to acquire our common shares that we granted under our Incentive Stock Option Plan during the year ended December 31, 2016:

Grant Date	Number of Options		Grant Price
June 21, 2016		475,000		Cdn.$6.15
June 21, 2016		75,000	$	4.84
August 11, 2016		25,000		Cdn.$4.01
August 11, 2016		42,500	$	3.08
Total		617,500

The following table sets forth information in respect of the RSUs that we granted under our 2014 Restricted Share Unit Plan during the year ended December 31, 2016:

Grant Date	Number of RSUs
January 13, 2016		3,000
June 22, 2016		31,282
July 4, 2016		500
August 11, 2016		11,000
August 30, 2016		2,000
September 1, 2016		500
November 8, 2016		2,500
Total		50,782

The following table sets forth information in respect of our common shares that we issued during the year ended December 31, 2016:

Issuance Date	Number of Common Shares		Issue Price
January 12, 2016		48,856		nil	(1)
January 19, 2016		20,000	$	5.33	(2)
January 22, 2016		20,000	$	5.16	(2)
January 26, 2016		20,000	$	5.21	(2)
January 28, 2016		20,000	$	5.21	(2)
February 1, 2016		20,000	$	5.21	(2)
February 4, 2016		20,000	$	5.21	(2)
February 8, 2016		20,000	$	5.36	(2)
February 10, 2016		20,000	$	5.37	(2)
July 29, 2016		11,500,000	$	3.00	(3)
Total		11,708,856

⁽¹⁾ Common shares were issued to LPC as a commitment fee. No proceeds were received for these shares.

⁽²⁾ Common shares were sold pursuant to the Purchase Agreement.

⁽²⁾ Common shares were sold pursuant to the Offering.

No other common shares, preferred shares, debt securities or warrants, or securities exchangeable or convertible into common shares, preferred shares, debt securities or warrants have been issued during the year ended December 31, 2016.

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, all as of the date hereof, 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 meeting.

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Name, Province/State and Country of Residence and Present Position with the Corporation	Date Became a Director/Officer	Principal Occupation Last Five Years
Richard M. Glickman(1)(2)(3) British Columbia, Canada Director	December 11, 2006	February 2017 to present – CEO, Aurinia Pharmaceuticals; July 2007 to January 2017 – Retired
W. James O’Shea(2)(3) Massachusetts, United States Director	June 17, 2014	September 2007 to present – Retired
Arthur H. Willms(1)(3) British Columbia, Canada Director	June 22, 2015	January 2009 to present – Retired
Mark H. Corrigan(1)(2)(4) Massachusetts, United States Director	June 22, 2015	July 2014 to July 2016 – Chairman of the Board, Epirus Pharmaceuticals; January 2010 to June 2014 – President and CEO, Zalicus Inc.
Robert J. Meyer(4) Virginia, United States Director	September 25, 2015	March 2013 to present – Director for Translational and Regulatory Sciences at the University of Virginia School of Medicine; January 2008 to January 2013 – VP of Global Regulatory Strategy, Policy, and Safety at Merck, Sharpe and Dohme
William L. Hunter British Columbia, Canada President and Chief Executive Officer, Director	June 11, 2007	July 2012 to present – President and Chief Executive Officer, Cardiome Pharma Corp.; 1997 to October 2011 – President and Chief Executive Officer, Angiotech Pharmaceuticals, Inc. (“Angiotech”)
Jennifer Archibald British Columbia, Canada Chief Financial Officer	September 20, 2012	September 2012 to present – Chief Financial Officer, Cardiome Pharma Corp.; September 2006 to September 2012 – Director of Finance, Cardiome Pharma Corp.
Sheila M. Grant British Columbia, Canada Chief Operating Officer	August 1, 2003	March 2013 to present – Chief Operating Officer, Cardiome Pharma Corp.; April 2005 to March 2013 – Vice President of Product Development – vernakalant, Cardiome Pharma Corp.
David D. McMasters Washington, United States General Counsel	January 1, 2015	November 2012 to present – General Counsel, Cardiome Pharma Corp.; 2000 to July 2011 – General Counsel, Angiotech

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Name, Province/State and Country of Residence and Present Position with the Corporation	Date Became a Director/Officer	Principal Occupation Last Five Years
David C. Dean British Columbia, Canada VP, Investor Relations and Business Development	June 22, 2015	June 2015 to present – VP, Investor Relations and Business Development, Cardiome Pharma Corp.; January 2013 to June 2015 – Director and Research Analyst, Cormark Securities Inc.; January 2012 to January 2013 – Institutional Equity Sales, Cantor Fitzgerald Canada; January 2010 to January 2012 – VP Institutional Equity Sales, Versant Partners Inc.
Hugues Sachot St. Gregoire, France SVP, Sales	June 22, 2015	March 2013 to present – SVP, Sales, Cardiome Pharma Corp.; September 2007 to February 2013 – VP, Commercial, Angiotech

⁽¹⁾ Member of the Compensation Committee. Dr. Glickman is the Chair of this Committee.

⁽²⁾ Member of the Corporate Governance and Nomination Committee. Dr. Corrigan is the Chair of this Committee.

⁽³⁾ Member of the Audit Committee. Mr. Willms is the Chair of this Committee.

⁽⁴⁾ Member of the Special Committee. Dr. Corrigan is the Chair of this Committee.

As of March 27, 2017, our directors and executive officers beneficially owned, or exercised control of or direction over, directly or indirectly, in the aggregate 706,821 (2%) of our outstanding common shares.

Directors and Executive Officers

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

Richard M. Glickman, L.L.D. (Hon), Director. Dr. Glickman was a co-founder and Executive Chairman of Aurinia Pharmaceuticals, or Aurinia, and currently serves as the Chairman of the Board for Aurinia. Dr. Glickman was a co-founder, Chairman and Chief Executive Officer of Aspreva Pharmaceuticals, or Aspreva. Prior to establishing Aspreva, Dr. Glickman was the co-founder and Chief Executive Officer of StressGen Biotechnologies Corporation. Since 2000, Dr. Glickman has served as the Chairman of the Board of Vigil Health Solutions Inc., a healthcare services company and more recently, as Chairman of the Board of Essa Pharmaceuticals Inc. Dr. Glickman was also the founder and a director of Ontario Molecular Diagnostics, a diagnostic facility that evolved into the largest molecular diagnostic laboratories in Canada. He co-founded Probtec Corporation, a rational drug design and molecular genetics firm, where he established and introduced the first licensed DNA-based forensic and paternity testing services in Canada. He has served on numerous biotechnology boards including roles as Chairman of Life Sciences B.C. (formerly the British Columbia Biotechnology Alliance), Director of the Canadian Genetic Disease Network and a member of the federal government’s National Biotechnology Advisory Committee. Dr. Glickman currently serves as a member of the British Columbia Innovation Council and a Director for the Vancouver Aquarium. Dr. Glickman received the Ernst & Young Entrepreneur of the Year 2004 Award for the Pacific Region Life Sciences Group and has received both Canada’s and British Columbia’s Top 40 under 40 Award for Entrepreneurs and has been the recipient of 2006 BC Biotech Leadership Award. Dr. Glickman has served on the audit committees of other publicly listed companies.

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W. James O’Shea, Chairman. Mr. O’Shea was President and Chief Operating Officer of Sepracor Inc., or Sepracor, from October 1999 to March 2007 where he was responsible for successfully building that organization’s commercial infrastructure. From April to August 2007, Mr. O’Shea served as Sepracor’s Vice Chairman. Prior to Sepracor, Mr. O’Shea was Senior Vice President of Sales and Marketing and Medical Affairs for Zeneca Pharmaceuticals, a business unit of Astra Zeneca Plc, a publicly held biopharmaceutical company. Mr. O’Shea is past Chairman of the National Pharmaceutical Council and is also a board member of BTG Plc, Prostrakan Group Plc, Ocular Therapeutics and Trevi Therapeutics. Mr. O’Shea has served on the audit committees of other publicly listed companies.

Arthur H. Willms, Director. Mr. Willms currently participates on several boards, including the Board of Directors of: Naikun Wind Energy Group Inc.; 2010 Games Operating Trust; and Pacific Autism Family Centre Foundation.  He was previously the President and Chief Operating Officer of Westcoast Energy Inc. Mr. Willms has a B.A. in Mathematics and an M.A. in Economics and has served on numerous audit committees of major corporation entities.

Mark H. Corrigan, M.D., Director. Dr. Corrigan was the Chairman of the Board of Directors at Epirus Biopharmaceuticals, Inc. until July 2016, and was a former Board member of Cubist Pharmaceuticals, Inc.  He was formerly the Chief Executive Officer of Zalicus Inc., prior to its merger with Epirus Biopharmaceuticals Inc., and prior to that was the executive vice president of R&D at Sepracor Inc.  Prior to Sepracor Inc., he spent 10 years with Pharmacia & Upjohn, where he served most recently as Group Vice President of Global Clinical Research and Experimental Medicine. 

Robert J. Meyer, M.D., Director. Dr. Meyer is currently a Director at the Virginia Center for Translational and Regulatory Sciences at the University of Virginia School of Medicine, but has held senior roles at Merck Research Laboratories from 2007 to 2013, most recently as Vice President, Global Regulatory Strategy, Policy and Safety, as well as at the FDA from 1999 to 2007 where Dr. Meyer served as Director of the Division of Pulmonary and Allergy Drug Products and then Director of the Office of Drug Evaluation II in the Center for Drug Evaluation and Research.

William Hunter, M.D., President and Chief Executive Officer & Director. Dr. Hunter has been a member of Cardiome's Board of Directors since 2007 and became the Company's President and CEO in July 2012. Prior to Cardiome, Dr. Hunter co-founded Angiotech in 1992 and assumed the position of Chief Executive Officer in 1997 when Angiotech was a venture-stage, private, pre-clinical company with less than 50 employees. He led Angiotech through three rounds of private equity financing, the Company’s IPO and listing on the TSX and the NASDAQ, over $1 billion in equity and debt financings, a debt restructuring and eight separate corporate acquisitions. During that time, Angiotech grew to become a profitable, diversified, healthcare company with over 1,400 employees, several thousand commercially available products, 12 facilities in five countries and worldwide annual revenues exceeding $250 million. Dr. Hunter has over 200 patents and patent applications to his name and products in which he was an inventor or co-inventor include the TAXUS^® Drug-Eluting Coronary Stent, the Zilver PTX Peripheral Drug-Eluting Stent, the Quill barbed wound closure device and the 5-FU Anti-Infective Catheter; combined these products have been used in over 6 million patients and recorded revenues of over $12 billion worldwide. Dr. Hunter currently serves as a director of Epirus Pharmaceuticals Inc. (NASDAQ: EPRS) and Rex Bionics Plc, and selected awards he has received include the 2006 Principal Award from the Manning Foundation (one of Canada’s highest awards for innovation); BC Innovation Council’s Cecil Green Award for Science and Technology Entrepreneurship; Entrepreneur of the Year from the Canadian Venture Capital and Private Equity Association; and Canada’s 40 Under 40. Dr. Hunter served as a practicing physician in British Columbia for five years.

Jennifer Archibald, CPA, CA, Chief Financial Officer. Ms. Archibald is Cardiome’s Chief Financial Officer, with responsibility for overseeing Cardiome’s financial operations.  She joined Cardiome in 2006 and served as Cardiome’s Director of Finance until her appointment as Chief Financial Officer in September 2012.  Ms. Archibald has extensive accounting and finance experience, dealing with the complexities of both public and private corporations.  Prior to joining Cardiome, Ms. Archibald managed the accounting operations at the corporate office of The Jim Pattison Group.  Ms. Archibald began her career as a corporate auditor with KPMG LLP.  She is a Chartered Professional Accountant and earned a Bachelor of Commerce degree from the University of British Columbia.

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Sheila M. Grant, MBA, Chief Operating Officer. Ms. Grant is Cardiome's Chief Operating Officer. Ms. Grant was most recently Cardiome’s Vice President of Product Development, with responsibility for the overall management of the vernakalant (IV) program. She has overseen the development of vernakalant from its initial pre-clinical studies through to commercialization. Ms. Grant’s past roles at Cardiome have included Vice President, Commercial Affairs and Director of Business & Clinical Development. Prior to joining Cardiome, Ms. Grant acted as business consultant to De Novo Enzyme Corporation and Coopers & Lybrand. Ms. Grant also worked in research and development, production, and quality assurance with Schering Agrochemicals U.K., Wellcome Biotechnologies U.K. and Serono Diagnostics U.K.. Ms. Grant holds an MBA degree from Simon Fraser University.

David D. McMasters, JD, General Counsel. Mr. McMasters is Cardiome’s General Counsel, and oversees all legal affairs of the Company. Mr. McMasters was formerly General Counsel to Angiotech for 11 years, and, prior to that, was the Managing Partner of a mid-sized intellectual property law firm (Seed Law Group).

David C. Dean, Vice President, Investor Relations and Business Development. Mr. Dean has 15 years of capital markets experience as a top ranked industry analyst focused exclusively on the Canadian healthcare sector, most recently as a Director and Research Analyst at one of Canada’s leading independent investment banks. Mr. Dean attained a M.Sc. from the University of Ottawa with a focus on Cardiac Physiology as well as an MBA (Finance) from Queens University.

Hugues Sachot, Senior Vice President, Sales. Mr. Sachot is Cardiome’s Senior Vice President of Sales and leads the commercial organization in all direct market and distributor sales worldwide. He was previously Vice President of Commercial at Angiotech.

CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS

To the best of our knowledge, no director or executive officer or any shareholder holding a sufficient number of our common shares to materially affect the control of the Corporation:

(a) is, as at the date of this annual information form, or has been, within the ten years before, a director or executive officer of any company (including the Corporation), that while that person was acting in that capacity,

(i) was the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days,

(ii) was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days that was issued after the director or executive officer ceased to be a director or an executive officer and which resulted from an event that occurred while that person was acting in the capacity as director or executive officer, or

(iii) within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, or

(b) has, within the 10 years before the date of this annual information form, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director or executive officer or shareholder,

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except in respect of the following companies:

· Angiotech and each of the following subsidiaries: 0741693 B.C. Ltd. and Angiotech International Holdings Corp. (the “Angiotech Canadian Subsidiaries”) and Angiotech Pharmaceuticals (US), Inc., American Medical Instruments Holdings Inc., NeuColl Inc., Angiotech BioCoatings Corp., Afmedica Inc., Quill Medical Inc., Angiotech America Inc., Angiotech Florida Holdings Inc., B.G. Sulzle Inc., Surgical Specialties Corporation, Angiotech Delaware Inc., Medical Device Technologies Inc., Manan Medical Products Inc. and Surgical Specialties Puerto Rico Inc. (the “Angiotech U.S. Subsidiaries”). On January 28, 2011, Angiotech, the Angiotech Canadian Subsidiaries and the Angiotech U.S. Subsidiaries voluntarily filed a petition under the CCAA in the Supreme Court of British Columbia to implement a proposed recapitalization transaction. On January 31, 2011, the Angiotech U.S. Subsidiaries filed a voluntary petition under Chapter 15 of Title 11 of the United States Code to obtain recognition and enforcement in the United States for certain relief granted in the CCAA proceedings, and to obtain assistance of the United States courts to the Supreme Court of British Columbia in effectuating the proposed recapitalization. Dr. Hunter was the president and chief executive officer and a director of Angiotech until October 2011, and Mr. McMasters was General Counsel of Angiotech until July 2011. Mr. Willms was a director of Angiotech until May 2011.

To the best of our knowledge, none of our directors or executive officers or any shareholder holding a sufficient number of our common shares to materially affect the control of the Corporation have been subject to:

(a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or

(b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

conflicts of interest

To the knowledge of Cardiome, and other than as disclosed herein, there are no known existing or potential material conflicts of interest among Cardiome, its directors and officers or a subsidiary of Cardiome and any director or officer of Cardiome or of a subsidiary of Cardiome, or other members of management as a result of their outside business interests, except that certain of the directors or officers may serve as directors and officers of other companies, and therefore it is possible that a conflict may arise between their duties to Cardiome and their duties as a director or officer of such other companies. See “Risk Factors – We are dependent upon our key personnel to achieve our business objectives” in this annual information form.

The directors of Cardiome are required by law to act honestly and in good faith with a view to the best interests of Cardiome and to disclose any interests that they may have in any material contract or material transaction. If a conflict of interest arises at a meeting of the Board of Directors of the Cardiome, any director in a conflict is required to disclose his or her interest and abstain from voting on such matter. The directors and officers of Cardiome are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest in respect of Cardiome and are required to comply with such laws in respect of any directors’ and officers’ conflicts of interest or in respect of any breaches of duty by any of its directors or officers.

AUDIT COMMITTEE INFORMATION

Audit Committee Mandate

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

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Composition and Relevant Education and Experience

The Audit Committee is comprised of three independent directors: Arthur H. Willms, Richard M. Glickman and W. James O’Shea. A description of the 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” in this annual information form.

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 Mr. Willms qualifies as an audit committee financial expert under such rules. In addition, all members of the Audit Committee are considered financially literate under applicable Canadian and U.S. laws and we provide continuing education to all Audit Committee members. On a regular basis, the Audit Committee performs and reviews a self-assessment.

Auditor Independence

Our Audit Committee has concluded that KPMG LLP, our independent registered chartered accountant, is independent under applicable rules and guidelines and, in particular, that KPMG LLP is free from conflicts of interest that could impair its objectivity in conducting the audit of our financial statements. The Audit Committee is required to approve all audit and non-audit related services performed by KPMG LLP, and KPMG LLP is not permitted to perform services for us prohibited for an independent auditor under applicable Canadian and United States laws, including the Securities Act, and the rules and regulations adopted thereunder by the SEC and the Public Company Accounting Oversight Board (United States).

Auditor’s Fees

The following table sets out the fees billed to us by KPMG LLP for professional services for the years ended December 31, 2016 and December 31, 2015.

	December 31, 2016	December 31, 2015
Audit Fees(1)	Cdn.$574,500	Cdn.$583,300
Audit-Related Fees(2)	Cdn.$45,200	Nil
Tax Fees(3)	Nil	Cdn.$42,200
All Other Fees	Nil	Nil

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

⁽²⁾ Audit-related fees are fees for assurance and related services reasonably related to the performance of the audit or review of our consolidated financial statements that are not reported under “Audit Fees”.

⁽³⁾ Tax fees include tax compliance, tax planning, tax advice and various taxation matters.

legal proceedings AND REGULATORY ACTIONS

There are no outstanding material legal proceedings or regulatory actions to which we are a party, nor, to our knowledge, are any material legal proceedings or regulatory actions contemplated.

interest of management and others in material transactions

None of our directors, executive officers, person or company, beneficially owning or exercising control or direction over, directly or indirectly, more than 10% of our common shares, 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 annual information form that has materially affected us or is reasonably expected to materially affect us.

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transfer agents and registrars

Our co-transfer agents and co-registrars for our common shares are Computershare Investor Services Inc. located at its principal offices in Vancouver, British Columbia and Toronto, Ontario and Computershare Trust Company, N.A. located at its principal offices in Golden, Colorado.

material contracts

We are party to the following material contracts as defined in National Instrument 51-102 - Continuous Disclosure Obligations:

1) Term Loan Agreement between Cardiome Pharma Corp. and CRG entered into on June 13, 2016 described in the section titled “General Development of the Business” in this annual information form.

2) License Agreement by and between Correvio International Sarl and Durata Therapeutics International B.V. (Allergan) entered into on May 5, 2016 described in the section titled “General Development of the Business” in this annual information form.

3) Supply Agreement by and between Correvio International Sarl and Durata Therapeutics International B.V. (Allergan) entered into on May 5, 2016. The Supply Agreement was entered into in conjunction with the License Agreement by and between Correvio International Sarl and Durata Therapeutics International B.V. (Allergan) entered into on May 5, 2016 described in the section titled “General Development of the Business” in this annual information form.

4) Exclusive License and Supply Agreement by and between Cardiome Pharma Corp., Correvio International Sarl and SteadyMed entered into on June 28, 2015 described in the section titled “General Development of the Business” in this annual information form.

5) Registration Rights Agreement by and between Cardiome Pharma Corp. and CarCor Investment Holdings LLC (“CarCor”) entered into on November 18, 2013 in connection with the acquisition of Correvio described in the section titled “General Development of the Business” in this annual information form.

6) Stock and Asset Purchase Agreement by and among Cardiome Pharma Corp., Cardiome International AG, Murk Acquisition Sub, Inc., Correvio, and CarCor entered into on November 18, 2013 in connection with the acquisition of Correvio described in the section titled “General Development of the Business” in this annual information form.

interests of experts

Our auditor is KPMG LLP, Chartered Professional Accountants, P.O. Box 10426, 777 Dunsmuir Street, Vancouver, British Columbia, V7Y 1K3. KPMG LLP has audited our consolidated financial statements as at December 31, 2016 and 2015, and for each of the years in the two-year period ended December 31, 2016 as set forth in their report. KPMG LLP confirmed that they are independent within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulations and that they are independent accountants with respect to the Company under all relevant U.S. professional and regulatory standards.

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ADDITIONAL INFORMATION

Additional information relating to us may be found on SEDAR at www.sedar.com or on EDGAR at www.sec.gov.

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 meeting held on June 21, 2016.

Additional Financial Information

Additional financial information is provided in our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the financial year ended December 31, 2016.

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SCHEDULE “A”
AUDIT committee MANDATE

Date of Adoption: May 11, 2016

Purpose

The audit committee (the “Committee”) of Cardiome Pharma Corp. (the “Corporation”) was established by the Board of Directors (“Board”) to assist the Board in fulfilling its responsibilities for oversight of the following:

· the Corporation’s systems of internal and disclosure controls;

· the Corporation’s financial reporting process, including the Corporation’s financial statements and other financial information provided by the Corporation to its shareholders, the public and others in accordance with applicable securities and corporate legislation and the Corporation’s Disclosure Policy;

· the Corporation’s compliance with financial, accounting, legal and regulatory requirements including the Corporation’s Code of Business Conduct and Ethics;

· the appointment, compensation, independence, oversight, communication with , performance and change of the Corporation’s independent external auditors (the “Auditors”);

· the Corporation’s process for identification of the principal risks of the Corporation’s business and ensuring that an appropriate process is in place to manage risks across the enterprise; and

· the fulfillment of the other responsibilities set forth in this mandate

Organization, Membership and Reporting

1. The Committee shall consist of three or more directors who are “independent” as defined by applicable law, regulations, guidelines and policies.

2. All members of the Committee shall be “financially literate” and at least one member of the Committee shall be a “financial expert”. “Financially literate” and “financial expert” will have the respective meanings set out in applicable law, regulations, guidelines and policies.

3. Appointments and replacements to the Committee will be made by the Board and will be reviewed on an annual basis. The Board will provide for continuity of membership, while at the same time allowing fresh perspectives to be added. Each member of the Committee will automatically cease to be a member if he or she ceases to be independent.

4. The chairman of the Committee (the “Chairman”) will be appointed by a vote of the Board on an annual basis.

5. The Committee will report to the Board, at the next scheduled meeting of the Board, the proceedings of the Committee and any recommendations made by the Committee.

6. The Committee shall meet from time to time, as it deems necessary, but at least four times per year. Special meetings of the Committee will be authorized at the request of any member of the Committee or at the request of the Auditors. The Auditors will be informed about, and can attend, meetings of the Committee as deemed appropriate by the Chairman. 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.

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Organization, Membership and Reporting (continued)

7. The Committee shall maintain written minutes of its meetings, which minutes shall be filed in the corporate minute book.

Authority and Responsibilities

External Audit:

1. The Auditors will report directly to the Committee. The Committee is responsible for overseeing the work of the Auditors and will communicate directly with the Auditors as required.

2. The Committee will review the basis and amount of the Auditors’ fees and pre-approve all auditing services and permitted non-audit services.

3. The Committee will consider whether the Auditors should be re-appointed and make recommendations to the Board. At least on an annual basis, the Committee will evaluate the qualifications, performance and independence of the Auditors and the senior audit partners having primary responsibility for the audit, including considering whether the Auditors’ quality controls are adequate.

4. The Committee will pre-approve the appointment of the Auditors for all accounting services, internal control related services and permitted non-audit services to be provided to the Corporation. The Committee may establish policies and procedures, from time to time, pre-approving the appointment of the Auditors for certain non-audit services. In addition, the Committee may delegate to one or more members the authority to pre-approve the appointment of the Auditors for any non-audit service to the extent permitted by applicable law, provided that any pre-approvals granted pursuant to such delegation will be reported to the full Committee at its next scheduled meeting.

5. The Committee will receive from the Auditors a formal written statement delineating all relationships between the Auditors and the Corporation and will actively engaging in a dialogue with the Auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the Auditors.

6. The Committee will confirm that the rotation of the lead audit partner or the audit partner responsible for reviewing the audit (the concurring partner), for the Corporation’s Auditors complies with the requirements of the Canadian and US regulatory authorities

7. The Committee will review, based upon the recommendation of the Auditors and management, the scope and plan of the work to be done by the Auditors for each fiscal year.

8. The Committee will review and approve the Corporation’s hiring of partners, employees, former partners and former employees of the present and former Auditors of the Corporation.

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Authority and Responsibilities (continued)

Financial Statements:

1. The Committee will review and discuss with management and the Auditors the Corporation’s interim financial statements, management discussion and analysis (“MD&A”) and the interim earnings press release prior to submission to shareholders, any governmental body, any stock exchange or disclosure to the public. On behalf of the Board, the Committee will approve the interim financial statements, MD&A and interim earnings press release and sign a resolution to that effect.

2. The Committee will review and discuss with management and the Auditors the Corporation’s annual audited financial statements, management discussion and analysis (“MD&A”) and the annual earnings press release prior to submission to shareholders, any governmental body, any stock exchange or disclosure to the public. The Committee will recommend to the Board approval of the annual audited financial statements, MD&A and annual earnings press release and sign a resolution to that effect.

3. The Committee will review and discuss with management and the 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.

4. The Committee will issue any necessary reports required of the Committee to be included in the Corporation’s annual proxy statement. The Committee will review and recommend to the Board the approval of all documents filed with securities regulatory authorities.

5. In addition, the Committee will review other financial statements, information and documents that require the approval of the Board. These will include financial statements in prospectus and other offering memoranda and financial statements required by regulatory authorities. The Committee will sign a resolution to the effect that such financial statements, information or documents that are being presented to the Board are satisfactory, and recommend their approval.

Periodic and Annual Reviews:

1. The Committee will review and discuss with management all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Corporation with unconsolidated entities or persons that may have a material current or future effect on financial condition, changes in financial condition, results of operation, liquidity or capital resources.

2. The Committee will discuss with management the application of the Corporation’s accounting policies that are in accordance with U.S. generally accepted accounting principles and their consistency from period to period.

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Authority and Responsibilities (continued)

Periodic and Annual Reviews (continued):

3. The Committee will periodically review with each of management and the Auditors any significant disagreements between management and the Auditors in connection with the preparation of the financial statements and any difficulties encountered during the course of the audit or review (including any restrictions on the scope of work or access to required information).

4. The Committee will review with management and the Auditors any legal matters, tax assessments, correspondence with regulators or governmental agencies or published reports that raise material issues regarding the Corporation’s financial statements or accounting policies and the manner in which these matters have been disclosed in public filings, if applicable.

5. The Committee will approve all related party transactions.

6. The Committee will review the Corporation’s Treasury Investment Policy annually.

7. The Committee will review with management and the Auditors the sufficiency and quality of the financial and accounting personnel of the Corporation.

8. The Committee will review the policies and practices of the Corporation regarding the regular examination of officers’ expenses and perquisites, including the use of the assets of the Corporation.

9. The Committee will review and reassess the adequacy of this mandate annually.

Internal Controls and Disclosure:

1. The Committee will review the Corporation’s systems of and compliance with internal financial controls

2. The Committee will review and discuss with management and the Auditors any major issue as to the adequacy and effectiveness of internal controls over the accounting and financial reporting systems of the Corporation, either directly, or through the Auditors or other advisors and obtain and review a report from the Auditors, at least annually, regarding same; and the Committee will review and discuss with management and the Auditors any special steps adopted in light of material internal control deficiencies and the adequacy of disclosures about changes in internal controls over financial reporting.

3. The Committee will establish 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.

4. The Committee will be satisfied that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements and periodically assess the adequacy of those procedures.

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Authority and Responsibilities (continued)

Risk Management and Compliance:

1. The Committee will ensure that the business of the Corporation is conducted in compliance with applicable laws and regulations and according to the highest ethical standards.

2. The Committee will review management’s fraud risk assessment on an annual basis.

3. The Committee will discuss with management the Corporation’s guidelines and policies governing the Corporation’s process of risk assessment and risk management.

The Committee has the authority, to the extent it deems necessary or appropriate, to retain independent legal, accounting or other advisors. The Corporation will provide 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.

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	Q1	Q2	Q3	Q4
Audit Committee Purpose
Review audit committee mandate	X
Conduct special investigations	*	*	*	*
Audit Committee Composition and Meetings
Assess independence and financial literacy of Committee members		X
Establish number and timing of meetings				X
Committee chair to establish meeting agendas	X	X	X	X
Maintain minutes and report to Board	X	X	X	X
Private sessions with auditors	X	X	X	X
Perform self-assessment of Committee and members			X
Prepare report of Committee effectiveness to Board				X
Audit Committee Responsibilities and Duties
External Auditor
Recommend appointment of Auditors				X
Review audit plan			X
Approve audit and non-audit fees in advance	X	X	X	X
Review performance of Auditors	X
Review independence letter and discuss auditor independence				X
Review reports from Auditors’ on their own internal control procedures			X
Review audit partner rotation		X
Financial Statements
Review quarterly financial statements, MD&A and earnings press release and approve on behalf of the Board	X	X	X
Review interim financial reports and Auditors’ findings	X	X	X
Review annual financial statements, MD&A, earnings release and recommend approval to Board				X
Review audit report				X
Review regulatory reports				X
Prepare reports to be included in annual meeting materials		X

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	Q1	Q2	Q3	Q4
Periodic and Annual Reviews
Review material off-balance sheet transactions, arrangements, obligations and contingent obligations	X	X	X	X
Discuss appropriateness of accounting principles, critical accounting policies and management’s judgments and estimates without management present	X	X	X	X
Consider and approve, if necessary, significant changes to accounting policies and financial disclosure practices	X	X	X	X
Review any significant disagreements between management and Auditors	X	X	X	X
Review any difficulties encountered during the review or audit	X	X	X	X
Review legal matters with legal counsel	*	*	*	*
Review Corporation’s Treasury Investment Policy				X
Review with management and Auditors the sufficiency and quality of financial and accounting personnel	*	*	*	*
Review and approve related party transactions	*	*	*	*
Review policies and practices regarding examination of officers’ expenses and perquisites			X
Review and approve hiring of partners, employees, former partners and employees of the present and former Auditors	*	*	*	*
Internal Controls and Disclosure
Review adequacy of internal control structure and system with management and Auditors	X		X
Discuss any whistleblowing activity	X	X	X	X
Review adequacy of procedures for review of public disclosure of financial information			X
Review disclosure of audit committee information required in the management information circular	X
Risk Management
Discuss with management the Corporation’s guidelines and policies governing the Corporation’s process of risk assessment and risk management				X
Review management’s fraud risk assessment annually				X

*     As needed

X    Recommended timing

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EX-1.2

Exhibit 1.2

CARDIOME PHARMA CORP.

Consolidated Financial Statements

For the years ended December 31, 2016 and 2015

MANAGEMENT’S REPORT

The accompanying consolidated financial statements of Cardiome Pharma Corp. are the responsibility of management and have been approved by the Board of Directors. The consolidated financial statements and related notes have been prepared by management in accordance with generally accepted accounting principles used in the United States of America, and where appropriate, reflect management’s best estimates and assumptions based upon information available at the time that these estimates and assumptions were made.

Management is responsible for establishing and maintaining a system of internal controls over financial reporting designed to provide reasonable assurance as to the reliability of financial information and the safeguarding of assets.

The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and internal control. The Board of Directors exercises this responsibility principally through the Audit Committee. The Audit Committee consists of directors not involved in the daily operations of the Company. The Audit Committee is responsible for engaging the external auditor and reviewing the financial statements prior to their presentation to the Board of Directors for approval. The Audit Committee meets with management and the external auditors to satisfy itself that management’s responsibilities are properly discharged.

The company’s external auditors, who are appointed by the shareholders, conducted an independent audit in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), and express their opinion thereon.

/s/ Dr. William Hunter	/s/ Jennifer Archibald
President and CEO	Chief Financial Officer
March 6, 2017	March 6, 2017

 

KPMG LLP

PO Box 10426 777 Dunsmuir Street

Vancouver BC V7Y 1K3

Canada

Telephone (604) 691-3000

Fax (604) 691-3031

Report of INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Cardiome Pharma Corp.

We have audited the accompanying consolidated balance sheets of Cardiome Pharma Corp. as of December 31, 2016 and December 31, 2015 and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of Cardiome Pharma Corp.'s management. Our responsibility is to express an opinion on these (consolidated) 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cardiome Pharma Corp. as of December 31, 2016 and December 31, 2015, and its consolidated results of operations and its consolidated cash flows for the years then ended in conformity with US generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cardiome Pharma Corp.’s internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 6, 2017, expressed an unqualified opinion on the effectiveness of Cardiome Pharma Corp.’s internal control over financial reporting.

//s// KPMG LLP

Chartered Professional Accountants

Vancouver, Canada

March 6, 2017

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP.

 

KPMG LLP

PO Box 10426 777 Dunsmuir Street

Vancouver BC V7Y 1K3

Canada

Telephone (604) 691-3000

Fax (604) 691-3031

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Cardiome Pharma Corp.

We have audited Cardiome Pharma Corp.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Cardiome Pharma Corp.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Cardiome Pharma Corp. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP.

Cardiome Pharma Corp. Page 2

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cardiome Pharma Corp. as of December 31, 2016 and 2015, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the years then ended and our report dated March 6, 2017 expressed an unqualified opinion on those consolidated financial statements.

//s// KPMG LLP

Chartered Professional Accountants

Vancouver, Canada
March 6, 2017

2

CARDIOME PHARMA CORP.

Consolidated Balance Sheets

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

	December 31, 2016			December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	26,758		$	17,661
Restricted cash (note 5)		2,547			2,196
Accounts receivable, net of allowance for doubtful accounts of $97 (2015 - $424)		6,154			6,814
Inventories (note 6)		4,618			4,401
Prepaid expenses and other assets		1,302			1,408
Deferred income tax assets (note 17)		460			469
		41,839			32,949
Property and equipment (note 7)		548			740
Intangible assets (note 8)		24,352			14,221
Goodwill		318			318
	$	67,057		$	48,228
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities (note 9)	$	8,021		$	10,488
Current portion of long-term debt, net of unamortized debt issuance costs (note 10)		-			3,912
Current portion of deferred consideration (note 11)		2,815			2,619
Current portion of deferred revenue		182			188
		11,018			17,207
Long-term debt, net of unamortized debt issuance costs (note 10)		19,391			5,686
Deferred consideration (note 11)		-			2,478
Deferred revenue		2,381			2,647
Other long-term liabilities		243			274
		33,033			28,292
Stockholders’ equity:
Common stock		344,928			312,019
Authorized - unlimited number without par value
Issued and outstanding – 31,884,420 (2015 – 20,147,337) (note 12(b))
Additional paid-in capital		35,812			34,678
Deficit		(363,054	)		(343,435	)
Accumulated other comprehensive income		16,338			16,674
		34,024			19,936
	$	67,057		$	48,228

Commitments and contingencies (notes 16 and 19)

See accompanying notes to the consolidated financial statements.

Approved on behalf of the Board:

/s/ W. James O’Shea	/s/ Arthur H. Willms
Director	Director

CARDIOME PHARMA CORP.

Consolidated Statements of Operations and Comprehensive Income (Loss)

For the years ended December 31, 2016 and 2015

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

	December 31, 2016			December 31, 2015
Revenue:
Product and royalty revenues	$	25,066		$	20,795
Licensing and other fees		190			115
		25,256			20,910
Cost of goods sold		6,310			6,587
Gross margin		18,946			14,323
Expenses:
Selling, general and administration		30,513			31,004
Research and development (note 14)		-			3,223
Amortization (notes 7 and 8)		2,984			2,177
		33,497			36,404
Operating loss		(14,551	)		(22,081	)
Other expense:
Loss on extinguishment of long-term debt (note 10)		1,402			-
Interest expense		2,543			2,260
Other expense		348			175
Foreign exchange loss (gain)		623			(43	)
		4,916			2,392
Loss before income taxes		(19,467	)		(24,473	)
Income tax expense (recovery) (note 17)		152			(11	)
Net loss	$	(19,619	)	$	(24,462	)
Other comprehensive loss:
Foreign currency translation adjustments		336			449
Comprehensive loss	$	(19,955	)	$	(24,911	)
Loss per common share (note 15)
Basic	$	(0.78	)	$	(1.34	)
Diluted	$	(0.79	)	$	(1.34	)
Weighted average common shares outstanding (note 15)
Basic		25,255,413			18,198,840
Diluted		25,318,196			18,198,840

See accompanying notes to the consolidated financial statements.

CARDIOME PHARMA CORP.

Consolidated Statements of Stockholders’ Equity

For the years ended December 31, 2016 and 2015

(In thousands of U.S. dollars, except number of common shares)

	Number of common shares		Common shares			Additional paid-in capital			Deficit			Accumulated other comprehensive income			Total stockholders’ equity
Balance at December 31, 2014		16,591,002	$	284,760		$	34,229		$	(318,973	)	$	17,123		$	17,139
Net loss		-		-			-			(24,462	)		-			(24,462	)
Issuance of common stock (note 12(b))		3,429,247		28,334			-			-			-			28,334
Share issue costs		-		(1,705	)		-			-			-			(1,705	)
Common stock issued upon exercise of options (note 12(b))		119,842		293			-			-			-			293
Reallocation of additional paid in capital arising from stock-based compensation related to exercise of options		-		256			(256	)		-			-			-
Reallocation of stock-based compensation liability arising from stock-based compensation related to exercise of options		-		9			-			-			-			9
Issuance of common shares on vesting of restricted share units, net of tax (note 12(b))		7,246		72			(110	)								(38	)
Stock-based compensation expense (note 13)		-		-			815			-			-			815
Foreign currency translation adjustments		-		-			-			-			(449	)		(449	)
Balance at December 31, 2015		20,147,337		312,019			34,678			(343,435	)		16,674			19,936
Net loss		-		-			-			(19,619	)		-			(19,619	)
Issuance of common stock (note 12(b))		11,708,856		35,676			-			-			-			35,676
Share issue costs		-		(3,121	)		-			-			-			(3,121	)
Issuance of common shares on vesting of restricted share units, net of tax (note 12(b))		28,227		354			(449	)								(95	)
Stock-based compensation expense (note 13)		-		-			1,583			-			-			1,583
Foreign currency translation adjustments		-		-			-			-			(336	)		(336	)
Balance at December 31, 2016		31,884,420	$	344,928		$	35,812		$	(363,054	)	$	16,338		$	34,024

See accompanying notes to the consolidated financial statements.

CARDIOME PHARMA CORP.

Consolidated Statements of Cash Flows

For the years ended December 31, 2016 and 2015

(In thousands of U.S. dollars)

	December 31, 2016			December 31, 2015
Operating activities:
Net loss	$	(19,619	)	$	(24,462	)
Items not affecting cash:
Amortization (notes 7 and 8)		2,984			2,177
Amortization of deferred financing fees		250			525
Stock-based compensation expense, net (note 13)		260			2,205
Write-down of inventory (note 6)		159			2,028
Loss on extinguishment of long-term debt (note 10)		1,402			-
Unrealized foreign exchange loss (gain)		210			(43	)
Changes in operating assets and liabilities:
Restricted cash		(296	)		(31	)
Accounts receivable		506			3,067
Inventories		(375	)		(1,094	)
Prepaid expenses and other assets		(37	)		212
Deferred revenue		(272	)		1,885
Accounts payable and accrued liabilities		(1,123	)		(2,776	)
Other long-term liabilities		(31	)		-
Net cash used in operating activities		(15,982	)		(16,307	)
Investing activities:
Purchase of property and equipment		(9	)		(132	)
Purchase of intangible assets		(13,628	)		(39	)
Net cash used in investing activities		(13,637	)		(171	)
Financing activities:
Issuance of common stock (note 12(b))		35,341			28,334
Share issue costs		(2,746	)		(1,650	)
Issuance of common stock upon exercise of stock options (note 12(b))		-			293
Proceeds from issuance of long-term debt (note 10)		20,000			-
Financing fees on issuance of long-term debt (note 10)		(713	)		(106	)
Repayment of long-term debt (note 10)		(10,000	)		(2,000	)
Payment of fees on extinguishment of long-term debt (note 10)		(1,146	)		-
Payment of deferred consideration (note 11)		(2,174	)		(3,049	)
Net cash provided by financing activities		38,562			21,822
Increase in cash and cash equivalents during the year		8,943			5,344
Effect of foreign exchange rate changes on cash and cash equivalents		154			(391	)
Cash and cash equivalents, beginning of year		17,661			12,708
Cash and cash equivalents, end of year	$	26,758		$	17,661
Supplemental cash flow information:
Interest paid	$	2,329		$	1,826
Interest received		17			20
Cash (received) paid for income taxes		(109	)		693

See accompanying notes to the consolidated financial statements.

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

1. Basis of presentation:

Cardiome Pharma Corp. (the “Company”) was incorporated under the Company Act (British Columbia) on December 12, 1986 and was continued under the laws of Canada on March 8, 2002. Cardiome is a specialty pharmaceutical company dedicated to offering patients and healthcare providers innovative therapeutic options that effectively, safely, and conveniently manage acute medical conditions to improve health and quality of life. Cardiome strives to find innovative, differentiated medicines that provide therapeutic and economic value to patients, physicians and healthcare systems. Cardiome currently has two marketed, in-hospital cardiology products, BRINAVESS^TM (vernakalant IV), for the rapid conversion of recent onset atrial fibrillation to sinus rhythm in adults, and AGGRASTAT^{® (}tirofiban HCl), a reversible GP IIb/IIIa inhibitor indicated for use in patients with acute coronary syndrome, which are commercially available in markets outside of the United States. Cardiome has licensed a European-approved antibiotic, XYDALBA™ (dalbavancin), a second generation, semi-synthetic lipoglycopeptide for the treatment of acute bacterial skin and skin structure infections in adults, that the Company has launched commercially in Germany and the United Kingdom and expects to commercialize in France, Belgium, Nordic nations, Canada, certain other European countries and some countries in the Middle East over time. In addition, Cardiome has also licensed commercialization rights to a pre-registration drug/device combination product, TREVYENT^®, for the treatment of pulmonary arterial hypertension in certain regions outside the United States and commercialization rights to cardiology products ESMOCARD^® and ESMOCARD LYO^® (esmolol hydrochloride), a short-acting beta-blocker used to control rapid heart rate in a number of cardiovascular indications, in certain European countries.

The Company has financed its operations through cash flows generated from sales of its products, the issuance of common shares, and debt financing. If existing cash resources together with the cash the Company generates from the sales of its products are insufficient to fund its operational needs, the Company may need to sell additional equity or debt securities or seek additional financing through other arrangements. There can be no assurance that the Company will be able to successfully obtain financing in the amounts or terms acceptable to the Company, if at all, in order to continue its operational activities.   

2. Summary of significant accounting policies:

The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and are presented in U.S. dollars. The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements:

(a) Principles of consolidation:

The consolidated financial statements include the accounts of Cardiome Pharma Corp. and its wholly-owned subsidiaries from their respective dates of acquisition of control. All intercompany transactions and balances have been eliminated on consolidation.

2

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

2. Summary of significant accounting policies (continued):

(b) Use of estimates:

The consolidated financial statements have been prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Significant areas requiring the use of accounting judgments and estimates include accounting for amounts recorded in connection with recoverability of inventories, carrying value of intangible assets, revenue recognition, bad debt and doubtful accounts, income taxes, stock-based compensation expense, and commitments and contingencies. 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 action. Actual results could differ from those estimates.

(c) Foreign currency translation:

The net assets of foreign subsidiaries where the local currencies have been determined to be the functional currencies are translated into U.S. dollars using exchange rates at the balance sheet dates. Equity is translated at historical rates and revenue and expenses are translated at exchange rates prevailing during the period. The foreign exchange gains and losses arising from translation are recorded in the foreign currency translation account, which is included in other comprehensive loss and reflected as a separate component of equity. For those subsidiaries where the U.S. dollar has been determined to be the functional currency, non-monetary foreign currency assets and liabilities are translated using historical rates, while monetary assets and liabilities are translated at the period-end exchange rates. Revenues and expenses denominated in foreign currencies are translated at exchange rates in effect at the time of the transactions. Foreign exchange gains and losses are recorded in net loss for the period.

(d) Fair value measurements of financial instruments:

Fair value measurements of financial instruments are determined by using a fair value hierarchy that prioritizes the inputs to valuation techniques into three levels according to the relative reliability of the inputs used to estimate the fair values.

The three levels of inputs used to measure fair value are as follows:

Level 1 - Unadjusted quoted prices in active markets for identical financial instruments;

Level 2 - Inputs other than quoted prices that are observable for the financial instrument either directly or indirectly; and

Level 3 - Inputs that are not based on observable market data.

In determining fair value measurements, the most observable inputs are used when available. The fair value hierarchy level at which a financial instrument is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement.

3

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

2. Summary of significant accounting policies (continued):

(e) Cash and cash equivalents:

Cash and cash equivalents include cash and short-term deposits with original maturities of 90 days or less. Short-term deposits are valued at amortized cost. The carrying amounts approximate fair value due to the short-term maturities of these instruments.

(f) Allowance for doubtful accounts:

The Company maintains an allowance for accounts for estimated losses that may result from our customers’ inability to pay. The Company estimates an allowance for doubtful accounts primarily based on the credit worthiness of customers, aging of receivable balances and general economic conditions. Amounts later determined and specifically identified to be uncollectible are charged against this allowance.

(g) Inventories:

Inventories consist of finished goods, unfinished product (work in process) and raw materials and are valued at the lower of cost or estimated net realizable value, determined on a first-in-first-out basis. Cost is defined as all costs that relate to bringing the inventory to its present condition and location under normal operating conditions. Estimated net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The components of inventory and inventory purchase commitments are reviewed on a regular basis for excess and obsolete inventory based on estimated future usage and sales, demand from drug distributors and hospitals and economic conditions. Management believes that the estimates used in calculating the inventory provision are reasonable and properly reflect the risk of excess and obsolete inventory.

(h) Property and equipment:

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

Asset	Rate
Laboratory equipment	5 years
Production equipment	7 years
Computer equipment	3-5 years
Software	3-5 years
Furniture and office equipment	5-7 years

Leasehold improvements are amortized on a straight-line basis over the lesser of their estimated useful life or the initial lease term.

4

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

2. Summary of significant accounting policies (continued):

(i) Intangible assets:

Intangible assets are comprised of patent costs, trade name, marketing rights and licenses. Patent costs which are associated with the preparation, filing, and obtaining of patents are capitalized. Maintenance costs of patents are expensed as incurred.

The estimated useful life of an intangible asset with a definite life is the period over which the asset is expected to contribute to future cash flows. When determining the useful life, the Company considers the expected use of the asset, useful life of a related intangible asset, any legal, regulatory or contractual provisions that limit the useful life, any legal, regulatory, or contractual renewal or extension provisions without substantial costs or modifications to the existing terms and conditions, the effects of obsolescence, demand, competition and other economic factors, and the expected level of maintenance expenditures relative to the cost of the asset required to obtain future cash flows from the asset.

Amortization is provided using the straight-line method over the following terms:

Asset	Rate
Patents	over the patent life
Trade name	10 years
Marketing rights	10 years
Licenses	10 years

(j) Goodwill:

Goodwill represents the excess of the purchase price of an acquired enterprise over the fair value assigned to assets acquired and liabilities assumed in a business combination. Goodwill is allocated as of the date of the business combination to the reporting units that are expected to benefit from the synergies of the business combination. Goodwill is not amortized, but reviewed for impairment on an annual basis or more frequently if impairment indicators arise. Qualitative factors are first assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the qualitative assessment indicates that the reporting unit may be impaired, a two-step impairment test which considers, among other things, the fair value of reporting units based on discounted estimated future cash flows, is performed. This review involves significant estimation uncertainty, which could affect the Company’s future results if the current estimates of future performance and fair values change.

(k) Impairment of long-lived assets:

Long-lived assets, including property and equipment, and intangible assets other than goodwill, are assessed for potential impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. The Company determines whether the carrying value of a long-lived depreciable

5

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

2. Summary of significant accounting policies (continued):

asset or asset group is recoverable based on its estimates of future asset utilization and undiscounted expected future cash flows the assets are expected to generate. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset.

(l) Deferred revenue:

Deferred revenue is recorded when upfront payments on distribution agreements are received. The deferred revenue is amortized into income over the applicable earnings period.

(m) Revenue recognition:

Product and royalty revenue

Revenue from sales of products is recognized upon the later of transfer of title or upon shipment of the product to the customer, so long as persuasive evidence of an arrangement exists, the sales price is fixed or determinable, and collection is reasonably assured. Provisions for chargebacks, rebates, sales incentives and returns are provided for in the same period the related sales are recorded. Sales taxes collected from customers in various European markets that must be remitted back to the relevant government authorities are excluded from revenues. Shipping and handling costs are included in cost of sales.

Royalty revenue is recognized on an accrual basis when earned in accordance with the agreement terms, when royalties from the collaborative partner are determinable and collection is reasonably assured, such as upon the receipt of a royalty statement from the collaborative partner.

Licensing and other fees

The Company earns revenue from collaboration and license agreements from the commercial sale of approved products. Royalties payable under license agreements are included in cost of sales.

(n) Research and development costs:

Research and development costs are expensed in the period incurred. These expenses include the costs of the Company’s proprietary R&D efforts, as well as costs incurred in connection with certain licensing arrangements. Before a drug product receives regulatory approval, upfront and milestone payments made to third parties under licensing arrangements are recorded as an expense. Upfront payments are recorded when incurred, and milestone payments are recorded when the specific milestone has been achieved. Once a drug product receives regulatory approval, any subsequent milestone payments made are recorded in intangible assets and, unless the asset is determined to have an indefinite life, the payments are amortized on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter. As of December 31, 2016, no amounts have been recorded in intangible assets.

6

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

2. Summary of significant accounting policies (continued):

(o) Clinical trial expenses:

Clinical trial expenses are a component of research and development costs and include fees paid to contract research organizations, investigators and other vendors who conduct certain product development activities on the Company’s behalf. The amount of clinical trial expenses recognized in a period related to service agreements are based on estimates of the work performed using an accrual basis of accounting. These estimates are based on patient enrollment, services provided and goods delivered, contractual terms and experience with similar contracts. The Company monitors these factors to the extent possible and adjusts its estimates accordingly. Prepaid expenses or accrued liabilities are adjusted if payments to service providers differ from estimates of the amount of service completed in a given period.

(p) Stock-based compensation and other stock-based payments:

Stock options and restricted share units granted to the Company’s directors, executive officers and employees are accounted for using the fair-value based method. Under this method, compensation expense for stock options is measured at fair value at the date of grant using the Black-Scholes valuation model and is expensed over the award’s vesting period on a graded basis. Stock options granted to consultants and to foreign employees with Canadian dollar denominated stock options are subject to variable accounting treatment and are re-valued at fair value at each balance sheet date until exercise, expiry or forfeiture. Compensation expense for restricted share units is measured at fair value at the date of grant, which is the market price of the underlying security, and is expensed over the award’s vesting period on a straight-line basis.

(q) Income taxes:

The Company accounts for income taxes using the liability method of tax allocation. Deferred income taxes are recognized for the deferred income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases. Deferred income tax assets and liabilities are measured using 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 deferred income tax assets and liabilities of a change in tax rates is included in income when a change in tax rates is enacted. Deferred income tax assets are evaluated periodically and if realization is not considered more likely than not, a valuation allowance is provided. Income tax credits, such as investment tax credits, are included as part of the provision for income taxes.

(r) Earnings (loss) per share:

Basic earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the treasury stock method. When the effect of options and other securities convertible into common shares is anti-dilutive, including when the Company has incurred a loss for the period, basic and diluted loss per share are the same.

7

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

2. Summary of significant accounting policies (continued):

Diluted earnings (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. Under the treasury stock method, the number of dilutive shares, if any, is determined by dividing the average market price of shares for the period into the net proceeds of in-the-money options.

(t) Comparative figures:

Certain comparative figures have been reclassified to conform with the financial statement presentation adopted for the current year.

3. Recent accounting pronouncements:

During the year ended December 31, 2016, the Company adopted ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, issued by the Financial Accounting Standards Board (the “FASB”) in April 2015. ASU 2015-03 changes the presentation of debt issuance costs in financial statements such that an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. As a result of the adoption, the Company reclassified unamortized debt issuance costs of $88 as of December 31, 2015 from other assets to a reduction in the current portion of long-term debt and $314 as of December 31, 2015 from other long-term assets to a reduction in long-term debt on the consolidated balance sheet.

During the year ended December 31, 2016, the Company adopted ASU 2014-15 “Presentation of Financial Statements – Going Concern, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which requires management to assess at each interim and annual reporting period whether substantial doubt exists about the Company’s ability to operate as a going concern. Substantial doubt exists if the Company will be unable to meet its obligations as they become due within one year after the financial statement issue date. If there is substantial doubt, additional disclosures are required.

During the year ended December 31, 2016, the Company adopted ASU 2015-02 “Consolidation – Amendments to the Consolidation Analysis”. There was no impact to the consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”. The amendments in ASU 2016-15 provide cash flow statement classification guidance on the following eight topics: 1. Debt Prepayment or Debt Extinguishment Costs; 2. Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; 3. Contingent Consideration Payments Made after a Business Combination; 4. Proceeds from the Settlement of Insurance Claims; 5. Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies; 6. Distributions Received from Equity Method Investees; 7. Beneficial Interests in Securitization Transactions; and 8. Separately

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CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

3. Recent accounting pronouncements (continued):

Identifiable Cash Flows and Application of the Predominance Principle. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”. ASU 2016-09 simplifies several aspects of accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statements of cash flows.  The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company is evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires lessees to recognize all leases, including operating leases, with a term greater than 12 months on the balance sheet, for the rights and obligations created by those leases. The accounting for lessors will remain largely unchanged from the existing accounting standards. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In May 2014, the FASB issued guidance codified in ASC 606, Revenue Recognition – Revenue from Contracts with Customers (“ASC 606”), which replaces the guidance in former ASC 605, Revenue Recognition. The amendment was the result of a joint effort by the FASB and the International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and international financial reporting standards ("IFRS"). The joint project clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. ASC 606 may be adopted using one of two methods: full retrospective or modified retrospective. Under the full retrospective approach, retrospective application is applied to each prior reporting period presented. Under the modified retrospective approach, retrospective application is applied with the cumulative effect of initially applying the update recognized at the date of initial application. The Company anticipates the adoption of ASC 606 under the modified retrospective approach on January 1, 2018. The Company’s evaluation of the impact of the new guidance on its consolidated financial statements is ongoing, however it currently anticipates that the standard may have an impact on the timing of revenue recognition of the Company’s individual long-term contracts without changing the total amount of revenue recognized. There is expected to be no changes to the treatment of cash flows and cash will continue to be collected in line with contractual terms.

9

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

4. Financial instruments:

Financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities, long-term debt and deferred consideration. The fair values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities and deferred consideration approximate carrying values because of their short-term nature. At December 31, 2016, the recorded amount of the Company’s long-term debt approximates fair value as the related interest rate approximates rates currently available to the Company. The long-term debt and deferred consideration are classified as Level 2 of the fair value hierarchy.

The Company’s financial instruments are exposed to certain financial risks, including credit risk and market risk.

(a) Credit risk:

Credit risk is the risk of financial loss to the Company if a partner or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s cash and cash equivalents and accounts receivable. The carrying amount of the financial assets represents the maximum credit exposure.

The Company limits its exposure to credit risk on cash and cash equivalents by placing these financial instruments with high-credit quality financial institutions.

The Company is subject to credit risk related to its accounts receivable. The majority of the Company’s accounts receivable arise from product sales which are primarily due from drug distributors and hospitals. The Company monitors the creditworthiness of its customers so that it can properly assess and respond to changes in their credit profile.

(b) Market risk:

Market risk is the risk that changes in market prices, such as foreign currency exchange rates and interest rates will affect the Company’s income or the value of the financial instruments held.

(i) Foreign currency risk:

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign currency risk as a portion of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, revenue, and operating expenses are denominated in other than U.S. dollars. The Company manages foreign currency risk by holding cash and cash equivalents in foreign currencies to support forecasted foreign currency cash outflows. The Company has not entered into any forward foreign exchange contracts.

(ii) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Financial

10

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

4. Financial instruments (continued):

instruments that potentially subject the Company to interest rate risk include cash and cash equivalents.

The Company is exposed to interest rate cash flow risk on its cash and cash equivalents as these instruments bear interest based on current market rates.

5. Restricted cash:

At December 31, 2016, restricted cash included $1,000 (2015 - $1,000) relating to amounts held in escrow in a non-interest bearing account in connection with the acquisition of Correvio LLC. This amount will be released from escrow upon the Company’s payment of all amounts owing under the deferred consideration liability plus all applicable accrued interest (note 11).

The Company also held restricted cash relating to deposits which are pledged as collateral for bank guarantees for sales contracts with various hospitals and health authorities of $1,443 (2015 - $1,196) and for operating lease arrangements of $104 (December 31, 2015 – nil).

6. Inventories:

	December 31,		December 31,
	2016		2015
Finished goods	$	1,757	$	1,193
Work in process		562		703
Raw materials		2,299		2,505
	$	4,618	$	4,401

During the year ended December 31, 2016, the Company had a write-down of inventory of $159 (2015 – $2,028). Included in the write-down during the year ended December 31, 2015 is a write-down of $1,125 of repurchased unsold inventory as part of a termination agreement.

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CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

7. Property and equipment:

			Accumulated		Net book
2016	Cost		amortization		value
Laboratory equipment	$	625	$	625	$	-
Production equipment		97		48		49
Software		161		85		76
Computer equipment		216		177		39
Leasehold improvements		399		107		292
Furniture and office equipment		187		95		92
	$	1,685	$	1,137	$	548

			Accumulated		Net book
2015	Cost		amortization		value
Laboratory equipment	$	625	$	598	$	27
Production equipment		96		30		66
Software		152		57		95
Computer equipment		240		149		91
Leasehold improvements		399		70		329
Furniture and office equipment		189		57		132
	$	1,701	$	961	$	740

During the year ended December 31, 2016, the Company wrote off computer equipment with a cost and accumulated amortization of $25 (2015 – nil). Amortization expense for the year ended December 31, 2016 amounted to $201 (2015 - $203).

12

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

8. Intangible assets:

			Accumulated		Net book
2016	Cost		amortization		value
Licenses	$	12,843	$	856	$	11,987
Marketing rights		15,830		4,948		10,882
Trade name		1,131		353		778
Patents		4,347		3,642		705
	$	34,151	$	9,799	$	24,352

			Accumulated		Net book
2015	Cost		amortization		value
Marketing rights	$	15,830	$	3,365	$	12,465
Trade name		1,131		240		891
Patents		4,312		3,447		865
	$	21,273	$	7,052	$	14,221

In the second quarter of 2016, the Company announced the execution of a license agreement with Allergan plc (“Allergan”), for the rights to commercialize dalbavancin (branded DALVANCE^® in the U.S. and XYDALBA^TM in the rest of the world) in France, the United Kingdom, Germany, Belgium, Nordic nations, other European nations, various Middle Eastern nations, and Canada. As consideration for the rights and licenses granted, the Company made non-refundable payments to Allergan of $13,000, along with incurring other transaction costs. Additional non-refundable milestone payments will be due to Allergan upon the Company’s achievement of various milestones. Royalty payments may also be due to Allergan based on achievement of pre-determined levels of annual net sales. The license will be amortized over the life of the agreement of 10 years.

Amortization expense for the year ended December 31, 2016 amounted to $2,783 (2015 - $1,974).

The estimated aggregate amortization expense for intangible assets held at December 31, 2016, for each of the five succeeding years is expected as follows:

2017	$	3,158
2018		3,126
2019		3,104
2020		3,083
2021		3,048

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CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

9. Accounts payable and accrued liabilities:

	December 31,		December 31,
	2016		2015
Trade accounts payable	$	3,924	$	3,474
Employee-related accruals		2,637		3,744
Interest payable on deferred consideration (note 11)		24		45
Other accrued liabilities		1,436		3,225
	$	8,021	$	10,488

10. Long term debt:

	December 31,			December 31,
	2016			2015
Principal amount	$	20,000		$	10,000
Less: unamortized debt issuance costs		(609	)		(402	)
Long-term debt, net of unamortized debt issuance costs	$	19,391		$	9,598
Less: current portion, net of unamortized debt issuance costs		-			(3,912	)
	$	19,391		$	5,686

On July 18, 2014, the Company closed a senior, secured term loan facility with MidCap Financial, LLC (“Midcap”) for up to $22,000 which consisted of two tranches bearing interest at a rate of LIBOR plus 8%. Interest was payable on a monthly basis. The first tranche of $12,000 was available for working capital and general corporate purposes. The second tranche of up to $10,000 was available to support a product or company acquisition. The loan carried a term of 48 months and was secured by substantially all of the assets of the Company. At December 31, 2015, the Company had a balance of $10,000 outstanding. During the year ended December 31, 2016, the Company extinguished the long-term debt from Midcap. The Company incurred a loss of $1,402 on the extinguishment of the long-term debt from Midcap. Of this amount, $256 related to the write-off of unamortized debt issuance costs and $1,146 related to prepayment and exit fees.

On June 13, 2016, the Company entered into a term loan agreement with CRG-managed funds for up to $30,000 consisting of three tranches bearing interest at 14% per annum. The first tranche of $20,000 was drawn at closing and was used to extinguish the long-term debt from Midcap and for general corporate purposes. The second and third tranches of $5,000 each are available to the Company if the Company is able to reach certain revenue milestones, as at December 2016 and June 2017, respectively. The Company reached the revenue milestone at December 31, 2016 and the second tranche of $5 million is available to the Company. The loan matures on March 31, 2021. Under the terms of the agreement, an interest-only period is

14

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

10. Long term debt (continued):

provided such that principal repayment begins in June 2019. Interest is payable on a quarterly basis through the full term of the loan. If certain revenue milestones are met by the Company, the interest-only period may be extended such that principal repayment begins in June 2020. The Company is required to meet certain annual revenue covenants. If the revenue covenants are not met, the Company may exercise a cure right by issuing additional common shares in exchange for cash or by borrowing subordinated debt in an amount equal to two times the difference between the minimum required revenue and the Company’s revenue. The cash received from the cure right would be considered repayment of principal. The Company was in compliance with this revenue covenant for the year ended December 31, 2016.

Future repayments are as follows:

2017	$	-
2018		-
2019		7,500
2020		10,000
2021		2,500
Total repayments	$	20,000

11. Deferred consideration:

On November 18, 2013, the Company completed the acquisition of Correvio LLC through the purchase of a combination of assets and shares in exchange for 19.9% of the Company’s then outstanding shares and deferred consideration of $12,000. The deferred consideration is being repaid monthly at an amount equal to 10% of cash receipts from product sales and any applicable interest accrued at 10% compounded annually.  The deferred consideration must be repaid in full by December 1, 2019.

15

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

12. 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.

(b) Issued and outstanding:

	Number
Common shares	of shares
Balance, December 31, 2014		16,591,002
Issued through at-the-market offering (i)		554,247
Issued through common share offering (ii)		2,875,000
Issued upon vesting of restricted share units, net of tax		7,246
Issued upon exercise of options in cashless transaction		10,431
Issued for cash upon exercise of options		109,411
Balance, December 31, 2015		20,147,337
Issued through common share offering (iii)		11,500,000
Issued to Lincoln Park Capital Fund, LLC (iv)		208,856
Issued upon vesting of restricted share units, net of tax		28,227
Balance, December 31, 2016		31,884,420

(i) On February 18, 2014, the Company completed a prospectus supplement under which the Company may issue common shares in one or more at-the-market (“ATM”) offerings up to an aggregate of $8,900. During the year ended December 31, 2015, the Company issued 554,247 common shares in the ATM offering for gross proceeds of $5,334.

On March 1, 2016, the Company filed a short form base shelf prospectus with the securities regulatory authorities in Canada, other than Quebec, and the United States Securities and Exchange Commission (the “SEC”) under a registration statement on Form F-10 (together, the “Base Shelf Prospectuses”). The Base Shelf Prospectuses provide for the potential offering in Canada and the United States of up to an aggregate of $250 million of the Company’s common shares, preferred shares, debt securities, warrants, subscription receipts and units from time to time over a 25-month period.

16

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

12. Share capital (continued):

On March 7, 2016, the Company filed an Amended and Restated At Market Issuance Sales Agreement (the “Sales Agreement”) with FBR Capital Markets & Co. (“FBR”) and MLV & Co. LLC (“MLV”). The Company entered into the Sales Agreement only as a result of the acquisition by FBR of MLV. The Company also filed a prospectus supplement, in connection with the filing of the Base Shelf Prospectuses, pertaining to the Sales Agreement under which the Company may issue common shares through ATM offerings with FBR and MLV as agents, up to an aggregate of $6,900. As at December 31, 2016, no shares have been issued and $6,900 remains available under the prospectus supplement.

(ii) On August 13, 2015, the Company completed a prospectus offering of 2,875,000 common shares from treasury at a price of US$8.00 per common share for gross proceeds of $23,000.

(iii) On July 29, 2016, the Company closed an underwritten public offering of 11,500,000 common shares from treasury at a price of US$3.00 per common share for gross proceeds of $34,500.

(iv) On January 12, 2016, the Company completed a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”) which allows LPC to purchase up to an aggregate value of $20 million worth of common shares in the capital of the Company. In consideration for entering into the agreement, the Company issued 48,856 common shares to LPC as a commitment fee. No proceeds were received for these shares which were valued at $335 and recorded as a share issuance cost. During the year ended December 31, 2016, the Company issued 160,000 common shares under the Purchase Agreement to LPC for gross proceeds $841.

On March 7, 2016, the Company filed a prospectus supplement, in connection with the filing of the Base Shelf Prospectuses, pertaining to the Purchase Agreement, under which the Company may sell its common shares to LPC up to an aggregate of $6,900. On December 22, 2016, the Company filed an amendment to this prospectus supplement. The Company’s closing share price must be equal to or greater than US$1.00 in order for a purchase to be effected. As at December 31, 2016, no shares have been issued and $6,900 remains available under the prospectus supplement.

17

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

13. Share-based compensation:

(a) Stock options:

Under the terms of the Company’s incentive stock option plan (the “Plan”), the Company may grant options to directors, executive officers, employees and consultants of the Company. The Plan provides for granting of options at the fair market value of the Company’s common shares at the grant date. Options generally vest over periods of up to four years with an expiry term of five years and generally vest in equal amounts at the end of each month. On June 16, 2014, shareholders approved an amendment to the Plan (the “Amended Plan”) whereby the maximum number of shares available for issue under the Amended Plan is a rolling number equal to a maximum of 12.5% of the issued common shares outstanding at the time of grant. Prior to this amendment, the number of shares available for issuance was a specified, fixed amount. Under the Amended Plan, the maximum number of stock options issuable to insiders continues to be restricted to 10% of the issued and outstanding common shares of the Company.

Details of the stock option transactions for the years ended December 31, 2016 and 2015 are summarized as follows:

	Number			Weighted average exercise price (CAD$)		Weighted average remaining contractual life (years)		Aggregate intrinsic value (CAD$)
Outstanding as at December 31, 2014		1,278,290			4.68		3.34		8,411
Options granted		382,900			10.84
Options exercised		(129,236	)		3.76
Options forfeited		(45,097	)		8.76
Options expired		(14,260	)		41.69
Outstanding as at December 31, 2015		1,472,597			5.88		2.88		8,024
Options granted		617,500			5.97
Options forfeited		(72,200	)		4.94
Options expired		(16,340	)		20.22
Outstanding as at December 31, 2016		2,001,557			5.82		2.72		1,110
Exercisable as at December 31, 2016		1,292,969			5.20		2.13		1,004

The outstanding options expire at various dates ranging from July 3, 2017 to August 10, 2021.

At December 31, 2016, stock options to executive officers and directors, employees and consultants were outstanding as follows:

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CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

13. Share-based compensation (continued):

	Options outstanding						Options exercisable
			Weighted		Weighted				Weighted
			average		average				average
			remaining		exercise				exercise
Range of			contractual		price				price
exercise prices (CAD$)	Number		life (years)		(CAD$)		Number		(CAD$)
$1.65 to $2.08		409,000		1.02		1.67		358,568		1.67
$2.09 to $5.63		454,683		1.68		3.78		430,983		3.71
$5.64 to $7.37		550,000		4.47		6.20		106,932		6.20
$7.38 to $13.09		587,874		3.07		9.92		396,486		9.74
		2,001,557		2.72		5.82		1,292,969		5.20

A summary of the Company’s non-vested stock option activity and related information for the year ended December 31, 2016 is as follows:

	Number			Weighted average
	of			grant-date fair value
Non-vested options	options			(U.S.$)
Non-vested at December 31, 2015		512,784			3.96
Granted		617,500			2.00
Vested		(417,744	)		2.56
Forfeited		(3,952	)		2.35
Non-vested at December 31, 2016		708,588			2.27

At December 31, 2016, there was $739 (2015 - $934) of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted average period of 1.3 years (2015 – 1.4 years).

The aggregate intrinsic value of stock options exercised during the year ended December 31, 2016 was nil as there were no stock options exercised. The aggregate intrinsic value of stock options exercised during the year ended December 31, 2015 was $743.

The aggregate fair value of vested options during the year ended December 31, 2016 was $1,071 (2015 - $1,404).

Stock options granted to the Company’s directors, executive officers and employees are accounted for using the fair-value based method. Under this method, compensation expense for stock options is measured at fair value at the date of grant using the Black-Scholes valuation model and is expensed over the award’s vesting period on a graded basis. Stock options granted to consultants and to foreign employees with Canadian dollar denominated stock options are subject to variable accounting treatment and are re-valued at fair value at each balance sheet date until exercise, expiry or forfeiture.

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CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

13. Share-based compensation (continued):

For the year ended December 31, 2016, $171 was recorded as stock-based compensation recovery with $1,323 being recorded as a recovery against liability and $1,152 being recorded as an expense against additional paid-in capital (2015 - $1,828 was recorded as stock-based compensation expense with $1,391 being recorded as an expense against liability and $437 being recorded as an expense against additional paid-in capital).

The weighted average fair value of stock options granted during the year ended December 31, 2016 was $2.00 (2015 - $4.50). The estimated fair value of the stock options granted was determined using the Black-Scholes option pricing model with the following weighted-average assumptions:

	December 31,			December 31,
	2016			2015
Dividend yield		-			-
Expected volatility		65.7	%		78.4	%
Risk-free interest rate		0.7	%		0.6	%
Expected average life of the options		3.1 years			3.4 years
Estimated forfeiture rate		-			-

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 on the contractual term of the options and on historical data of option holder exercise and post-vesting employment termination behaviour. Forfeitures are estimated at the time of grant and, if necessary, management revises that estimate if actual forfeitures differ and adjusts stock-based compensation expense accordingly.

(b) Restricted share unit plan:

During 2014, the Company established a treasury-based Restricted Share Unit Plan (the “RSU Plan”) to provide long-term incentives to certain executives and other key employees and to support the objective of employee share ownership through the granting of restricted share units (“RSUs”). There is no exercise price and no monetary payment is required from the employees to the Company upon grant of the RSUs or upon the subsequent issuance of shares to settle the award. The vested RSUs may be settled through the issuance of common shares from treasury, by the delivery of common shares purchased on the open market, in cash or in any combination of the foregoing, at the option of the Company. Vesting of RSUs is conditional upon the expiry of a time-based vesting period. The duration of the vesting period and other vesting terms applicable to the grant of the RSUs are determined at the time of the grant. Generally, RSUs vest annually over three years, in equal amounts, on the anniversary date of the date of grant.

20

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

13. Share-based compensation (continued):

Details of RSU transactions for the year ended December 31, 2016 are summarized as follows:

	Number			Weighted average grant date fair value (USD$)		Weighted average remaining contractual life (years)		Aggregate intrinsic value (USD$)
Outstanding as at December 31, 2015		132,108		$	8.91		2.16	$	1,058
RSUs granted		50,782			4.43				218
RSUs vested		(49,682	)		9.03				205
RSUs forfeited		(13,505	)		9.00
Outstanding as at December 31, 2016		119,703		$	6.95		1.71	$	334

At December 31, 2016, there was $537 (2015 - $828) of total unrecognized compensation cost related to non-vested RSUs. That cost is expected to be recognized over a weighted average period of 1.5 years (2015 – 2.2 years).

RSUs are valued at the market price of the underlying securities on the grant date and the compensation expense, based on the estimated number of awards expected to vest, is recognized on a straight-line basis over the three-year vesting period. For the year ended December 31, 2016, stock-based compensation expense related to RSUs of $431 (2015 – $377) was recorded in selling, general and administration expenses and recorded against additional paid-in capital.

14. Research and development expense:

In June 2015, the Company entered into a license and supply agreement with SteadyMed Ltd. for the distribution rights to TREVYENT^® that included an upfront payment of $3,000 upon execution of the agreement which was recorded in R&D expense.

21

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

15. Basic and diluted loss per share:

Basic loss per share is calculated as set forth below:

Year ended December 31	2016			2015
Net loss	$	(19,619	)	$	(24,462	)
Weighted average number of common shares for basic loss per share		25,255,413			18,198,840
Loss per share – basic	$	(0.78	)	$	(1.34	)

Diluted loss per share is calculated as set forth below:

Year ended December 31	2016			2015
Net loss	$	(19,619	)	$	(24,462	)
Less: recovery of fair value of liability classified awards		(433	)		-
Diluted loss available to common shareholders	$	(20,052	)	$	(24,462	)
Weighted average number of common shares for basic loss per share		25,255,413			18,198,840
Plus: incremental shares from assumed exercise		62,783			-
Diluted weighted average number of common shares for diluted loss per share		25,318,196			18,198,840
Loss per share – diluted	$	(0.79	)	$	(1.34	)

16. Commitments:

(a) Operating leases:

The Company has entered into operating leases for office space. Future minimum payments under the various operating leases are as follows:

2017	$	414
2018		414
2019		379
2020		328
2021		187
Thereafter		546
Total minimum payments required	$	2,268

Rent expense for the year ended December 31, 2016 was $614 (2015 - $655).

22

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

16. Commitments (continued):

(b) Commitments for clinical and other agreements:

The Company entered into various clinical and other agreements requiring it to fund future expenditures of $1,755 (2015 - $2,889).

(c) Purchase commitments:

The Company has purchase commitments with certain suppliers who assist in the production of AGGRASTAT^®. The amount of the purchase commitment is based on physical quantities manufactured; however, there is a minimum purchase obligation of $146 for years 2017 through 2020.

17. Income taxes:

The components of loss before income taxes consist of the following:

	2016			2015
Canadian	$	(13,602	)	$	(11,574	)
Foreign		(5,865	)		(12,899	)
Loss before income taxes	$	(19,467	)	$	(24,473	)

The reconciliation of income tax computed at statutory tax rates to income tax expense (recovery), using a 26.0% (2015 – 26.0%) statutory tax rate, is:

	December 31,			December 31,
	2016			2015
Loss before income taxes	$	(19,467	)	$	(24,473	)
Statutory tax rate		26.0	%		26.0	%
Income tax recovery at Canadian statutory income tax rates	$	(5,061	)	$	(6,363	)
Change in valuation allowance		4,197			4,290
Permanent differences		343			447
Tax rate differences		450			291
Foreign exchange and other differences		223			1,324
Income tax expense (recovery)	$	152		$	(11	)

23

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

17. Income taxes (continued):

Significant components of the Company’s deferred tax assets are shown below:

	December 31,			December 31,
	2016			2015
Deferred tax assets:
Tax loss carryforwards	$	80,963		$	76,694
Research and development deductions and investment tax credits		27,709			29,116
Tax values of depreciable assets in excess of accounting values		3,230			2,773
Share issue costs and other		1,413			544
Total deferred tax assets		113,315			109,127
Valuation allowance		(112,855	)		(108,658	)
Net deferred tax assets	$	460		$	469

At December 31, 2016, the Company has investment tax credits of $16,512 (2015 - $17,577) available to reduce deferred income taxes otherwise payable.

The Company also has total loss carryforwards of $327,455 (2015 - $313,062) available to offset future taxable income: in Canada, in the amount of $188,444 (2015 - $173,698); in Switzerland, in the amount of $93,314 (2015 - $93,205); in the United States, in the amount of $44,933 (2015 - $45,289); and in the United Kingdom, in the amount of $764 (2015 - $870).

The Company’s Canadian federal and provincial investment tax credits and non-capital losses for income tax purposes expire as follows:

	Investment		Non-capital
	tax credits		losses
2017	$	975	$	-
2018		145		-
2019		501		3,384
2020		481		34,506
2021		528		6,478
Thereafter until 2035		13,882		283,087
	$	16,512	$	327,455

The Company recognizes interest and penalties related to income taxes in interest and other income. To date, the Company has not incurred any significant interest and penalties. The Company is subject to assessments by various taxation authorities which may interpret tax legislations and tax filing positions differently from the Company. The Company provides for such differences when it is likely that a taxation authority will not sustain the Company’s filing position

24

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

17. Income taxes (continued):

and the amount of the tax exposure can be reasonably estimated. As at December 31, 2016, a provision of nil (2015 - nil) has been made in the financial statements for estimated tax liabilities. Tax years ranging from 2004 to 2016 remain subject to examination in the various countries we operate in.

18. Related party transactions:

During the year ended December 31, 2016, the Company incurred expenses for consulting services provided by a company owned by one of the officers of the Company. The amounts charged were recorded at their exchange amounts and were subject to normal trade terms. For the year ended December 31, 2016, the Company incurred expenses of $148 for services provided by the consulting company relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2016 was $148 owing to the consulting company.

During the year ended December 31, 2015, the Company incurred expenses for services provided by a law firm in which a director of one of the Company’s wholly owned subsidiaries was a partner. The amounts charged were recorded at their exchange amounts and were subject to normal trade terms. For the year ended December 31, 2015, the Company incurred legal fees of $63 for services provided by the law firm relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2015 was $12 owing to the legal firm. For the year ended December 31, 2016, the law firm was no longer a related party. The Company also incurred expenses for services provided by an accounting firm in which a director of one of the Company’s wholly owned subsidiaries was a partner. The amounts charged were recorded at their exchange amounts and were subject to normal trade terms. For the year ended December 31, 2015, the Company incurred accounting fees of $35 for services provided by the accounting firm relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2015 was $31 owing to the accounting firm. For the year ended December 31, 2016, the accounting firm was no longer a related party.

19. 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

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

As at and for the years ended December 31, 2016 and 2015

19. Contingencies (continued):

(c) The Company has entered into license and research agreements with third parties that include indemnification provisions that are customary in the industry. These indemnification provisions 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.

20. Segmented information:

Revenue is earned through the sale of the Company’s commercialized products. During the years ended December 31, 2016 and 2015, the sale of AGGRASTAT^® accounted for more than 90% of total revenue.

The Company recognizes segmentation based on geography as follows:

Year ended December 31, 2016	Europe			Rest of World			Total
Revenue	$	10,931		$	14,325		$	25,256
Cost of goods sold		2,585			3,725			6,310
Gross margin		8,346			10,600			18,946
Gross margin %		76	%		74	%		75	%

Year ended December 31, 2015	Europe			Rest of World			Total
Revenue	$	10,572		$	10,338		$	20,910
Cost of goods sold		3,191			3,396			6,587
Gross margin		7,381			6,942			14,323
Gross margin %		70	%		67	%		68	%

26

CARDIOME PHARMA CORP.

Notes to Consolidated Financial Statements

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

As at and for the years ended December 31, 2016 and 2015

20. Segmented information (continued):

During the years ended December 31, 2016 and 2015, there were two customers that individually accounted for more than 10% of total revenue. In 2016, these customers accounted for 23% and 20% of total revenue (2015 – 28% and 19%).

Property and equipment by geographic area were as follows:

As at December 31	2016		2015
Europe	$	116	$	95
Rest of World		432		645
	$	548	$	740

27

EX-1.3

Exhibit 1.3

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This management discussion and analysis (“MD&A”) of Cardiome Pharma Corp. (“Cardiome”, “we”, “us” or “our”) for the year ended December 31, 2016 is as of March 6, 2017. 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, Cardiome is 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 audited consolidated financial statements for the year ended December 31, 2016 and the related notes thereto. Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All amounts are expressed in U.S. dollars unless otherwise indicated.

This MD&A contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act and applicable Canadian securities laws regarding expectations of our future performance, liquidity and capital resources, as well as marketing plans, future revenues from sales of BRINAVESS™, AGGRASTAT^®, XYDALBA™, ESMOCARD^®, ESMOCARD LYO^® and TREVYENT^®, the expected completion of the transition of global rights to vernakalant to Cardiome by Merck & Co., Inc., known as Merck Sharp & Dohme (“MSD”) outside Canada and the United States, whether we will receive, and the timing and costs of obtaining regulatory approvals in the United States, Canada, Europe and other countries, the clinical development of our product candidates, the anticipated use of proceeds under the Purchase Agreement, the Sales Agreement or pursuant to the Offering (all as defined herein), the availability of future proceeds under the CRG Term Loan (as defined herein) and other non-historical statements, which are based on our current expectations and beliefs, including certain factors and assumptions, as described in our most recent 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 “believe”, “may”, “plan”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect” 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, including our most recent amended Annual Report on Form 40-F/A filed with the United States Securities Exchange Commission (the “SEC”), and our most recent Annual Information Form, is available by accessing the SEC’s Electronic Document Gathering and Retrieval System (“EDGAR”) website at www.sec.gov or the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com.

OVERVIEW

Cardiome is a specialty pharmaceutical company dedicated to offering patients and healthcare providers innovative therapeutic options that effectively, safely, and conveniently manage acute medical conditions to improve health and quality of life. We strive to find innovative, differentiated medicines that provide therapeutic and economic value to patients, physicians and healthcare systems. We currently have two marketed, in-hospital cardiology products, BRINAVESS^™ and AGGRASTAT^®, which are commercially available in markets outside of the United States. We have licensed a European-approved antibiotic, XYDALBA™ (dalbavancin) that we have launched commercially in Germany and the United Kingdom and expect to commercialize in France, Belgium, Nordic nations, Canada, certain other European countries and some countries in the Middle East over time. In addition, we have also licensed commercialization rights to a pre-registration drug/device combination product, TREVYENT^®, for the treatment of pulmonary arterial hypertension (“PAH”) in certain regions outside the United States and commercialization rights to cardiology products ESMOCARD^® and ESMOCARD LYO^® (esmolol hydrochloride) in certain European countries.

BRINAVESS™(vernakalant (IV)) was approved in the European Union in September 2010 and is currently registered and approved in approximately 50 countries for the rapid conversion of recent onset atrial fibrillation (“AF”) to sinus rhythm in adults (for non-surgery patients with AF of seven days or less) and for use in post-cardiac surgery patients with AF of three days or less. BRINAVESS^™ is mentioned as a first-line therapy in the European Society of Cardiology AF guidelines for the cardioversion of recent onset AF in patients with no, or minimal/moderate, structural heart disease.

 1

AGGRASTAT^® (tirofiban hydrochloride) is a reversible GP IIb/IIIa inhibitor (an intravenous anti-platelet drug) for use in patients with Acute Coronary Syndrome. AGGRASTAT^® is currently registered and approved in more than 60 countries worldwide. We acquired the marketing rights outside of the United States to AGGRASTAT^® as part of the transaction in which we also acquired Correvio LLC and its subsidiaries (“Correvio”), a privately held pharmaceutical company headquartered in Geneva, Switzerland, in November 2013.

Both BRINAVESS™ and AGGRASTAT^® are available commercially outside of the United States either directly through our own sales force in Europe or via our global distributor and partner network. We have a comprehensive global distributor and partner network that allows our products to be commercialized in many countries worldwide.

XYDALBA™ (dalbavancin) was approved by the European Medicines Agency (the “EMA”) in February 2015 as a treatment for Acute Bacterial Skin and Skin Structure Infections (“ABSSSI”) in adults. Dalbavancin is commercialized under the trade name XYDALBA™ in certain countries outside the United States and DALVANCE^® in the United States. Cardiome launched XYDALBA™ in Germany and the United Kingdom in December 2016.

TREVYENT^® (treprostinil sodium) is a development stage drug product that combines SteadyMed Ltd’s (“SteadyMed”) PatchPump technology, a drug delivery device, with treprostinil, a vasodilatory prostacyclin analogue to treat PAH. PatchPump is a proprietary, disposable, parenteral drug administration platform that is prefilled and preprogrammed at the site of manufacture.

ESMOCARD^® is indicated for the treatment of supraventricular tachycardia (except for pre-excitation syndromes) and for the rapid control of the ventricular rate in patients with AF or atrial flutter in perioperative, postoperative, or other circumstances where short-term control of the ventricular rate with a short-acting agent is desirable. ESMOCARD^® is also indicated for tachycardia and hypertension occurring in the perioperative phase and non-compensatory sinus tachycardia where, in the physician’s judgement, the rapid heart rate requires specific intervention. ESMOCARD^® is not intended for use in chronic settings.

BRINAVESS™ (Vernakalant (IV))

BRINAVESS™, the intravenous formulation of vernakalant hydrochloride, is an antiarrhythmic medicine for the treatment of AF. AF occurs when the electrical signals in the heart’s upper chambers (atria) beat in an uncoordinated and uncontrolled fashion. This can cause irregular and oftentimes rapid heart rhythms. Patients with AF frequently experience symptoms such as palpitations, chest pain, shortness of breath, fatigue, light-headedness, and fainting. AF also increases the risks for stroke and development of heart failure. BRINAVESS™ acts preferentially in the atria to block ionic currents and normalise the electrical signals converting the patient’s heart rhythm to sinus rhythm. BRINAVESS™ is approved in certain countries for the rapid conversion of recent onset AF to sinus rhythm in adults, for non-surgery patients with AF of 7 days or less and for post-cardiac surgery patients with AF of 3 days or less.

We have exclusive, global development and marketing rights to BRINAVESS™, and are responsible for all future development and commercialization of the product, subject to ongoing transfer of certain rights from MSD and its affiliates. Transfers have been delayed in certain jurisdictions due to routine regulatory requirements.

 2

North America

In December 2006, our former partner, Astellas Pharma US, Inc. (“Astellas”), filed a New Drug Application (“NDA”) for vernakalant (IV) with the U.S. Food and Drug Administration (“FDA”). In August 2008, the FDA notified Astellas that the application was approvable. After discussions between the FDA and Astellas, a confirmatory Phase 3 clinical trial (“ACT 5") was initiated in October 2009 under a Special Protocol Assessment. In October 2010, a clinical hold was placed on ACT 5 following a single unexpected serious adverse event of cardiogenic shock experienced by a patient with AF who received vernakalant (IV). The ACT 5 study was terminated. As of the date of this MD&A, the clinical program for vernakalant (IV) remains on hold in the United States. In 2013, when sponsorship of the U.S. Investigational New Drugs (“INDs”) for vernakalant (IV) and vernakalant (oral) and the NDA for vernakalant (IV) were transferred to us from MSD, we initiated discussions with the FDA to determine the next steps for the development of vernakalant (IV) in the United States. The program remains on clinical hold pending agreement of a suitable development path. In pursuit of alternative development scenarios, and after dialogue with the FDA, Cardiome has initiated additional nonclinical studies. Upon completion of these studies, it is Cardiome’s intention to re-engage with the Cardiorenal Division to discuss paths forward.

In December 2015, we announced the filing of a New Drug Submission (“NDS”) with Health Canada’s Therapeutic Products Directorate (the “TPD”) seeking Canadian approval of vernakalant (IV) for the rapid conversion of recent onset AF to sinus rhythm in adults with AF for up to seven days. Following completion of screening (May 2016), the TPD initiated a detailed review of the NDS. A decision on the approvability of BRINAVESS™ is expected within Health Canada’s target NDS review time of 300 days from completion of screening.

Rest of World (Outside North America)

In April 2009, we entered into two collaboration and license agreements (“the Collaboration Agreements”) with MSD for the development and commercialization of vernakalant. The Collaboration Agreements provided an affiliate of MSD with exclusive rights outside of North America to vernakalant (IV).

Under the terms of the Collaboration Agreements, MSD paid us an initial fee of $60 million. In addition, we were eligible to receive up to an additional $200 million in payments, of which we received $45 million. In July 2009, MSD submitted a Marketing Authorization Application (“MAA”) to the European Medicines Agency (“EMA”) seeking marketing approval for vernakalant (IV) in the European Union. In September 2010, vernakalant (IV) received marketing approval under the trade name BRINAVESS™ in the European Union, Iceland and Norway. After receipt of marketing approval, MSD began its commercial launch of BRINAVESS™ in a number of European countries.

In September 2012, MSD gave notice to us of its termination of the Collaboration Agreements. In April 2013 we took responsibility for worldwide sales, marketing, and promotion of vernakalant (IV) and in September 2013 we completed the transfer of commercialization responsibility for BRINAVESS™ in the European Union and of the responsibility to complete the post-marketing study for BRINAVESS™. Since this date, we have been supplying BRINAVESS™ under our own trade dress.

In September 2013, we entered into an agreement with MSD for the continued transfer of marketing authorizations. On a per country basis, regulatory and commercialization responsibilities have been transferred to us upon agencies’ approvals of marketing authorization transfers. As a result of routine regulatory requirements, the transfers have been delayed in certain jurisdictions.

 3

In December 2014, Eddingpharm (Asia) Macao Commercial Offshore Limited (“Eddingpharm”) acquired rights to develop and commercialize BRINAVESS™ in China, Taiwan, and Macau and to re-launch BRINAVESS™ in Hong Kong. Eddingpharm will be responsible for any clinical trials and regulatory approvals required to commercialize BRINAVESS™ in the countries covered by the agreement. Under the terms of the agreement, Eddingpharm agreed to an upfront payment of $1 million and specific annual commercial goals for BRINAVESS™. We are also eligible to receive regulatory milestone payments of up to $3 million.

In August 2015, we announced that the Secretary of State for the U.K. Department of Health approved pricing for BRINAVESS™. The approved amount represents a maximum price per vial of BRINAVESS™ in the United Kingdom. It is consistent with pricing in other territories and our economic forecasts. Pricing approval is a step on the path to formulary coverage.

In January and March 2016, we filed Marketing Authorization Applications with the Kingdom of Saudi Arabia’s Saudi Food and Drug Authority and the United Arab Emirates’ Ministry of Health, respectively, seeking approval of BRINAVESS™. 

Clinical Development and Post-Approval Studies

We are conducting a post-approval safety study in the European Union as part of our follow-up measures with the EMA. This 2,000 patient observational study will collect information about patients receiving BRINAVESS™, to characterize the normal use and dosing of the product, and to provide better estimates of the incidence of medically significant health outcomes of interest. The study was initiated in September 2011.

In China, Eddingpharm completed a Phase 1 study and plans are underway for the initiation of a Phase 3 trial in AF patients.

Vernakalant (oral)

Vernakalant (oral) is being developed as an oral maintenance therapy for the long-term prevention of AF recurrence. Two Phase 2 clinical trials have been completed.

As part of the Collaboration Agreements, MSD acquired exclusive rights for the development and commercialization of vernakalant (oral). In March 2012, MSD informed us of its decision to discontinue further development and in September 2012, MSD returned global marketing and development rights to us. The IND was transferred to us in 2013. In January 2016, we submitted an application for orphan drug designation for vernakalant (oral) for the prevention of post-operative AF in patients undergoing coronary artery bypass graft surgery to the FDA's Office of Orphan Products Development (the “OOPD”). In June 2016, we received notification from the OOPD that we were unsuccessful with our application.

AGGRASTAT^® for Acute Coronary Syndrome

AGGRASTAT^® contains tirofiban hydrochloride, which is a reversible GP IIb/IIIa inhibitor for use in indicated Acute Coronary Syndrome patients. AGGRASTAT^® is used to help assist the blood flow to the heart and to prevent chest pain and/or heart attacks (both STEMI – ST-elevation myocardial infarction, and NSTE-ACS – non-ST-elevation acute myocardial infarction). It works by preventing platelets, cells found in the blood, from forming into blood clots within the coronary arteries and obstructing blood flow to the heart muscle which can result in a heart attack. The medicine may also be used in patients whose heart vessels are dilated with a balloon (percutaneous coronary intervention), a procedure used to open up blocked or obstructed arteries in the heart in order to improve the blood flow to the heart muscle (myocardium) with or without the placement of a coronary stent. AGGRASTAT^® is administered intravenously, and has been on the market for many years.

 4

Applications for the extension of the indication statement for AGGRASTAT^® are continuing worldwide, most recently with the submission of a supplemental NDS in Canada in July 2015.

In September 2015, we entered into an agreement with Mitsubishi Tanabe Pharma Europe Ltd. (“MTPE”), a subsidiary of Mitsubishi Tanabe Pharma Corporation headquartered in Japan, to co-promote AGGRASTAT^® and MTPE’s EXEMBOL^® (argatroban monohydrate) in the United Kingdom. EXEMBOL^® is indicated for anticoagulation in adult patients with heparin-induced thrombocytopenia type II who require parenteral antithrombotic therapy. The co-promotion agreement is for an initial term of three years.

XYDALBA™

In May 2016, we announced the execution of an exclusive license agreement with Allergan plc (“Allergan”), for the rights to commercialize dalbavancin (branded DALVANCE^® in the United States, where it is marketed by Allergan, and XYDALBA™ in the rest of the world) in the United Kingdom, Germany, France, Denmark, Iceland, Finland, Malta, Norway, Sweden, Belgium, the Netherlands, Luxemburg, Ireland, Switzerland, Canada and certain countries in the Middle East. XYDALBA™ fits Cardiome’s commercial footprint as a differentiated specialty pharmaceutical company focused on commercializing proprietary growth pharmaceuticals in Europe and Canada. In December 2016, we initiated the launch of XYDALBA™ in the United Kingdom and Germany and expect to continue to commercialize in other countries over time.

XYDALBA™ is a second generation, semi-synthetic lipoglycopeptide. XYDALBA™ is the first and only IV antibiotic approved in Europe for the treatment of ABSSSI with a single dose regimen of 1500 mg administered over 30 minutes or a two-dose regimen of 1000 mg followed one week later by 500 mg, each administered over 30 minutes. This dosing regimen makes it possible to treat patients with ABSSSI in an outpatient setting, avoiding hospitalization or potentially allowing earlier discharge, without compromising efficacy. XYDALBA™ demonstrates bactericidal activity in vitro against a range of Gram-positive bacteria, such as Staphylococcus aureus (including methicillin-resistant, also known as MRSA, strains) and Streptococcus pyogenes, as well as certain other streptococcal species.

TREVYENT^®

In June 2015, we entered into an exclusive license and supply agreement (the “License Agreement”) with SteadyMed to commercialize the development-stage product TREVYENT^® (treprostinil) in Europe, Canada and the Middle East.

Pursuant to the License Agreement, SteadyMed granted us an exclusive royalty-bearing license to commercialize TREVYENT^® in Europe, Canada and the Middle East if TREVYENT^® is approved for the treatment of pulmonary arterial hypertension (“PAH”) in such regions. Under the License Agreement, SteadyMed will receive up to $12.3 million in connection with regulatory and sales milestones, including an upfront payment of $3 million. We have agreed to pay to SteadyMed a transfer price on finished goods and a scaling double-digit royalty on future TREVYENT^® sales.

PAH is a type of high blood pressure that occurs in the right side of the heart and in the arteries that supply blood to the lungs. PAH worsens over time and is life-threatening because the pressure in a patient’s pulmonary arteries rises to dangerously high levels, putting a strain on the heart. There is no cure for PAH, but several medications are available to treat symptoms, such as Remodulin^® (treprostinil sodium), the market-leading prostacyclin PAH therapy produced by United Therapeutics Corporation.

TREVYENT^® is a development stage drug product that combines SteadyMed’s PatchPump technology with treprostinil, a vasodilatory prostacyclin analogue to treat PAH. PatchPump is a proprietary, disposable, parenteral drug administration platform that is prefilled and preprogrammed at the site of manufacture.

 5

In January 2016, we announced that the EMA approved our request to review TREVYENT^® under the Centralised Authorisation Procedure drug review process. This procedure results in a single marketing authorization that is valid in all 28 European Union countries and three European Economic Area countries.

ESMOCARD^® and ESMOCARD LYO^®

During 2015, we continued to evaluate in-licensing and acquisition opportunities that complement our product and operational capabilities. As a result, in May 2015, we entered a commercialization agreement with AOP Orphan Pharma (“AOP”) to sell AOP’s cardiovascular products, ESMOCARD^® and ESMOCARD LYO^® in Italy, France, Spain and Belgium.

Supraventricular tachycardia refers to a rapid heart rhythm of the upper heart chambers (atria). Electrical signals in the atria fire abnormally, which interferes with electrical signals coming from the sinoatrial node - the heart’s natural pacemaker. A series of early beats in the atria speeds up the heart rate. The rapid heartbeat does not allow enough time for the heart to fill before it contracts so blood flow to the rest of the body is compromised.

ESMOCARD^® is indicated for the treatment of supraventricular tachycardia (except for pre-excitation syndromes) and for the rapid control of the ventricular rate in patients with AF or atrial flutter in perioperative, postoperative, or other circumstances where short-term control of the ventricular rate with a short-acting agent is desirable. ESMOCARD^® is also indicated for tachycardia and hypertension occurring in the perioperative phase and non-compensatory sinus tachycardia where, in the physician’s judgement the rapid heart rate requires specific intervention. ESMOCARD^® is not intended for use in chronic settings.

 6

Product Portfolio

The following table summarizes our portfolio of products:

Program	Stage of Development
BRINAVESS ™ (Vernakalant (IV)) EU & ROW	Approved in approximately 50 countries worldwide, including those in the European Union.
BRINAVESS™ (Vernakalant (IV)) US	On clinical hold. Seven global Phase 3 clinical trials reported.
AGGRASTAT® (tirofiban hydrochloride) outside of the United States	Approved in more than 60 countries worldwide.
XYDALBA™ (dalbavancin)	Centrally approved in the European Union. Pre-registration in Switzerland, Canada and the Middle East
TREVYENT®	Pre-registration worldwide.
ESMOCARD® and ESMOCARD LYO® (esmolol hydrochloride)	Approved or pre-registration in Europe.
Vernakalant (oral)	Two Phase 2 clinical trials completed.

CORPORATE UPDATE

Amendment to the Purchase Agreement with Lincoln Park Capital Fund, LLC

On December 22, 2016, we filed an amendment to our prospectus supplement dated March 7, 2016 to the Base Shelf Prospectuses (as defined below) in connection with an amendment to our Purchase Agreement dated January 12, 2016 (as amended, the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”).

Under the terms of the Purchase Agreement, we may sell to LPC, at our sole discretion from time to time, up to 4,027,453 common shares for an aggregate offering amount of up to $20.0 million until December 31, 2018, subject to the conditions and limitations set forth in the Purchase Agreement. The purchase price of any common shares sold to LPC will be based on the then prevailing market prices of the common shares. We may terminate the Purchase Agreement at any time, at our sole discretion, without any monetary cost or penalty to us upon one business day’s written notice to LPC. Our closing share price must be equal to or greater than $1.00 in order for a purchase to be effected.

In consideration for entering into the original purchase agreement, we issued 48,856 common shares to LPC as a commitment fee. We plan to use the net proceeds, if any, for general corporate purposes. We have sold 160,000 common shares to LPC for gross proceeds of $0.8 million under the Purchase Agreement. 

 7

Common Share Offering

On July 29, 2016, we closed an underwritten public offering (the “Offering”) of 11,500,000 common shares from treasury, including the underwriters' full exercise of their option to purchase 1,500,000 common shares, at a price to the public of US$3.00 per common share, for aggregate gross proceeds of $34.5 million before deducting the underwriting commission and estimated Offering expenses payable by us.

We used some of the net proceeds from the Offering for the payment of the upfront licensing fee pursuant to the exclusive license agreement with Allergan, for the in-licensing of dalbavancin, and for general corporate purposes. Any remaining net proceeds from the Offering will be used for milestone payments related to pricing reimbursements and launches of dalbavancin and for general corporate purposes.

Term Loan Agreement with CRG-Managed Funds

On June 13, 2016, we entered into a term loan agreement (the “Term Loan Agreement”) with CRG-managed funds for up to $30 million consisting of three tranches bearing interest at 14% per annum (the “CRG Term Loan”). The first tranche of $20 million has been drawn and was used to extinguish existing long-term debt from Midcap Financial, LLC (“Midcap”) and for general corporate purposes. The second and third tranches of $5 million each are available to us if we reach certain revenue milestones, as at December 2016 and June 2017, respectively. We reached the revenue milestone at December 31, 2016 and the second tranche of $5 million is available to us. The loan matures on March 31, 2021. Under the terms of the agreement, an interest-only period is provided such that principal repayment begins in June 2019; interest is payable on a quarterly basis through the full term of the loan. If we meet certain revenue milestones, the interest-only period may be extended such that principal repayment begins in June 2020. We expect to begin principal repayment in June 2019.

We are required to meet certain annual revenue covenants, starting for the year ending December 31, 2016. If the revenue covenants are not met, we may exercise a cure right by issuing additional common shares in exchange for cash or by borrowing subordinated debt in an amount equal to two times the difference between the minimum required revenue and our revenue. The cash received from the cure right would be considered repayment of principal. We were in compliance with this revenue covenant for the year ended December 31, 2016.

Filing of Shelf Prospectus

We filed a short form base shelf prospectus with the securities regulatory authorities in Canada, other than Quebec, and the SEC under a registration statement on Form F-10 on March 1, 2016 (together, the “Base Shelf Prospectuses”). The Base Shelf Prospectuses provide for the potential offering in Canada and the United States of up to an aggregate of $250.0 million of our common shares, preferred shares, debt securities, warrants, subscription receipts and units from time to time over a 25-month period. The Offering with gross proceeds of $34.5 million was applied against the Base Shelf Prospectuses.

Amended and Restated At Market Issuance Sales Agreement

In connection with the filing of the Base Shelf Prospectuses, we also filed a new prospectus supplement pertaining to sales under the previously-announced Amended and Restated At Market Issuance Sales Agreement dated March 7, 2016 (the “Sales Agreement”) with FBR Capital Markets & Co. (“FBR”) and MLV & Co. LLC (“MLV”).

Under the terms of the Sales Agreement, we may sell, from time to time, through “at-the-market” offerings with FBR and MLV as agents, such common shares as would have an aggregate offer price of up to US$30.0 million. FBR and MLV, at our discretion and instruction, will use their commercially reasonable efforts to sell the common shares at market prices from time to time. The Sales Agreement amends and restates the At Market Issuance Sales Agreement dated February 18, 2014 (the “Original Sales Agreement”) with MLV. We entered into the Sales Agreement only as a result of the acquisition by FBR of MLV.

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We did not issue any common shares under the Sales Agreement during the year ended December 31, 2016. We intend to use the net proceeds, if any, for general corporate purposes. During the year ended December 31, 2015, we issued 554,247 of our common shares under the Original Sales Agreement for gross proceeds of $5.3 million.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth selected consolidated data for the years ended December 31, 2016, 2015 and 2014 as follows:

(In thousands of U.S. dollars, except per share amounts)	2016			2015			2014
Statement of operations data:
Revenue	$	25,256		$	20,910		$	30,042
Operating loss		(14,551	)		(22,081	)		(16,585	)
Net loss		(19,619	)		(24,462	)		(18,227	)
Basic loss per common share	$	(0.78	)	$	(1.34	)	$	(1.12	)
Diluted loss per common share	$	(0.79	)	$	(1.34	)	$	(1.12	)
Balance sheet data:
Total assets	$	67,057		$	48,228		$	50,115
Long-term debt		20,000			10,000			12,000
Deferred consideration		2,815			5,097			7,588

RESULTS OF OPERATIONS – 2016

Year ended December 31, 2016 compared to year ended December 31, 2015

We recorded a net loss of $19.6 million (basic loss per share of $0.78) for the year ended December 31, 2016, compared to a net loss of $24.5 million (basic loss per share of $1.34) for the year ended December 31, 2015. The decrease in net loss was due primarily to an increase in revenue and a decrease in research and development (“R&D”) expense as we made an upfront payment of $3.0 million to SteadyMed upon the execution of the License Agreement for TREVYENT^® in 2015.

Revenue

Revenue for the year ended December 31, 2016 was $25.3 million compared to revenue of $20.9 million for the year ended December 31, 2015. The increase in revenue was due to increased sales, the timing of distributor sales and a reserve recorded against revenue for the year ended December 31, 2015 in relation to disputed historical product returns with a distributor.  The dispute was subsequently settled for approximately $1.0 million in the first quarter of 2016.

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Revenue is earned through the sale of our commercialized products. During the years ended December 31, 2016 and 2015, the sale of AGGRASTAT^® accounted for more than 90% of total revenue. Revenue may fluctuate between periods based on the timing of large and infrequent distributor orders. These distributor orders may impact both quarterly and annual revenue figures, and the related variance compared to prior periods, because a large order may comprise a relatively large proportion of the period’s total revenue. As a result, changes in revenues on a period-to-period basis may not provide a clear indication of actual sales trends.

Gross Margin

Gross margin for the year ended December 31, 2016 was 75.0%, compared to 68.5% for the year ended December 31, 2015. Included in cost of goods sold for the year ended December 31, 2015 was a $1.1 million charge for a write-down of inventory as a result of the termination of a distribution agreement.

Selling, General & Administration Expense

Selling, general and administration (“SG&A”) expense was $30.5 million for the year ended December 31, 2016, compared to $31.0 million for the year ended December 31, 2015. The decrease in SG&A expense was primarily due to a one-time $0.8 million charge related to the termination of a distributor agreement in 2015.

Research and Development Expense

Research and development (“R&D”) expense for the year ended December 31, 2016 was nil, compared to $3.2 million for the year ended December 31, 2015 reflecting the $3.0 million upfront payment we made to SteadyMed upon the execution of the License Agreement for TREVYENT^® in 2015.

Interest Expense

Interest expense was $2.5 million for the year ended December 31, 2016, compared to $2.3 million for the year ended December 31, 2015. The increase was due to an increase in long-term debt as we entered into the CRG Term Loan in the second quarter of 2016.

Loss on Extinguishment of Long-term Debt

During the year ended December 31, 2016, we had a loss on extinguishment of long-term debt of $1.4 million compared to nil for the year ended December 31, 2015. In the second quarter of 2016, we extinguished our senior secured term loan facility with Midcap and as a result, incurred a loss of $1.4 million due to the write-off of unamortized debt issuance costs and to exit and prepayment fees.

RESULTS OF OPERATIONS - 2015

Year ended December 31, 2015 compared to year ended December 31, 2014

We recorded a net loss of $24.5 million (loss per share of $1.34) for the year ended December 31, 2015, compared to a net loss of $18.2 million (loss per share of $1.12) for the year ended December 31, 2014. The increase in net loss was due primarily to a decrease in revenue.

Revenue

Revenue for the year ended December 31, 2015 was $20.9 million compared to revenue of $30.0 million for the year ended December 31, 2014. The decrease was due to foreign exchange translation on Euro denominated revenue ($2.0 million), the timing of distributor sales which included a distributor’s 2015 order ($1.7 million) being delayed to 2016, a decrease in AGGRASTAT^® sales due to generic competition versus the previous year and a reserve recorded against revenue for the year ended December 31, 2015 in relation to disputed historical product returns with a distributor.  The dispute was subsequently settled for approximately $1.0 million in the first quarter of 2016.

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Revenue is earned through the sale of our commercialized products. During the years ended December 31, 2015 and 2014, the sale of AGGRASTAT^® accounted for more than 90% of total revenue. Revenue may fluctuate between periods based on the timing of large and infrequent distributor orders. These distributor orders may impact both quarterly and annual revenue figures, and the related variance compared to prior periods, because a large order may comprise a relatively large proportion of the period’s total revenue. As a result, changes in revenues on a period-to-period basis may not provide a clear indication of actual sales trends.

Gross Margin

Gross margin increased to 68.5% for the year ended December 31, 2015, compared to 66.6% for the year ended December 31, 2014. The change in gross margin is primarily due to changes in customer mix as well as a decrease in current period supply chain restructuring costs. Included in cost of goods sold for the year ended December 31, 2015 was a $1.1 million charge for a write-down of inventory as a result of the termination of a distribution agreement. Excluding this one-time charge, gross margin for the year ended December 31, 2015 would have been 73.9%.

Selling, General & Administration Expense

SG&A expense was $31.0 million for the year ended December 31, 2015, compared to $33.8 million for the year ended December 31, 2014. The decrease was due primarily to the reduction of an accrued liability for a potential payment to the Italian medicine authorities following a favourable outcome for us, one-time costs incurred in the prior year related to the acquisition of Correvio, and the impact of foreign exchange translation year-over-year. These decreases were partially offset by an increase in stock-based compensation as a result of market fluctuation changes to our share price.

Research and Development Expense

R&D expense for the year ended December 31, 2015 was $3.2 million, compared to $0.6 million for the year ended December 31, 2014. The increase was due to a $3.0 million upfront payment to SteadyMed upon the execution of the License Agreement for TREVYENT^® in 2015.

Interest Expense

Interest expense was $2.3 million for the year ended December 31, 2015, compared to $1.5 million for the year ended December 31, 2014. The increase was due to a full year of interest expense being realized in 2015 on the senior secured term loan facility with Midcap that we entered into in July 2014.

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RESULTS OF OPERATIONS - FOURTH QUARTER (UNAUDITED)

(in thousands of U.S. dollars, except share and per share amounts)	Three Months Ended December 31
	2016			2015
Revenue
Product and royalty revenue	$	6,973		$	4,677
Licensing and other fees		45			40
		7,018			4,717
Cost of goods sold		1,858			2,816
		5,160			1,901
Expenses
Selling, general and administration		9,098			8,268
Research and development		-			62
Amortization costs		853			546
		9,951			8,876
Operating loss		(4,791	)		(6,975	)
Other expense
Interest expense		828			484
Other expense		19			50
Foreign exchange loss		22			255
		869			789
Loss before income taxes		(5,660	)		(7,764	)
Income tax recovery		(73	)		(360	)
Net loss	$	(5,587	)	$	(7,404	)
Other comprehensive loss (income):
Foreign currency translation adjustments		851			(182	)
Comprehensive loss	$	(6,438	)	$	(7,222	)
Loss per share – basic and diluted	$	(0.18	)	$	(0.37	)
Weighted average number of common shares
Basic		31,880,392			20,144,989
Diluted		31,924,032			20,299,750

Revenue for the three months ended December 31, 2016 was $7.0 million, compared to $4.7 million for the three months ended December 31, 2015. The increase was due to increased sales, the timing of distributor sales and a reserve recorded against revenue for the three months ended December 31, 2015 in relation to disputed historical product returns with a distributor.  The dispute was subsequently settled for approximately $1.0 million in the first quarter of 2016.

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Cost of goods sold for the three months ended December 31, 2016 was $1.9 million, compared to $2.8 million for the three months ended December 31, 2015. The decrease was due to a $1.1 million charge for a write-down of inventory during the three months ended December 31, 2015 as a result of the termination of a distribution agreement.

SG&A expense for the three months ended December 31, 2016 was $9.1 million, compared to $8.3 million for the three months ended December 31, 2015. The increase was due to costs related to the launch of XYDALBA™ and to lower payroll-related expenses in the fourth quarter of 2015.

QUARTERLY FINANCIAL INFORMATION

The following table highlights selected unaudited consolidated financial data for each of the eight most recent quarters that, in management’s opinion, have been prepared on a basis consistent with the audited consolidated financial statements for the year ended December 31, 2016. The selected financial information presented below reflects all adjustments, consisting primarily of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of results for the interim periods. These results are not necessarily indicative of results for any future period and you should not rely on these results to predict future performance.

	Three months ended
(In thousands of U.S. dollars except per share amounts)	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016
Revenue	$	7,018		$	5,237		$	5,911		$	7,090
Cost of goods sold		1,858			1,342			1,685			1,425
Selling, general and administration		9,098			7,170			7,977			6,268
Interest expense		828			865			445			405
Loss on extinguishment of long-term debt		-			-			1,402			-
Net loss		(5,587	)		(5,284	)		(7,514	)		(1,234	)
Loss per share – basic		(0.18	)		(0.19	)		(0.37	)		(0.06	)
Loss per share – diluted		(0.18	)		(0.19	)		(0.37	)		(0.09	)(1)

	Three months ended
(In thousands of U.S. dollars except per share amounts)	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015
Revenue	$	4,717		$	4,958		$	5,738		$	5,497
Cost of goods sold		2,816			1,393			1,154			1,224
Selling, general and administration		8,268			8,028			8,381			6,327
Research and development		62			15			3,084			62
Interest expense		484			542			560			674
Net loss		(7,404	)		(5,810	)		(7,361	)		(3,887	)
Loss per share – basic and diluted		(0.37	)		(0.31	)		(0.43	)		(0.23	)

⁽¹⁾ Diluted loss per share has been recast for the three months ended March 31, 2016 from a loss of $0.06 per share to a loss of $0.09 per share to adjust for the impact of the reversal of the recovery on liability classified awards which should be considered when calculating diluted earnings (loss) per share. This change also resulted in a change in diluted loss per share for the six months ended June 30, 2016 from a loss of $0.43 per share to a loss of $0.46 per share.

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Variations in our revenue, expense and net loss for the periods above resulted primarily from the following factors:

In the first quarter of 2016, our net loss decreased by $6.2 million compared to the fourth quarter of 2015 to $1.2 million, or a basic loss per share of $0.06. The decrease in net loss resulted from an increase in revenue and gross margin and a decrease in SG&A expense. The increase in revenue was driven by an increase in distributor sales. The increase in gross margin was due to a $1.1 million charge to cost of goods sold in the prior quarter, in connection with the termination of a distribution agreement. The decrease in SG&A expense was a result of lower expenditures associated with the timing of certain regulatory expenses and a decrease in stock-based compensation expense as a result of market fluctuations in our share price from the prior quarter.

In the second quarter of 2016, our net loss increased by $6.3 million compared to the first quarter of 2016 to $7.5 million, or a basic loss per share of $0.37. The increase in net loss from the prior quarter was mainly driven by a decrease in revenue, an increase in SG&A expense and a loss incurred on the extinguishment of long-term debt. The decrease in revenue was driven by the timing of distributor sales, which were weighted towards the first quarter. The increase in SG&A expense was impacted by an increase in stock-based compensation expense as a result of market fluctuations in our share price from the prior quarter. Additionally, we incurred a loss of $1.4 million upon the extinguishment of our senior secured term loan facility with Midcap.

In the third quarter of 2016, our net loss decreased by $2.2 million compared to the second quarter of 2016 to $5.3 million, or a basic loss per share of $0.19. The decrease in net loss from the prior quarter was mainly driven by the $1.4 million loss incurred in the prior quarter on the extinguishment of our term loan facility with Midcap and the impact of foreign exchange translation.

In the fourth quarter of 2016, our net loss increased by $0.3 million to $5.6 million, or a basic loss per share of $0.18. The slight increase in net loss from the prior quarter was driven by an increase in SG&A expense offset by an increase in revenue and gross margin. The increase in SG&A expense was primarily due to costs related to the launch of XYDALBA™, additional medical studies, and an increase in legal costs associated with business development activities.

LIQUIDITY AND CAPITAL RESOURCES

We have financed our operations through cash flow generated from sales of our products, the issuance of common shares, and debt financing.

Cash Flows

Sources and Uses of Cash

(in thousands of U.S. dollars)	For the Years Ended December 31
	2016			2015
Cash used in operating activities	$	(15,982	)	$	(16,307	)
Cash used in investing activities		(13,637	)		(171	)
Cash provided by financing activities		38,562			21,822
Effect of foreign exchange rate on cash and cash equivalents		154			(391	)
Net increase in cash and cash equivalents	$	9,097		$	4,953

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At December 31, 2016, we had $26.8 million in cash and cash equivalents, compared to $17.7 million at December 31, 2015. The increase in cash and cash equivalents for the year ended December 31, 2016 was comprised of $38.6 million in cash provided by financing activities offset by $16.0 million of net cash used in operating activities and $13.6 million of cash used in investing activities.

Cash used in operating activities for the year ended December 31, 2016 was $16.0 million, a decrease of $0.3 million from $16.3 million used for the year ended December 31, 2015. The decrease in cash used was primarily due to an increase in revenue and gross margin offset by upfront payments received on distribution agreements entered into during 2015.

Cash used in investing activities for the year ended December 31, 2016 was $13.6 million, an increase of $13.4 million from $0.2 million used for the year ended December 31, 2015. In 2016, we made an upfront payment for the execution of a license agreement with Allergan to commercialize dalbavancin.

Cash provided by financing activities for the year ended December 31, 2016 was $38.6 million, compared to cash provided by financing activities of $21.8 million for the year ended December 31, 2015. During the year ended December 31, 2016, we received net proceeds of $31.8 million from the Offering, net proceeds of $0.8 million from the Purchase Agreement, net proceeds of $19.3 million from the CRG Term Loan, offset by the extinguishment of the long-term debt with Midcap and the payment of our deferred consideration. Cash provided by financing activities for the year ended December 31, 2015 consisted of net proceeds of $21.6 million from the common share offering we completed in August 2015 and $5.1 million from the Sales Agreement, offset by $2.0 million in repayment of the term loan facility with Midcap and the payment of our deferred consideration.

Funding Requirements

We expect to devote financial resources to our operations, sales and commercialization efforts, regulatory approvals and business development. We will require cash to fund operations, pay interest and make principal payments on the CRG Term Loan and our deferred consideration.

Our future funding requirements will depend on many factors including:

· the cost and extent to which we will be successful in obtaining reimbursement for our products in additional countries where they are currently approved;

· the cost and outcomes of regulatory submissions and reviews for approval of our products in additional countries;

· the extent to which our products will be commercially successful globally;

· the extent to which AGGRASTAT^® sales will remain stable as it faces generic competition in certain markets;

· the future development plans for our products in development;

· the consummation of suitable business development opportunities;

· the extent to which we elect to develop, acquire or license new technologies, products or businesses;

· the size, cost and effectiveness of our sales and marketing programs; and

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· the consummation, continuation or termination of third-party manufacturing, distribution and sales and marketing arrangements.

At December 31, 2016, we had working capital of $30.8 million, compared to $15.7 million at December 31, 2015. We believe that our cash on hand, the expected future cash inflows from the sale of our products, potential future proceeds from the CRG Term Loan, the net proceeds, if any, from the Purchase Agreement and the Sales Agreement will be sufficient to finance our working capital, operational, and capital needs for at least the next 12 months, including our obligations with respect to the CRG Term Loan and deferred consideration. Under the Term Loan Agreement, we are required to make regular quarterly interest payments, and in the future, quarterly principal payments. If we are unable to make our regularly scheduled payments pursuant to the Term Loan Agreement or comply with the restrictive covenants therein, we could be in breach of the facility, which could result in the full amount of the facility becoming due and payable and the related security becoming enforceable. If our existing cash resources together with the cash we generate from the sales of our products are insufficient to fund our working capital, operational, and capital needs, we may need to sell additional equity or debt securities or seek additional financing through other arrangements. Any sale of additional equity or debt securities may result in dilution to our shareholders. Debt financing may involve covenants limiting or restricting our ability to take specific actions, such as incurring additional debt or making capital expenditures. Moreover, our ability to obtain additional debt financing may be limited by the Term Loan Agreement. If we seek to raise funds through collaboration or licensing arrangements with third parties, we may be required to relinquish rights to products, product candidates or technologies that we would not otherwise relinquish or grant licenses on terms that may not be favorable to us. There can be no assurance that we will be able to successfully obtain financing in the amounts or terms acceptable to us, if at all, in order to continue our operational activities. If we are unable to obtain financing to fund our operational and strategic business development activities, we may be required to delay, reduce the scope of, or eliminate one or more of our planned development and commercialization activities, which could harm our future financial condition and operating results.

Contractual Obligations

As of December 31, 2016, 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 U.S. dollars)	2017		2018		2019		2020		2021		There- after		Total
Commitments for clinical and other agreements	$	1,755		-		-		-		-		-	$	1,755
Supplier purchase commitment		146		146		146		146		-		-		584
Deferred consideration		2,815		-		-		-		-		-		2,815
Interest expense on deferred consideration		282		-		-		-		-		-		282
CRG Term Loan (1)		-		-		7,500		10,000		2,500		-		20,000
Interest expense on Term Loan Agreement (2)		2,839		2,839		2,571		1,243		88		-		9,580
Operating lease obligations		414		414		379		328		187		546		2,268
Total	$	8,251	$	3,399	$	10,596	$	11,717	$	2,775	$	546	$	37,284

⁽¹⁾ Based on draws as of the date of this MD&A.

⁽²⁾ Based on draws as of the date of this MD&A and does not include interest expense on other amounts that can be drawn.

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Outstanding Share Capital

As of March 6, 2017, there were 31,900,185 common shares issued and outstanding, and 1,983,197 common shares issuable upon the exercise of outstanding stock options (of which 1,340,979 were exercisable) at a weighted average exercise price of CAD $5.85 per share, and 122,852 restricted share units outstanding.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

Our audited 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 accounting for amounts recorded in connection with business combinations, recoverability of inventories, the assessment of net recoverable value and amortization period of intangible assets, reporting of revenue recognition, bad debt and doubtful accounts, income taxes, accounting for stock-based compensation expense, and commitments and contingencies.

The significant accounting policies that we believe are the most critical in fully understanding and evaluating our reported financial results include revenue recognition, impairment of long-lived assets, amortization, and stock-based compensation. These and other significant accounting policies are described more fully in Note 2 of our annual consolidated financial statements for the year ended December 31, 2016.

Revenue Recognition

Product and Royalty Revenue

Revenue from sales of products is recognized upon the later of transfer of title or upon shipment of the product to the customer, so long as persuasive evidence of an arrangement exists, the sales price is fixed or determinable, and collection is reasonably assured. Provisions for chargebacks, rebates, sales incentives and returns are provided for in the same period the related sales are recorded. Sales taxes collected from customers in various European markets that must be remitted back to the relevant government authorities are excluded from revenues. Shipping and handling costs are included in cost of sales.

Royalty revenue is recognized on an accrual basis when earned in accordance with the agreement terms, when royalties from the collaborative partner are determinable and collection is reasonably assured, such as upon the receipt of a royalty statement from the collaborative partner.

Licensing and Other Fees

We earn revenue from collaboration and license agreements from the commercial sale of approved products.

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Impairment of Long-Lived Assets

Long-lived assets, including property and equipment, and intangible assets other than goodwill, are assessed for potential impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. We determine whether the carrying value of a long-lived depreciable asset or asset group is recoverable based on its estimates of future asset utilization and undiscounted expected future cash flows the assets are expected to generate. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset. We primarily use the income approach when determining the fair value of assets.

Amortization

Amortization of intangible assets incorporates estimates of useful lives and residual values. These estimates may change as more experience is obtained or as general market conditions change impacting the use of intangible assets.

Stock-Based Compensation and Other Stock-Based Payments

We recognize stock-based compensation expense for all stock-based compensation awards based on the fair value at grant date, amortized over the vesting period.

Determining the appropriate fair value model and calculating the fair value of share-based payment awards requires subjective assumptions. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

R&D Costs

R&D costs are expensed as incurred. These expenses include the costs of our proprietary R&D efforts, as well as costs incurred in connection with certain licensing arrangements. Before a drug product receives regulatory approval, upfront and milestone payments made to third parties under licensing arrangements are recorded as expense. Upfront payments are recorded when incurred, and milestone payments are recorded when the specific milestone has been achieved. Once a drug product receives regulatory approval, any milestone payments are recorded in intangible assets and, unless the asset is determined to have an indefinite life, the payments are amortized on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter.

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Recent Accounting Pronouncements

Simplifying the Presentation of Debt Issuance Costs

During the year ended December 31, 2016, we adopted ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, issued by the Financial Accounting Standards Board (“FASB”) in April 2015. ASU 2015-03 changes the presentation of debt issuance costs in financial statements such that an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. As a result of the adoption, we reclassified unamortized debt issuance costs of $88 as of December 31, 2015 from other assets to a reduction in the current portion of long-term debt and $314 as of December 31, 2015 from other long-term assets to a reduction in long-term debt on the consolidated balance sheet.

Presentation of Financial Statements – Going Concern, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

During the year ended December 31, 2016, we adopted ASU 2014-15 “Presentation of Financial Statements – Going Concern, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which requires management to assess at each interim and annual reporting period whether substantial doubt exists about our ability to operate as a going concern. Substantial doubt exists if we will be unable to meet our obligations as they become due within one year after the financial statement issue date. If there is substantial doubt, additional disclosures are required.

Consolidation – Amendments to the Consolidation Analysis

During the year ended December 31, 2016, we adopted ASU 2015-02 “Consolidation – Amendments to the Consolidation Analysis”. There was no impact to our consolidated financial statements.

Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”. The amendments in ASU 2016-15 provide cash flow statement classification guidance on the following eight topics: 1. Debt Prepayment or Debt Extinguishment Costs; 2. Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; 3. Contingent Consideration Payments Made after a Business Combination; 4. Proceeds from the Settlement of Insurance Claims; 5. Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies; 6. Distributions Received from Equity Method Investees; 7. Beneficial Interests in Securitization Transactions; and 8. Separately Identifiable Cash Flows and Application of the Predominance Principle. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. We are evaluating the new guidance to determine the impact it will have on our consolidated financial statements

Improvements to Employee Share-Based Payment Accounting

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”. ASU 2016-09 simplifies several aspects of accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statements of cash flows.  The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We are evaluating the new guidance to determine the impact it will have on our consolidated financial statements.

 19

Leases

In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires lessees to recognize all leases, including operating leases, with a term greater than 12 months on the balance sheet, for the rights and obligations created by those leases. The accounting for lessors will remain largely unchanged from the existing accounting standards. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are evaluating the new guidance to determine the impact it will have on our consolidated financial statements.

Revenue Recognition – Revenue from Contracts with Customers

In May 2014, the FASB issued guidance codified in ASC 606, Revenue Recognition – Revenue from Contracts with Customers (“ASC 606”), which replaces the guidance in former ASC 605, Revenue Recognition. The amendment was the result of a joint effort by the FASB and the International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and international financial reporting standards ("IFRS"). The joint project clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. ASC 606 may be adopted using one of two methods: full retrospective or modified retrospective. Under the full retrospective approach, retrospective application is applied to each prior reporting period presented. Under the modified retrospective approach, retrospective application is applied with the cumulative effect of initially applying the update recognized at the date of initial application. We anticipate the adoption of ASC 606 under the modified retrospective approach on January 1, 2018. Our evaluation of the impact of the new guidance on our consolidated financial statements is ongoing, however we currently anticipate that the standard may have an impact on the timing of revenue recognition of our individual long-term contracts without changing the total amount of revenue recognized. There is expected to be no changes to the treatment of cash flows and cash will continue to be collected in line with contractual terms.

RELATED PARTY TRANSACTIONS

During the year ended December 31, 2016, we incurred expenses for consulting services provided by a company owned by one of our officers. The amounts charged were recorded at their exchange amounts and were subject to normal trade terms. For the year ended December 31, 2016, we incurred expenses of $0.1 million for services provided by the consulting company relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2016 was $0.1 million owing to the consulting company. There are ongoing contractual obligations as we have a contract in place with the consulting company in which we are committed to pay the consulting company $0.1 million annually in exchange for consulting services relating to general corporate matters.

During the year ended December 31, 2015, we incurred expenses for services provided by a law firm in which a director of one of our wholly-owned subsidiaries was a partner. The amounts charged were recorded at their exchange amounts and were subject to normal trade terms. For the year ended December 31, 2015, we incurred legal fees of $0.1 million for services provided by the law firm relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2015 was an amount of $0.01 million owing to the legal firm. For the year ended December 31, 2016, the law firm was no longer a related party. There are no ongoing contractual obligations or other commitments resulting from the services.

 20

During the year ended December 31, 2015, we also incurred expenses for services provided by an accounting firm in which a director of one of our wholly owned subsidiaries was a partner. The amounts charged were recorded at their exchange amounts and were subject to normal trade terms. For the year ended December 31, 2015, we incurred accounting fees of $0.04 million for services provided by the accounting firm relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2015 was an amount of $0.03 million owing to the accounting firm. For the year ended December 31, 2016, the accounting firm was no longer a related party. There are no ongoing contractual obligations or other commitments resulting from the services.

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, financial condition, revenues or expenses, liquidity, capital expenditures or capital resources that is material to investors.

DISCLOSURE CONTROLS AND PROCEDURE

Our management is responsible for establishing and maintaining adequate disclosure controls and procedures (as such term is defined in applicable securities regulations). Management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of December 31, 2016. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit with securities regulatory authorities is recorded, processed, summarized and reported, within the time periods specified in applicable securities regulations. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit with securities regulatory authorities is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding our required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures.

Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2016, our disclosure controls and procedures were effective.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Management’s Annual Report on Internal Control over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in applicable securities regulations).

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements even when determined to be effective and can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

 21

Under the supervision of our Chief Executive Officer and our Chief Financial Officer, as of December 31, 2016, management evaluated the effectiveness of our internal control over financial reporting based on the framework set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation under this framework, management concluded that our internal control over financial reporting was effective as of December 31, 2016.

The effectiveness of our internal control over financial reporting as of December 31, 2016 has been audited by KPMG LLP, the independent registered public accounting firm that audited our December 31, 2016 consolidated annual financial statements, as stated in their report thereon.

Changes in Internal Control over Financial Reporting

Management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, whether any changes in our internal control over financial reporting that occurred during our last fiscal year have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes with regard to internal control over financial reporting during the year ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FINANCIAL INSTRUMENTS AND RISKS

We are exposed to credit risks and 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 December 31, 2016, our cash and cash equivalents were primarily held as cash, the majority of which was denominated in U.S. dollars. 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. 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 fluctuations that could have a material effect on our future operating results or cash flows. We are exposed to interest rate cash flow risk on our cash and cash equivalents as these instruments bear interest based on current market rates.

 22

EX-23.1

Exhibit 23.1

 

KPMG LLP	Telephone	(604) 691-3000
Chartered Professional Accountants	Fax	(604) 691-3031
PO Box 10426 777 Dunsmuir Street	Internet	www.kpmg.ca
Vancouver BC V7Y 1K3
Canada

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Cardiome Pharma Corp.

We consent to the use of our reports, both dated March 6, 2017, with respect to the consolidated financial statements and the effectiveness of internal control over financial reporting included in this annual report on Form 40-F.

We also consent to the incorporation by reference of such reports in the Registration Statements (No. 333-209606) on Form F-10 and (No. 333-199091 and No. 333-199092) on Form S-8 of Cardiome Pharma Corp.

/s/ KPMG LLP

Chartered Professional Accountants

March 28, 2017

Vancouver, Canada

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP.

KPMG Confidential

EX-31.1

Exhibit 31.1

CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William Hunter, certify that:

1. I have reviewed this annual report on Form 40-F of Cardiome Pharma Corp.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer 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 issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this 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

(d) Disclosed in this report any change in the issuer’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 issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’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 issuer’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 issuer’s internal control over financial reporting.

Date: March 28, 2017
	/s/ William Hunter
	Name:	William Hunter
	Title:	President and Chief Executive Officer

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jennifer Archibald, certify that:

1. I have reviewed this annual report on Form 40-F of Cardiome Pharma Corp.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer 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 issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this 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

(d) Disclosed in this report any change in the issuer’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 issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’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 issuer’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 issuer’s internal control over financial reporting.

Date: March 28, 2017
	/s/ Jennifer Archibald
	Name:	Jennifer Archibald
	Title:	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CEO AND CFO
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Cardiome Pharma Corp. (the “Registrant”) filed under cover of Form 40-F for the period ended December 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), William Hunter, as President and Chief Executive Officer of the Registrant, and Jennifer Archibald, as Chief Financial Officer of the Registrant, each hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of his or her knowledge that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ William Hunter
Name:	William Hunter
Title:	President and Chief Executive Officer
Date:	March 28, 2017
/s/ Jennifer Archibald
Name:	Jennifer Archibald
Title:	Chief Financial Officer
Date:	March 28, 2017

This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Registrant for purposes of §18 of the Securities Exchange Act of 1934, as amended.

XML

Document And Entity Information	12 Months Ended
	Dec. 31, 2016 shares
Document Information [Line Items]
Document Type	40-F
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Trading Symbol	CRME
Entity Common Stock, Shares Outstanding	31,884,420
Entity Registrant Name	Cardiome Pharma Corp
Entity Central Index Key	0001036141
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 26,758	$ 17,661
Restricted cash (note 5)	2,547	2,196
Accounts receivable, net of allowance for doubtful accounts of $97 (2015 - $424)	6,154	6,814
Inventories (note 6)	4,618	4,401
Prepaid expenses and other assets	1,302	1,408
Deferred income tax assets (note 17)	460	469
Assets, Current	41,839	32,949
Property and equipment (note 7)	548	740
Intangible assets (note 8)	24,352	14,221
Goodwill	318	318
Assets	67,057	48,228
Current liabilities:
Accounts payable and accrued liabilities (note 9)	8,021	10,488
Current portion of long-term debt, net of unamortized debt issuance costs (note 10)	0	3,912
Current portion of deferred consideration (note 11)	2,815	2,619
Current portion of deferred revenue	182	188
Liabilities, Current	11,018	17,207
Long-term debt, net of unamortized debt issuance costs (note 10)	19,391	5,686
Deferred consideration (note 11)	0	2,478
Deferred revenue	2,381	2,647
Other long-term liabilities	243	274
Liabilities	33,033	28,292
Stockholders' equity:
Common stock Authorized - unlimited number without par value Issued and outstanding - 31,884,420 (2015 - 20,147,337) (note 12(b))	344,928	312,019
Additional paid-in capital	35,812	34,678
Deficit	(363,054)	(343,435)
Accumulated other comprehensive income	16,338	16,674
Stockholders' Equity Attributable to Parent	34,024	19,936
Liabilities and Equity	$ 67,057	$ 48,228

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Allowance for Doubtful Accounts Receivable, Current	$ 97	$ 424
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares, Issued	31,884,420	20,147,337
Common Stock, Shares, Outstanding	31,884,420	20,147,337

XML

Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Revenue:
Product and royalty revenues	$ 25,066	$ 20,795
Licensing and other fees	190	115
Revenues	25,256	20,910
Cost of goods sold	6,310	6,587
Gross margin	18,946	14,323
Expenses:
Selling, general and administration	30,513	31,004
Research and development (note 14)	0	3,223
Amortization (notes 7 and 8)	2,984	2,177
Operating Expenses	33,497	36,404
Operating loss	(14,551)	(22,081)
Other expense:
Loss on extinguishment of long-term debt (note 10)	1,402	0
Interest expense	2,543	2,260
Other expense	348	175
Foreign exchange loss (gain)	623	(43)
Other expense	4,916	2,392
Loss before income taxes	(19,467)	(24,473)
Income tax expense (recovery) (note 17)	152	(11)
Net loss	(19,619)	(24,462)
Other comprehensive loss:
Foreign currency translation adjustments	336	449
Comprehensive loss	$ (19,955)	$ (24,911)
Loss per common share (note 15)
Basic	$ (0.78)	$ (1.34)
Diluted	$ (0.79)	$ (1.34)
Weighted average common shares outstanding (note 15)
Basic	25,255,413	18,198,840
Diluted	25,318,196	18,198,840

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common shares [Member]	Additional paid-in capital [Member]	Deficit [Member]	Accumulated other comprehensive income [Member]
Balance at Dec. 31, 2014	$ 17,139	$ 284,760	$ 34,229	$ (318,973)	$ 17,123
Balance (in shares) at Dec. 31, 2014		16,591,002
Net loss	(24,462)	$ 0	0	(24,462)	0
Issuance of common stock (note 12(b))	28,334	$ 28,334	0	0	0
Issuance of common stock (note 12(b)) (in shares)		3,429,247
Share issue costs	(1,705)	$ (1,705)	0	0	0
Common stock issued upon exercise of options (note 12(b))	293	$ 293	0	0	0
Common stock issued upon exercise of options (note 12(b)) (in shares)		119,842
Reallocation of additional paid in capital arising from stock-based compensation related to exercise of options	0	$ 256	(256)	0	0
Reallocation of stock-based compensation liability arising from stock-based compensation related to exercise of options	9	9	0	0	0
Issuance of common shares on vesting of restricted share units, net of tax (note 12(b))	(38)	$ 72	(110)
Issuance of common shares on vesting of restricted share units, net of tax (note 12(b)) (in shares)		7,246
Stock-based compensation expense (note 13)	815	$ 0	815	0	0
Foreign currency translation adjustments	(449)	0	0	0	(449)
Balance at Dec. 31, 2015	19,936	$ 312,019	34,678	(343,435)	16,674
Balance (in shares) at Dec. 31, 2015		20,147,337
Net loss	(19,619)	$ 0	0	(19,619)	0
Issuance of common stock (note 12(b))	35,676	$ 35,676	0	0	0
Issuance of common stock (note 12(b)) (in shares)		11,708,856
Share issue costs	(3,121)	$ (3,121)	0	0	0
Issuance of common shares on vesting of restricted share units, net of tax (note 12(b))	(95)	$ 354	(449)
Issuance of common shares on vesting of restricted share units, net of tax (note 12(b)) (in shares)		28,227
Stock-based compensation expense (note 13)	1,583	$ 0	1,583	0	0
Foreign currency translation adjustments	(336)	0	0	0	(336)
Balance at Dec. 31, 2016	$ 34,024	$ 344,928	$ 35,812	$ (363,054)	$ 16,338
Balance (in shares) at Dec. 31, 2016		31,884,420

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Operating activities:
Net loss	$ (19,619)	$ (24,462)
Items not affecting cash:
Amortization (notes 7 and 8)	2,984	2,177
Amortization of deferred financing fees	250	525
Stock-based compensation expense, net (note 13)	260	2,205
Write-down of inventory (note 6)	159	2,028
Loss on extinguishment of long-term debt (note 10)	(1,402)	0
Unrealized foreign exchange loss (gain)	210	(43)
Changes in operating assets and liabilities:
Restricted cash	(296)	(31)
Accounts receivable	506	3,067
Inventories	(375)	(1,094)
Prepaid expenses and other assets	(37)	212
Deferred revenue	(272)	1,885
Accounts payable and accrued liabilities	(1,123)	(2,776)
Other long-term liabilities	(31)	0
Net cash used in operating activities	(15,982)	(16,307)
Investing activities:
Purchase of property and equipment	(9)	(132)
Purchase of intangible assets	(13,628)	(39)
Net cash used in investing activities	(13,637)	(171)
Financing activities:
Issuance of common stock (note 12(b))	35,341	28,334
Share issue costs	(2,746)	(1,650)
Issuance of common stock upon exercise of stock options (note 12(b))	0	293
Proceeds from issuance of long-term debt (note 10)	20,000	0
Financing fees on issuance of long-term debt (note 10)	(713)	(106)
Repayment of long-term debt (note 10)	(10,000)	(2,000)
Payment of fees on extinguishment of long-term debt (note 10)	(1,146)	0
Payment of deferred consideration (note 11)	(2,174)	(3,049)
Net cash provided by financing activities	38,562	21,822
Increase in cash and cash equivalents during the year	8,943	5,344
Effect of foreign exchange rate changes on cash and cash equivalents	154	(391)
Cash and cash equivalents, beginning of year	17,661	12,708
Cash and cash equivalents, end of year	26,758	17,661
Supplemental cash flow information:
Interest paid	2,329	1,826
Interest received	17	20
Cash (received) paid for income taxes	$ (109)	$ 693

XML

Basis of presentation

12 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Nature of Operations [Text Block]

1. Basis of presentation:

Cardiome Pharma Corp. (the “Company”) was incorporated under the Company Act (British Columbia) on December 12, 1986 and was continued under the laws of Canada on March 8, 2002. Cardiome is a specialty pharmaceutical company dedicated to offering patients and healthcare providers innovative therapeutic options that effectively, safely, and conveniently manage acute medical conditions to improve health and quality of life. Cardiome strives to find innovative, differentiated medicines that provide therapeutic and economic value to patients, physicians and healthcare systems. Cardiome currently has two marketed, in-hospital cardiology products, BRINAVESS^TM (vernakalant IV), for the rapid conversion of recent onset atrial fibrillation to sinus rhythm in adults, and AGGRASTAT^{® (}tirofiban HCl), a reversible GP IIb/IIIa inhibitor indicated for use in patients with acute coronary syndrome, which are commercially available in markets outside of the United States. Cardiome has licensed a European-approved antibiotic, XYDALBA™ (dalbavancin), a second generation, semi-synthetic lipoglycopeptide for the treatment of acute bacterial skin and skin structure infections in adults, that the Company has launched commercially in Germany and the United Kingdom and expects to commercialize in France, Belgium, Nordic nations, Canada, certain other European countries and some countries in the Middle East over time. In addition, Cardiome has also licensed commercialization rights to a pre-registration drug/device combination product, TREVYENT^®, for the treatment of pulmonary arterial hypertension in certain regions outside the United States and commercialization rights to cardiology products ESMOCARD^® and ESMOCARD LYO^® (esmolol hydrochloride), a short-acting beta-blocker used to control rapid heart rate in a number of cardiovascular indications, in certain European countries.

The Company has financed its operations through cash flows generated from sales of its products, the issuance of common shares, and debt financing. If existing cash resources together with the cash the Company generates from the sales of its products are insufficient to fund its operational needs, the Company may need to sell additional equity or debt securities or seek additional financing through other arrangements.  There can be no assurance that the Company will be able to successfully obtain financing in the amounts or terms acceptable to the Company, if at all, in order to continue its operational activities.

XML

Summary of significant accounting policies

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

2. Summary of significant accounting policies:

The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and are presented in U.S. dollars. The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements:

(a) Principles of consolidation:

The consolidated financial statements include the accounts of Cardiome Pharma Corp. and its wholly-owned subsidiaries from their respective dates of acquisition of control. All intercompany transactions and balances have been eliminated on consolidation.

(b) Use of estimates:

The consolidated financial statements have been prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Significant areas requiring the use of accounting judgments and estimates include accounting for amounts recorded in connection with recoverability of inventories, carrying value of intangible assets, revenue recognition, bad debt and doubtful accounts, income taxes, stock-based compensation expense, and commitments and contingencies. 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 action. Actual results could differ from those estimates.

(c) Foreign currency translation:

The net assets of foreign subsidiaries where the local currencies have been determined to be the functional currencies are translated into U.S. dollars using exchange rates at the balance sheet dates. Equity is translated at historical rates and revenue and expenses are translated at exchange rates prevailing during the period. The foreign exchange gains and losses arising from translation are recorded in the foreign currency translation account, which is included in other comprehensive loss and reflected as a separate component of equity. For those subsidiaries where the U.S. dollar has been determined to be the functional currency, non-monetary foreign currency assets and liabilities are translated using historical rates, while monetary assets and liabilities are translated at the period-end exchange rates. Revenues and expenses denominated in foreign currencies are translated at exchange rates in effect at the time of the transactions. Foreign exchange gains and losses are recorded in net loss for the period.

(d) Fair value measurements of financial instruments:

Fair value measurements of financial instruments are determined by using a fair value hierarchy that prioritizes the inputs to valuation techniques into three levels according to the relative reliability of the inputs used to estimate the fair values.

The three levels of inputs used to measure fair value are as follows:

Level 1 - Unadjusted quoted prices in active markets for identical financial instruments;

Level 2 - Inputs other than quoted prices that are observable for the financial instrument either directly or indirectly; and

Level 3 - Inputs that are not based on observable market data.

In determining fair value measurements, the most observable inputs are used when available. The fair value hierarchy level at which a financial instrument is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement.

(e) Cash and cash equivalents:

Cash and cash equivalents include cash and short-term deposits with original maturities of 90 days or less. Short-term deposits are valued at amortized cost. The carrying amounts approximate fair value due to the short-term maturities of these instruments.

(f) Allowance for doubtful accounts:

The Company maintains an allowance for accounts for estimated losses that may result from our customers’ inability to pay. The Company estimates an allowance for doubtful accounts primarily based on the credit worthiness of customers, aging of receivable balances and general economic conditions. Amounts later determined and specifically identified to be uncollectible are charged against this allowance.

(g) Inventories:

Inventories consist of finished goods, unfinished product (work in process) and raw materials and are valued at the lower of cost or estimated net realizable value, determined on a first-in-first-out basis. Cost is defined as all costs that relate to bringing the inventory to its present condition and location under normal operating conditions. Estimated net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The components of inventory and inventory purchase commitments are reviewed on a regular basis for excess and obsolete inventory based on estimated future usage and sales, demand from drug distributors and hospitals and economic conditions. Management believes that the estimates used in calculating the inventory provision are reasonable and properly reflect the risk of excess and obsolete inventory.

(h) Property and equipment:

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

Asset	Rate
Laboratory equipment	5 years
Production equipment	7 years
Computer equipment	3-5 years
Software	3-5 years
Furniture and office equipment	5-7 years

Leasehold improvements are amortized on a straight-line basis over the lesser of their estimated useful life or the initial lease term. 

(i) Intangible assets:

Intangible assets are comprised of patent costs, trade name, marketing rights and licenses. Patent costs which are associated with the preparation, filing, and obtaining of patents are capitalized. Maintenance costs of patents are expensed as incurred.

The estimated useful life of an intangible asset with a definite life is the period over which the asset is expected to contribute to future cash flows. When determining the useful life, the Company considers the expected use of the asset, useful life of a related intangible asset, any legal, regulatory or contractual provisions that limit the useful life, any legal, regulatory, or contractual renewal or extension provisions without substantial costs or modifications to the existing terms and conditions, the effects of obsolescence, demand, competition and other economic factors, and the expected level of maintenance expenditures relative to the cost of the asset required to obtain future cash flows from the asset.

Amortization is provided using the straight-line method over the following terms: 

Asset	Rate
Patents	over the patent life
Trade name	10 years
Marketing rights	10 years
Licenses	10 years

(j) Goodwill:

Goodwill represents the excess of the purchase price of an acquired enterprise over the fair value assigned to assets acquired and liabilities assumed in a business combination. Goodwill is allocated as of the date of the business combination to the reporting units that are expected to benefit from the synergies of the business combination. Goodwill is not amortized, but reviewed for impairment on an annual basis or more frequently if impairment indicators arise. Qualitative factors are first assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the qualitative assessment indicates that the reporting unit may be impaired, a two-step impairment test which considers, among other things, the fair value of reporting units based on discounted estimated future cash flows, is performed. This review involves significant estimation uncertainty, which could affect the Company’s future results if the current estimates of future performance and fair values change.

(k) Impairment of long-lived assets:

Long-lived assets, including property and equipment, and intangible assets other than goodwill, are assessed for potential impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. The Company determines whether the carrying value of a long-lived depreciable asset or asset group is recoverable based on its estimates of future asset utilization and undiscounted expected future cash flows the assets are expected to generate. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset.

(l) Deferred revenue:

Deferred revenue is recorded when upfront payments on distribution agreements are received. The deferred revenue is amortized into income over the applicable earnings period.

(m) Revenue recognition:

Product and royalty revenue

Revenue from sales of products is recognized upon the later of transfer of title or upon shipment of the product to the customer, so long as persuasive evidence of an arrangement exists, the sales price is fixed or determinable, and collection is reasonably assured. Provisions for chargebacks, rebates, sales incentives and returns are provided for in the same period the related sales are recorded. Sales taxes collected from customers in various European markets that must be remitted back to the relevant government authorities are excluded from revenues. Shipping and handling costs are included in cost of sales.

Royalty revenue is recognized on an accrual basis when earned in accordance with the agreement terms, when royalties from the collaborative partner are determinable and collection is reasonably assured, such as upon the receipt of a royalty statement from the collaborative partner.

Licensing and other fees

The Company earns revenue from collaboration and license agreements from the commercial sale of approved products. Royalties payable under license agreements are included in cost of sales.

(n) Research and development costs:

Research and development costs are expensed in the period incurred. These expenses include the costs of the Company’s proprietary R&D efforts, as well as costs incurred in connection with certain licensing arrangements. Before a drug product receives regulatory approval, upfront and milestone payments made to third parties under licensing arrangements are recorded as an expense. Upfront payments are recorded when incurred, and milestone payments are recorded when the specific milestone has been achieved. Once a drug product receives regulatory approval, any subsequent milestone payments made are recorded in intangible assets and, unless the asset is determined to have an indefinite life, the payments are amortized on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter. As of December 31, 2016, no amounts have been recorded in intangible assets.

(o) Clinical trial expenses:

Clinical trial expenses are a component of research and development costs and include fees paid to contract research organizations, investigators and other vendors who conduct certain product development activities on the Company’s behalf. The amount of clinical trial expenses recognized in a period related to service agreements are based on estimates of the work performed using an accrual basis of accounting. These estimates are based on patient enrollment, services provided and goods delivered, contractual terms and experience with similar contracts. The Company monitors these factors to the extent possible and adjusts its estimates accordingly. Prepaid expenses or accrued liabilities are adjusted if payments to service providers differ from estimates of the amount of service completed in a given period.

(p) Stock-based compensation and other stock-based payments:

Stock options and restricted share units granted to the Company’s directors, executive officers and employees are accounted for using the fair-value based method. Under this method, compensation expense for stock options is measured at fair value at the date of grant using the Black-Scholes valuation model and is expensed over the award’s vesting period on a graded basis. Stock options granted to consultants and to foreign employees with Canadian dollar denominated stock options are subject to variable accounting treatment and are re-valued at fair value at each balance sheet date until exercise, expiry or forfeiture. Compensation expense for restricted share units is measured at fair value at the date of grant, which is the market price of the underlying security, and is expensed over the award’s vesting period on a straight-line basis.

(q) Income taxes:

The Company accounts for income taxes using the liability method of tax allocation. Deferred income taxes are recognized for the deferred income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases. Deferred income tax assets and liabilities are measured using 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 deferred income tax assets and liabilities of a change in tax rates is included in income when a change in tax rates is enacted. Deferred income tax assets are evaluated periodically and if realization is not considered more likely than not, a valuation allowance is provided. Income tax credits, such as investment tax credits, are included as part of the provision for income taxes.

(r) Earnings (loss) per share:

Basic earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the treasury stock method. When the effect of options and other securities convertible into common shares is anti-dilutive, including when the Company has incurred a loss for the period, basic and diluted loss per share are the same.

Diluted earnings (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. Under the treasury stock method, the number of dilutive shares, if any, is determined by dividing the average market price of shares for the period into the net proceeds of in-the-money options.

(t) Comparative figures:

Certain comparative figures have been reclassified to conform with the financial statement presentation adopted for the current year.

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Recent accounting pronouncements

12 Months Ended

Dec. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

3. Recent accounting pronouncements:

During the year ended December 31, 2016, the Company adopted ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, issued by the Financial Accounting Standards Board (the “FASB”) in April 2015. ASU 2015-03 changes the presentation of debt issuance costs in financial statements such that an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. As a result of the adoption, the Company reclassified unamortized debt issuance costs of $88 as of December 31, 2015 from other assets to a reduction in the current portion of long-term debt and $314 as of December 31, 2015 from other long-term assets to a reduction in long-term debt on the consolidated balance sheet.

During the year ended December 31, 2016, the Company adopted ASU 2014-15 “Presentation of Financial Statements – Going Concern, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which requires management to assess at each interim and annual reporting period whether substantial doubt exists about the Company’s ability to operate as a going concern. Substantial doubt exists if the Company will be unable to meet its obligations as they become due within one year after the financial statement issue date. If there is substantial doubt, additional disclosures are required.

During the year ended December 31, 2016, the Company adopted ASU 2015-02 “Consolidation – Amendments to the Consolidation Analysis”. There was no impact to the consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”. The amendments in ASU 2016-15 provide cash flow statement classification guidance on the following eight topics: 1. Debt Prepayment or Debt Extinguishment Costs; 2. Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; 3. Contingent Consideration Payments Made after a Business Combination; 4. Proceeds from the Settlement of Insurance Claims; 5. Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies; 6. Distributions Received from Equity Method Investees; 7. Beneficial Interests in Securitization Transactions; and 8. Separately Identifiable Cash Flows and Application of the Predominance Principle. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”. ASU 2016-09 simplifies several aspects of accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statements of cash flows.  The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company is evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires lessees to recognize all leases, including operating leases, with a term greater than 12 months on the balance sheet, for the rights and obligations created by those leases. The accounting for lessors will remain largely unchanged from the existing accounting standards. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In May 2014, the FASB issued guidance codified in ASC 606, Revenue Recognition – Revenue from Contracts with Customers (“ASC 606”), which replaces the guidance in former ASC 605, Revenue Recognition. The amendment was the result of a joint effort by the FASB and the International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and international financial reporting standards ("IFRS"). The joint project clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. ASC 606 may be adopted using one of two methods: full retrospective or modified retrospective. Under the full retrospective approach, retrospective application is applied to each prior reporting period presented. Under the modified retrospective approach, retrospective application is applied with the cumulative effect of initially applying the update recognized at the date of initial application. The Company anticipates the adoption of ASC 606 under the modified retrospective approach on January 1, 2018. The Company’s evaluation of the impact of the new guidance on its consolidated financial statements is ongoing, however it currently anticipates that the standard may have an impact on the timing of revenue recognition of the Company’s individual long-term contracts without changing the total amount of revenue recognized. There is expected to be no changes to the treatment of cash flows and cash will continue to be collected in line with contractual terms.

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Financial instruments

12 Months Ended

Dec. 31, 2016

Investments, All Other Investments [Abstract]

Financial Instruments Disclosure [Text Block]

4. Financial instruments:

Financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities, long-term debt and deferred consideration. The fair values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities and deferred consideration approximate carrying values because of their short-term nature. At December 31, 2016, the recorded amount of the Company’s long-term debt approximates fair value as the related interest rate approximates rates currently available to the Company. The long-term debt and deferred consideration are classified as Level 2 of the fair value hierarchy.

The Company’s financial instruments are exposed to certain financial risks, including credit risk and market risk.

(a) Credit risk:

Credit risk is the risk of financial loss to the Company if a partner or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s cash and cash equivalents and accounts receivable. The carrying amount of the financial assets represents the maximum credit exposure.

The Company limits its exposure to credit risk on cash and cash equivalents by placing these financial instruments with high-credit quality financial institutions.

The Company is subject to credit risk related to its accounts receivable. The majority of the Company’s accounts receivable arise from product sales which are primarily due from drug distributors and hospitals. The Company monitors the creditworthiness of its customers so that it can properly assess and respond to changes in their credit profile.

(b) Market risk:

Market risk is the risk that changes in market prices, such as foreign currency exchange rates and interest rates will affect the Company’s income or the value of the financial instruments held.

(i) Foreign currency risk:

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign currency risk as a portion of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, revenue, and operating expenses are denominated in other than U.S. dollars. The Company manages foreign currency risk by holding cash and cash equivalents in foreign currencies to support forecasted foreign currency cash outflows. The Company has not entered into any forward foreign exchange contracts.

(ii) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Financial instruments that potentially subject the Company to interest rate risk include cash and cash equivalents.

The Company is exposed to interest rate cash flow risk on its cash and cash equivalents as these instruments bear interest based on current market rates.

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Restricted cash

12 Months Ended

Dec. 31, 2016

Cash and Cash Equivalents [Abstract]

Restricted Assets Disclosure [Text Block]

5. Restricted cash:

At December 31, 2016, restricted cash included $1,000 (2015 - $1,000) relating to amounts held in escrow in a non-interest bearing account in connection with the acquisition of Correvio LLC. This amount will be released from escrow upon the Company’s payment of all amounts owing under the deferred consideration liability plus all applicable accrued interest (note 11).

The Company also held restricted cash relating to deposits which are pledged as collateral for bank guarantees for sales contracts with various hospitals and health authorities of $1,443 (2015 - $1,196) and for operating lease arrangements of $104 (December 31, 2015 – nil).

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Inventories

12 Months Ended

Dec. 31, 2016

Inventory, Net [Abstract]

Inventory Disclosure [Text Block]

6. Inventories:

	December 31,		December 31,
	2016		2015
Finished goods	$	1,757	$	1,193
Work in process		562		703
Raw materials		2,299		2,505
	$	4,618	$	4,401

During the year ended December 31, 2016, the Company had a write-down of inventory of $159 (2015 – $2,028). Included in the write-down during the year ended December 31, 2015 is a write-down of $1,125 of repurchased unsold inventory as part of a termination agreement.

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Property and equipment

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

7. Property and equipment:

			Accumulated		Net book
2016	Cost		amortization		value
Laboratory equipment	$	625	$	625	$	-
Production equipment		97		48		49
Software		161		85		76
Computer equipment		216		177		39
Leasehold improvements		399		107		292
Furniture and office equipment		187		95		92
	$	1,685	$	1,137	$	548

			Accumulated		Net book
2015	Cost		amortization		value
Laboratory equipment	$	625	$	598	$	27
Production equipment		96		30		66
Software		152		57		95
Computer equipment		240		149		91
Leasehold improvements		399		70		329
Furniture and office equipment		189		57		132
	$	1,701	$	961	$	740

During the year ended December 31, 2016, the Company wrote off computer equipment with a cost and accumulated amortization of $25 (2015 – nil). Amortization expense for the year ended December 31, 2016 amounted to $201 (2015 - $203).

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Intangible assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

8. Intangible assets:

			Accumulated		Net book
2016	Cost		amortization		value
Licenses	$	12,843	$	856	$	11,987
Marketing rights		15,830		4,948		10,882
Trade name		1,131		353		778
Patents		4,347		3,642		705
	$	34,151	$	9,799	$	24,352

			Accumulated		Net book
2015	Cost		amortization		value
Marketing rights	$	15,830	$	3,365	$	12,465
Trade name		1,131		240		891
Patents		4,312		3,447		865
	$	21,273	$	7,052	$	14,221

In the second quarter of 2016, the Company announced the execution of a license agreement with Allergan plc (“Allergan”), for the rights to commercialize dalbavancin (branded DALVANCE^® in the U.S. and XYDALBA^TM in the rest of the world) in France, the United Kingdom, Germany, Belgium, Nordic nations, other European nations, various Middle Eastern nations, and Canada. As consideration for the rights and licenses granted, the Company made non-refundable payments to Allergan of $13,000, along with incurring other transaction costs. Additional non-refundable milestone payments will be due to Allergan upon the Company’s achievement of various milestones. Royalty payments may also be due to Allergan based on achievement of pre-determined levels of annual net sales. The license will be amortized over the life of the agreement of 10 years.

Amortization expense for the year ended December 31, 2016 amounted to $2,783 (2015 - $1,974).

The estimated aggregate amortization expense for intangible assets held at December 31, 2016, for each of the five succeeding years is expected as follows:

2017	$	3,158
2018		3,126
2019		3,104
2020		3,083
2021		3,048

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Accounts payable and accrued liabilities

12 Months Ended

Dec. 31, 2016

Payables and Accruals [Abstract]

Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

9. Accounts payable and accrued liabilities:

	December 31,		December 31,
	2016		2015
Trade accounts payable	$	3,924	$	3,474
Employee-related accruals		2,637		3,744
Interest payable on deferred consideration (note 11)		24		45
Other accrued liabilities		1,436		3,225
	$	8,021	$	10,488

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Long term debt

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

10. Long term debt:

	December 31,		December 31,
	2016		2015
Principal amount	$	20,000	$	10,000
Less: unamortized debt issuance costs		(609)		(402)
Long-term debt, net of unamortized debt issuance costs	$	19,391	$	9,598
Less: current portion, net of unamortized debt issuance costs		-		(3,912)
	$	19,391	$	5,686

On July 18, 2014, the Company closed a senior, secured term loan facility with MidCap Financial, LLC (“Midcap”) for up to $22,000 which consisted of two tranches bearing interest at a rate of LIBOR plus 8%. Interest was payable on a monthly basis. The first tranche of $12,000 was available for working capital and general corporate purposes. The second tranche of up to $10,000 was available to support a product or company acquisition. The loan carried a term of 48 months and was secured by substantially all of the assets of the Company. At December 31, 2015, the Company had a balance of $10,000 outstanding. During the year ended December 31, 2016, the Company extinguished the long-term debt from Midcap. The Company incurred a loss of $1,402 on the extinguishment of the long-term debt from Midcap. Of this amount, $256 related to the write-off of unamortized debt issuance costs and $1,146 related to prepayment and exit fees.

On June 13, 2016, the Company entered into a term loan agreement with CRG-managed funds for up to $30,000 consisting of three tranches bearing interest at 14% per annum. The first tranche of $20,000 was drawn at closing and was used to extinguish the long-term debt from Midcap and for general corporate purposes. The second and third tranches of $5,000 each are available to the Company if the Company is able to reach certain revenue milestones, as at December 2016 and June 2017, respectively. The Company reached the revenue milestone at December 31, 2016 and the second tranche of $5 million is available to the Company. The loan matures on March 31, 2021. Under the terms of the agreement, an interest-only period is provided such that principal repayment begins in June 2019. Interest is payable on a quarterly basis through the full term of the loan. If certain revenue milestones are met by the Company, the interest-only period may be extended such that principal repayment begins in June 2020. The Company is required to meet certain annual revenue covenants. If the revenue covenants are not met, the Company may exercise a cure right by issuing additional common shares in exchange for cash or by borrowing subordinated debt in an amount equal to two times the difference between the minimum required revenue and the Company’s revenue. The cash received from the cure right would be considered repayment of principal. The Company was in compliance with this revenue covenant for the year ended December 31, 2016.

Future repayments are as follows:

2017	$	-
2018		-
2019		7,500
2020		10,000
2021		2,500
Total repayments	$	20,000

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Deferred consideration

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

11. Deferred consideration:

On November 18, 2013, the Company completed the acquisition of Correvio LLC through the purchase of a combination of assets and shares in exchange for 19.9% of the Company’s then outstanding shares and deferred consideration of $12,000. The deferred consideration is being repaid monthly at an amount equal to 10% of cash receipts from product sales and any applicable interest accrued at 10% compounded annually.  The deferred consideration must be repaid in full by December 1, 2019.

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Share capital

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

12. 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.

(b) Issued and outstanding:

	Number
Common shares	of shares
Balance, December 31, 2014		16,591,002
Issued through at-the-market offering (i)		554,247
Issued through common share offering (ii)		2,875,000
Issued upon vesting of restricted share units, net of tax		7,246
Issued upon exercise of options in cashless transaction		10,431
Issued for cash upon exercise of options		109,411
Balance, December 31, 2015		20,147,337
Issued through common share offering (iii)		11,500,000
Issued to Lincoln Park Capital Fund, LLC (iv)		208,856
Issued upon vesting of restricted share units, net of tax		28,227
Balance, December 31, 2016		31,884,420

(i) On February 18, 2014, the Company completed a prospectus supplement under which the Company may issue common shares in one or more at-the-market (“ATM”) offerings up to an aggregate of $8,900. During the year ended December 31, 2015, the Company issued 554,247 common shares in the ATM offering for gross proceeds of $5,334.

On March 1, 2016, the Company filed a short form base shelf prospectus with the securities regulatory authorities in Canada, other than Quebec, and the United States Securities and Exchange Commission (the “SEC”) under a registration statement on Form F-10 (together, the “Base Shelf Prospectuses”). The Base Shelf Prospectuses provide for the potential offering in Canada and the United States of up to an aggregate of $250 million of the Company’s common shares, preferred shares, debt securities, warrants, subscription receipts and units from time to time over a 25-month period.

On March 7, 2016, the Company filed an Amended and Restated At Market Issuance Sales Agreement (the “Sales Agreement”) with FBR Capital Markets & Co. (“FBR”) and MLV & Co. LLC (“MLV”). The Company entered into the Sales Agreement only as a result of the acquisition by FBR of MLV. The Company also filed a prospectus supplement, in connection with the filing of the Base Shelf Prospectuses, pertaining to the Sales Agreement under which the Company may issue common shares through ATM offerings with FBR and MLV as agents, up to an aggregate of $6,900. As at December 31, 2016, no shares have been issued and $6,900 remains available under the prospectus supplement.

(ii) On August 13, 2015, the Company completed a prospectus offering of 2,875,000 common shares from treasury at a price of US$8.00 per common share for gross proceeds of $23,000.

(iii) On July 29, 2016, the Company closed an underwritten public offering of 11,500,000 common shares from treasury at a price of US$3.00 per common share for gross proceeds of $34,500.

(iv) On January 12, 2016, the Company completed a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”) which allows LPC to purchase up to an aggregate value of $20 million worth of common shares in the capital of the Company. In consideration for entering into the agreement, the Company issued 48,856 common shares to LPC as a commitment fee. No proceeds were received for these shares which were valued at $335 and recorded as a share issuance cost. During the year ended December 31, 2016, the Company issued 160,000 common shares under the Purchase Agreement to LPC for gross proceeds $841.

On March 7, 2016, the Company filed a prospectus supplement, in connection with the filing of the Base Shelf Prospectuses, pertaining to the Purchase Agreement, under which the Company may sell its common shares to LPC up to an aggregate of $6,900. On December 22, 2016, the Company filed an amendment to this prospectus supplement. The Company’s closing share price must be equal to or greater than US$1.00 in order for a purchase to be effected. As at December 31, 2016, no shares have been issued and $6,900 remains available under the prospectus supplement.

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Share-based compensation

12 Months Ended

Dec. 31, 2016

Share-based Compensation [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

13. Share-based compensation:

(a) Stock options:

Under the terms of the Company’s incentive stock option plan (the “Plan”), the Company may grant options to directors, executive officers, employees and consultants of the Company. The Plan provides for granting of options at the fair market value of the Company’s common shares at the grant date. Options generally vest over periods of up to four years with an expiry term of five years and generally vest in equal amounts at the end of each month. On June 16, 2014, shareholders approved an amendment to the Plan (the “Amended Plan”) whereby the maximum number of shares available for issue under the Amended Plan is a rolling number equal to a maximum of 12.5% of the issued common shares outstanding at the time of grant. Prior to this amendment, the number of shares available for issuance was a specified, fixed amount. Under the Amended Plan, the maximum number of stock options issuable to insiders continues to be restricted to 10% of the issued and outstanding common shares of the Company.

Details of the stock option transactions for the years ended December 31, 2016 and 2015 are summarized as follows:

					Weighted
			Weighted		average		Aggregate
			average		remaining		intrinsic
			exercise price		contractual life		value
	Number		(CAD$)		(years)		(CAD$)
Outstanding as at December 31, 2014		1,278,290		4.68		3.34		8,411
Options granted		382,900		10.84
Options exercised		(129,236)		3.76
Options forfeited		(45,097)		8.76
Options expired		(14,260)		41.69
Outstanding as at December 31, 2015		1,472,597		5.88		2.88		8,024
Options granted		617,500		5.97
Options forfeited		(72,200)		4.94
Options expired		(16,340)		20.22
Outstanding as at December 31, 2016		2,001,557		5.82		2.72		1,110
Exercisable as at December 31, 2016		1,292,969		5.20		2.13		1,004

The outstanding options expire at various dates ranging from July 3, 2017 to August 10, 2021.

At December 31, 2016, stock options to executive officers and directors, employees and consultants were outstanding as follows:

	Options outstanding						Options exercisable
			Weighted		Weighted				Weighted
			average		average				average
			remaining		exercise				exercise
Range of			contractual		price				price
exercise prices (CAD$)	Number		life (years)		(CAD$)		Number		(CAD$)
$1.65 to $2.08		409,000		1.02		1.67		358,568		1.67
$2.09 to $5.63		454,683		1.68		3.78		430,983		3.71
$5.64 to $7.37		550,000		4.47		6.20		106,932		6.20
$7.38 to $13.09		587,874		3.07		9.92		396,486		9.74
		2,001,557		2.72		5.82		1,292,969		5.20

A summary of the Company’s non-vested stock option activity and related information for the year ended December 31, 2016 is as follows:

	Number		Weighted average
	of		grant-date fair value
Non-vested options	options		(U.S.$)
Non-vested at December 31, 2015		512,784		3.96
Granted		617,500		2.00
Vested		(417,744)		2.56
Forfeited		(3,952)		2.35
Non-vested at December 31, 2016		708,588		2.27

At December 31, 2016, there was $739 (2015 - $934) of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted average period of 1.3 years (2015 – 1.4 years).

The aggregate intrinsic value of stock options exercised during the year ended December 31, 2016 was nil as there were no stock options exercised. The aggregate intrinsic value of stock options exercised during the year ended December 31, 2015 was $743.

The aggregate fair value of vested options during the year ended December 31, 2016 was $1,071 (2015 - $1,404).

Stock options granted to the Company’s directors, executive officers and employees are accounted for using the fair-value based method. Under this method, compensation expense for stock options is measured at fair value at the date of grant using the Black-Scholes valuation model and is expensed over the award’s vesting period on a graded basis. Stock options granted to consultants and to foreign employees with Canadian dollar denominated stock options are subject to variable accounting treatment and are re-valued at fair value at each balance sheet date until exercise, expiry or forfeiture.

For the year ended December 31, 2016, $171 was recorded as stock-based compensation recovery with $1,323 being recorded as a recovery against liability and $1,152 being recorded as an expense against additional paid-in capital (2015 - $1,828 was recorded as stock-based compensation expense with $1,391 being recorded as an expense against liability and $437 being recorded as an expense against additional paid-in capital).

The weighted average fair value of stock options granted during the year ended December 31, 2016 was $2.00 (2015 - $4.50). The estimated fair value of the stock options granted was determined using the Black-Scholes option pricing model with the following weighted-average assumptions:

	December 31,			December 31,
	2016			2015
Dividend yield		-			-
Expected volatility		65.7	%		78.4	%
Risk-free interest rate		0.7	%		0.6	%
Expected average life of the options		3.1 years			3.4 years
Estimated forfeiture rate		-			-

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 on the contractual term of the options and on historical data of option holder exercise and post-vesting employment termination behaviour. Forfeitures are estimated at the time of grant and, if necessary, management revises that estimate if actual forfeitures differ and adjusts stock-based compensation expense accordingly. 

(b) Restricted share unit plan:

During 2014, the Company established a treasury-based Restricted Share Unit Plan (the “RSU Plan”) to provide long-term incentives to certain executives and other key employees and to support the objective of employee share ownership through the granting of restricted share units (“RSUs”). There is no exercise price and no monetary payment is required from the employees to the Company upon grant of the RSUs or upon the subsequent issuance of shares to settle the award. The vested RSUs may be settled through the issuance of common shares from treasury, by the delivery of common shares purchased on the open market, in cash or in any combination of the foregoing, at the option of the Company. Vesting of RSUs is conditional upon the expiry of a time-based vesting period. The duration of the vesting period and other vesting terms applicable to the grant of the RSUs are determined at the time of the grant. Generally, RSUs vest annually over three years, in equal amounts, on the anniversary date of the date of grant.

Details of RSU transactions for the year ended December 31, 2016 are summarized as follows:

			Weighted		Weighted
			average		average		Aggregate
			grant date		remaining		intrinsic
			fair value		contractual		value
	Number		(USD$)		life (years)		(USD$)
Outstanding as at December 31, 2015		132,108	$	8.91		2.16	$	1,058
RSUs granted		50,782		4.43				218
RSUs vested		(49,682)		9.03				205
RSUs forfeited		(13,505)		9.00
Outstanding as at December 31, 2016		119,703	$	6.95		1.71	$	334

At December 31, 2016, there was $537 (2015 - $828) of total unrecognized compensation cost related to non-vested RSUs. That cost is expected to be recognized over a weighted average period of 1.5 years (2015 – 2.2 years).

RSUs are valued at the market price of the underlying securities on the grant date and the compensation expense, based on the estimated number of awards expected to vest, is recognized on a straight-line basis over the three-year vesting period. For the year ended December 31, 2016, stock-based compensation expense related to RSUs of $431 (2015 – $377) was recorded in selling, general and administration expenses and recorded against additional paid-in capital.

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Research and development expense

12 Months Ended

Dec. 31, 2016

Research and development expense Disclosure [Abstract]

Research and Development expense Disclosure [Text Block]

14. Research and development expense:

In June 2015, the Company entered into a license and supply agreement with SteadyMed Ltd. for the distribution rights to TREVYENT^® that included an upfront payment of $3,000 upon execution of the agreement which was recorded in R&D expense.

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Basic and diluted loss per share

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

15. Basic and diluted loss per share:

Basic loss per share is calculated as set forth below:

Year ended December 31	2016		2015
Net loss	$	(19,619)	$	(24,462)
Weighted average number of common shares for basic loss per share		25,255,413		18,198,840
Loss per share – basic	$	(0.78)	$	(1.34)

Diluted loss per share is calculated as set forth below:

Year ended December 31	2016		2015
Net loss	$	(19,619)	$	(24,462)
Less: recovery of fair value of liability classified awards		(433)		-
Diluted loss available to common shareholders	$	(20,052)	$	(24,462)
Weighted average number of common shares for basic loss per share		25,255,413		18,198,840
Plus: incremental shares from assumed exercise		62,783		-
Diluted weighted average number of common shares for diluted loss per share		25,318,196		18,198,840
Loss per share – diluted	$	(0.79)	$	(1.34)

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Commitments

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments Disclosure [Text Block]

16. Commitments:

(a) Operating leases:

The Company has entered into operating leases for office space. Future minimum payments under the various operating leases are as follows:

2017	$	414
2018		414
2019		379
2020		328
2021		187
Thereafter		546
Total minimum payments required	$	2,268

Rent expense for the year ended December 31, 2016 was $614 (2015 - $655).

(b) Commitments for clinical and other agreements:

The Company entered into various clinical and other agreements requiring it to fund future expenditures of $1,755 (2015 - $2,889).

(c) Purchase commitments:

The Company has purchase commitments with certain suppliers who assist in the production of AGGRASTAT^®. The amount of the purchase commitment is based on physical quantities manufactured; however, there is a minimum purchase obligation of $146 for years 2017 through 2020.

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Income taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

17. Income taxes:

The components of loss before income taxes consist of the following:

	2016		2015
Canadian	$	(13,602)	$	(11,574)
Foreign		(5,865)		(12,899)
Loss before income taxes	$	(19,467)	$	(24,473)

The reconciliation of income tax computed at statutory tax rates to income tax expense (recovery), using a 26.0% (2015 – 26.0%) statutory tax rate, is:

	December 31,			December 31,
	2016			2015
Loss before income taxes	$	(19,467)		$	(24,473)
Statutory tax rate		26.0	%		26.0	%
Income tax recovery at Canadian statutory income tax rates	$	(5,061)		$	(6,363)
Change in valuation allowance		4,197			4,290
Permanent differences		343			447
Tax rate differences		450			291
Foreign exchange and other differences		223			1,324
Income tax expense (recovery)	$	152		$	(11)

Significant components of the Company’s deferred tax assets are shown below:

	December 31,		December 31,
	2016		2015
Deferred tax assets:
Tax loss carryforwards	$	80,963	$	76,694
Research and development deductions and investment tax credits		27,709		29,116
Tax values of depreciable assets in excess of accounting values		3,230		2,773
Share issue costs and other		1,413		544
Total deferred tax assets		113,315		109,127
Valuation allowance		(112,855)		(108,658)
Net deferred tax assets	$	460	$	469

At December 31, 2016, the Company has investment tax credits of $16,512 (2015 - $17,577) available to reduce deferred income taxes otherwise payable.

The Company also has total loss carryforwards of $327,455 (2015 - $313,062) available to offset future taxable income: in Canada, in the amount of $188,444 (2015 - $173,698); in Switzerland, in the amount of $93,314 (2015 - $93,205); in the United States, in the amount of $44,933 (2015 - $45,289); and in the United Kingdom, in the amount of $764 (2015 - $870).

The Company’s Canadian federal and provincial investment tax credits and non-capital losses for income tax purposes expire as follows:

	Investment		Non-capital
	tax credits		losses
2017	$	975	$	-
2018		145		-
2019		501		3,384
2020		481		34,506
2021		528		6,478
Thereafter until 2035		13,882		283,087
	$	16,512	$	327,455

The Company recognizes interest and penalties related to income taxes in interest and other income. To date, the Company has not incurred any significant interest and penalties. The Company is subject to assessments by various taxation authorities which may interpret tax legislations and tax filing positions differently from the Company. The Company provides for such differences when it is likely that a taxation authority will not sustain the Company’s filing position and the amount of the tax exposure can be reasonably estimated. As at December 31, 2016, a provision of nil (2015 - nil) has been made in the financial statements for estimated tax liabilities. Tax years ranging from 2004 to 2016 remain subject to examination in the various countries we operate in.

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Related party transactions

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

18. Related party transactions:

During the year ended December 31, 2016, the Company incurred expenses for consulting services provided by a company owned by one of the officers of the Company. The amounts charged were recorded at their exchange amounts and were subject to normal trade terms. For the year ended December 31, 2016, the Company incurred expenses of $148 for services provided by the consulting company relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2016 was $148 owing to the consulting company.

During the year ended December 31, 2015, the Company incurred expenses for services provided by a law firm in which a director of one of the Company’s wholly owned subsidiaries was a partner. The amounts charged were recorded at their exchange amounts and were subject to normal trade terms. For the year ended December 31, 2015, the Company incurred legal fees of $63 for services provided by the law firm relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2015 was $12 owing to the legal firm. For the year ended December 31, 2016, the law firm was no longer a related party. The Company also incurred expenses for services provided by an accounting firm in which a director of one of the Company’s wholly owned subsidiaries was a partner. The amounts charged were recorded at their exchange amounts and were subject to normal trade terms. For the year ended December 31, 2015, the Company incurred accounting fees of $35 for services provided by the accounting firm relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2015 was $31 owing to the accounting firm. For the year ended December 31, 2016, the accounting firm was no longer a related party.

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Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Contingencies Disclosure [Text Block]

19. 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.

(c) The Company has entered into license and research agreements with third parties that include indemnification provisions that are customary in the industry. These indemnification provisions 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.

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Segmented information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

20. Segmented information:

Revenue is earned through the sale of the Company’s commercialized products. During the years ended December 31, 2016 and 2015, the sale of AGGRASTAT^® accounted for more than 90% of total revenue.

The Company recognizes segmentation based on geography as follows:

Year ended December 31, 2016	Europe			Rest of World			Total
Revenue	$	10,931		$	14,325		$	25,256
Cost of goods sold		2,585			3,725			6,310
Gross margin		8,346			10,600			18,946
Gross margin %		76	%		74	%		75	%

Year ended December 31, 2015	Europe			Rest of World			Total
Revenue	$	10,572		$	10,338		$	20,910
Cost of goods sold		3,191			3,396			6,587
Gross margin		7,381			6,942			14,323
Gross margin %		70	%		67	%		68	%

During the years ended December 31, 2016 and 2015, there were two customers that individually accounted for more than 10% of total revenue. In 2016, these customers accounted for 23% and 20% of total revenue (2015 – 28% and 19%).

Property and equipment by geographic area were as follows:

As at December 31	2016		2015
Europe	$	116	$	95
Rest of World		432		645
	$	548	$	740

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Summary of significant accounting policies (Policies)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

(a) Principles of consolidation:

The consolidated financial statements include the accounts of Cardiome Pharma Corp. and its wholly-owned subsidiaries from their respective dates of acquisition of control. All intercompany transactions and balances have been eliminated on consolidation.

Use Of Estimates, Policy [Policy Text Block]

(b) Use of estimates:

The consolidated financial statements have been prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Significant areas requiring the use of accounting judgments and estimates include accounting for amounts recorded in connection with recoverability of inventories, carrying value of intangible assets, revenue recognition, bad debt and doubtful accounts, income taxes, stock-based compensation expense, and commitments and contingencies. 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 action. Actual results could differ from those estimates.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

(c) Foreign currency translation:

The net assets of foreign subsidiaries where the local currencies have been determined to be the functional currencies are translated into U.S. dollars using exchange rates at the balance sheet dates. Equity is translated at historical rates and revenue and expenses are translated at exchange rates prevailing during the period. The foreign exchange gains and losses arising from translation are recorded in the foreign currency translation account, which is included in other comprehensive loss and reflected as a separate component of equity. For those subsidiaries where the U.S. dollar has been determined to be the functional currency, non-monetary foreign currency assets and liabilities are translated using historical rates, while monetary assets and liabilities are translated at the period-end exchange rates. Revenues and expenses denominated in foreign currencies are translated at exchange rates in effect at the time of the transactions. Foreign exchange gains and losses are recorded in net loss for the period.

Fair Value Of Financial Instruments, Policy [Policy Text Block]

(d) Fair value measurements of financial instruments:

Fair value measurements of financial instruments are determined by using a fair value hierarchy that prioritizes the inputs to valuation techniques into three levels according to the relative reliability of the inputs used to estimate the fair values.

The three levels of inputs used to measure fair value are as follows:

Level 1 - Unadjusted quoted prices in active markets for identical financial instruments;

Level 2 - Inputs other than quoted prices that are observable for the financial instrument either directly or indirectly; and

Level 3 - Inputs that are not based on observable market data.

In determining fair value measurements, the most observable inputs are used when available. The fair value hierarchy level at which a financial instrument is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement.

Cash and Cash Equivalents, Policy [Policy Text Block]

(e) Cash and cash equivalents:

Cash and cash equivalents include cash and short-term deposits with original maturities of 90 days or less. Short-term deposits are valued at amortized cost. The carrying amounts approximate fair value due to the short-term maturities of these instruments.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

(f) Allowance for doubtful accounts:

The Company maintains an allowance for accounts for estimated losses that may result from our customers’ inability to pay. The Company estimates an allowance for doubtful accounts primarily based on the credit worthiness of customers, aging of receivable balances and general economic conditions. Amounts later determined and specifically identified to be uncollectible are charged against this allowance.

Inventory, Policy [Policy Text Block]

(g) Inventories:

Inventories consist of finished goods, unfinished product (work in process) and raw materials and are valued at the lower of cost or estimated net realizable value, determined on a first-in-first-out basis. Cost is defined as all costs that relate to bringing the inventory to its present condition and location under normal operating conditions. Estimated net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The components of inventory and inventory purchase commitments are reviewed on a regular basis for excess and obsolete inventory based on estimated future usage and sales, demand from drug distributors and hospitals and economic conditions. Management believes that the estimates used in calculating the inventory provision are reasonable and properly reflect the risk of excess and obsolete inventory.

Property, Plant and Equipment, Policy [Policy Text Block]

(h) Property and equipment:

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

Asset	Rate
Laboratory equipment	5 years
Production equipment	7 years
Computer equipment	3-5 years
Software	3-5 years
Furniture and office equipment	5-7 years

Leasehold improvements are amortized on a straight-line basis over the lesser of their estimated useful life or the initial lease term. 

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

(i) Intangible assets:

Intangible assets are comprised of patent costs, trade name, marketing rights and licenses. Patent costs which are associated with the preparation, filing, and obtaining of patents are capitalized. Maintenance costs of patents are expensed as incurred.

The estimated useful life of an intangible asset with a definite life is the period over which the asset is expected to contribute to future cash flows. When determining the useful life, the Company considers the expected use of the asset, useful life of a related intangible asset, any legal, regulatory or contractual provisions that limit the useful life, any legal, regulatory, or contractual renewal or extension provisions without substantial costs or modifications to the existing terms and conditions, the effects of obsolescence, demand, competition and other economic factors, and the expected level of maintenance expenditures relative to the cost of the asset required to obtain future cash flows from the asset.

Amortization is provided using the straight-line method over the following terms:

Asset	Rate
Patents	over the patent life
Trade name	10 years
Marketing rights	10 years
Licenses	10 years

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

(j) Goodwill:

Goodwill represents the excess of the purchase price of an acquired enterprise over the fair value assigned to assets acquired and liabilities assumed in a business combination. Goodwill is allocated as of the date of the business combination to the reporting units that are expected to benefit from the synergies of the business combination. Goodwill is not amortized, but reviewed for impairment on an annual basis or more frequently if impairment indicators arise. Qualitative factors are first assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the qualitative assessment indicates that the reporting unit may be impaired, a two-step impairment test which considers, among other things, the fair value of reporting units based on discounted estimated future cash flows, is performed. This review involves significant estimation uncertainty, which could affect the Company’s future results if the current estimates of future performance and fair values change.

Impairment Of Long Lived Assets [Policy Text Block]

(k) Impairment of long-lived assets:

Long-lived assets, including property and equipment, and intangible assets other than goodwill, are assessed for potential impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. The Company determines whether the carrying value of a long-lived depreciable asset or asset group is recoverable based on its estimates of future asset utilization and undiscounted expected future cash flows the assets are expected to generate. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset.

Revenue Recognition, Deferred Revenue [Policy Text Block]

(l) Deferred revenue:

Deferred revenue is recorded when upfront payments on distribution agreements are received. The deferred revenue is amortized into income over the applicable earnings period.

Revenue Recognition, Policy [Policy Text Block]

(m) Revenue recognition:

Product and royalty revenue

Revenue from sales of products is recognized upon the later of transfer of title or upon shipment of the product to the customer, so long as persuasive evidence of an arrangement exists, the sales price is fixed or determinable, and collection is reasonably assured. Provisions for chargebacks, rebates, sales incentives and returns are provided for in the same period the related sales are recorded. Sales taxes collected from customers in various European markets that must be remitted back to the relevant government authorities are excluded from revenues. Shipping and handling costs are included in cost of sales.

Royalty revenue is recognized on an accrual basis when earned in accordance with the agreement terms, when royalties from the collaborative partner are determinable and collection is reasonably assured, such as upon the receipt of a royalty statement from the collaborative partner.

Licensing and other fees

The Company earns revenue from collaboration and license agreements from the commercial sale of approved products. Royalties payable under license agreements are included in cost of sales.

Research and Development Expense, Policy [Policy Text Block]

(n) Research and development costs:

Research and development costs are expensed in the period incurred. These expenses include the costs of the Company’s proprietary R&D efforts, as well as costs incurred in connection with certain licensing arrangements. Before a drug product receives regulatory approval, upfront and milestone payments made to third parties under licensing arrangements are recorded as an expense. Upfront payments are recorded when incurred, and milestone payments are recorded when the specific milestone has been achieved. Once a drug product receives regulatory approval, any subsequent milestone payments made are recorded in intangible assets and, unless the asset is determined to have an indefinite life, the payments are amortized on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter. As of December 31, 2016, no amounts have been recorded in intangible assets.

Clinical Trial Expenses [Policy Text Block]

(o) Clinical trial expenses:

Clinical trial expenses are a component of research and development costs and include fees paid to contract research organizations, investigators and other vendors who conduct certain product development activities on the Company’s behalf. The amount of clinical trial expenses recognized in a period related to service agreements are based on estimates of the work performed using an accrual basis of accounting. These estimates are based on patient enrollment, services provided and goods delivered, contractual terms and experience with similar contracts. The Company monitors these factors to the extent possible and adjusts its estimates accordingly. Prepaid expenses or accrued liabilities are adjusted if payments to service providers differ from estimates of the amount of service completed in a given period.

Stock-based compensation and other stock-based payments [Policy Text Block]

(p) Stock-based compensation and other stock-based payments:

Stock options and restricted share units granted to the Company’s directors, executive officers and employees are accounted for using the fair-value based method. Under this method, compensation expense for stock options is measured at fair value at the date of grant using the Black-Scholes valuation model and is expensed over the award’s vesting period on a graded basis. Stock options granted to consultants and to foreign employees with Canadian dollar denominated stock options are subject to variable accounting treatment and are re-valued at fair value at each balance sheet date until exercise, expiry or forfeiture. Compensation expense for restricted share units is measured at fair value at the date of grant, which is the market price of the underlying security, and is expensed over the award’s vesting period on a straight-line basis.

Income Tax, Policy [Policy Text Block]

(q) Income taxes:

The Company accounts for income taxes using the liability method of tax allocation. Deferred income taxes are recognized for the deferred income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases. Deferred income tax assets and liabilities are measured using 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 deferred income tax assets and liabilities of a change in tax rates is included in income when a change in tax rates is enacted. Deferred income tax assets are evaluated periodically and if realization is not considered more likely than not, a valuation allowance is provided. Income tax credits, such as investment tax credits, are included as part of the provision for income taxes.

Earnings Per Share, Policy [Policy Text Block]

(r) Earnings (loss) per share:

Basic earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the treasury stock method. When the effect of options and other securities convertible into common shares is anti-dilutive, including when the Company has incurred a loss for the period, basic and diluted loss per share are the same.

Diluted earnings (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. Under the treasury stock method, the number of dilutive shares, if any, is determined by dividing the average market price of shares for the period into the net proceeds of in-the-money options.

Reclassification, Policy [Policy Text Block]

(t) Comparative figures:

Certain comparative figures have been reclassified to conform with the financial statement presentation adopted for the current year.

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Summary of significant accounting policies (Tables)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Schedule Of Property Plant and Equipment Estimated Useful Life [Table Text Block]

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

Asset	Rate
Laboratory equipment	5 years
Production equipment	7 years
Computer equipment	3-5 years
Software	3-5 years
Furniture and office equipment	5-7 years

Finite Lived Intangible Assets Estimated Useful Life [Table Text Block]

Amortization is provided using the straight-line method over the following terms:

Asset	Rate
Patents	over the patent life
Trade name	10 years
Marketing rights	10 years
Licenses	10 years

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Inventories (Tables)

12 Months Ended

Dec. 31, 2016

Inventory, Net [Abstract]

Schedule of Inventory, Current [Table Text Block]

	December 31,		December 31,
	2016		2015
Finished goods	$	1,757	$	1,193
Work in process		562		703
Raw materials		2,299		2,505
	$	4,618	$	4,401

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Property and equipment (Tables)

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

			Accumulated		Net book
2016	Cost		amortization		value
Laboratory equipment	$	625	$	625	$	-
Production equipment		97		48		49
Software		161		85		76
Computer equipment		216		177		39
Leasehold improvements		399		107		292
Furniture and office equipment		187		95		92
	$	1,685	$	1,137	$	548

			Accumulated		Net book
2015	Cost		amortization		value
Laboratory equipment	$	625	$	598	$	27
Production equipment		96		30		66
Software		152		57		95
Computer equipment		240		149		91
Leasehold improvements		399		70		329
Furniture and office equipment		189		57		132
	$	1,701	$	961	$	740

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Intangible assets (Tables)

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

			Accumulated		Net book
2016	Cost		amortization		value
Licenses	$	12,843	$	856	$	11,987
Marketing rights		15,830		4,948		10,882
Trade name		1,131		353		778
Patents		4,347		3,642		705
	$	34,151	$	9,799	$	24,352

			Accumulated		Net book
2015	Cost		amortization		value
Marketing rights	$	15,830	$	3,365	$	12,465
Trade name		1,131		240		891
Patents		4,312		3,447		865
	$	21,273	$	7,052	$	14,221

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The estimated aggregate amortization expense for intangible assets held at December 31, 2016, for each of the five succeeding years is expected as follows:

2017	$	3,158
2018		3,126
2019		3,104
2020		3,083
2021		3,048

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Accounts payable and accrued liabilities (Tables)

12 Months Ended

Dec. 31, 2016

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	December 31,		December 31,
	2016		2015
Trade accounts payable	$	3,924	$	3,474
Employee-related accruals		2,637		3,744
Interest payable on deferred consideration (note 11)		24		45
Other accrued liabilities		1,436		3,225
	$	8,021	$	10,488

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Long term debt (Tables)

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

	December 31,		December 31,
	2016		2015
Principal amount	$	20,000	$	10,000
Less: unamortized debt issuance costs		(609)		(402)
Long-term debt, net of unamortized debt issuance costs	$	19,391	$	9,598
Less: current portion, net of unamortized debt issuance costs		-		(3,912)
	$	19,391	$	5,686

Schedule of Maturities of Long-term Debt [Table Text Block]

Future repayments are as follows:

2017	$	-
2018		-
2019		7,500
2020		10,000
2021		2,500
Total repayments	$	20,000

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Share capital (Tables)

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Schedule of Common Stock Outstanding Roll Forward [Table Text Block]

	Number
Common shares	of shares
Balance, December 31, 2014		16,591,002
Issued through at-the-market offering (i)		554,247
Issued through common share offering (ii)		2,875,000
Issued upon vesting of restricted share units, net of tax		7,246
Issued upon exercise of options in cashless transaction		10,431
Issued for cash upon exercise of options		109,411
Balance, December 31, 2015		20,147,337
Issued through common share offering (iii)		11,500,000
Issued to Lincoln Park Capital Fund, LLC (iv)		208,856
Issued upon vesting of restricted share units, net of tax		28,227
Balance, December 31, 2016		31,884,420

(i) On February 18, 2014, the Company completed a prospectus supplement under which the Company may issue common shares in one or more at-the-market (“ATM”) offerings up to an aggregate of $8,900. During the year ended December 31, 2015, the Company issued 554,247 common shares in the ATM offering for gross proceeds of $5,334.

On March 1, 2016, the Company filed a short form base shelf prospectus with the securities regulatory authorities in Canada, other than Quebec, and the United States Securities and Exchange Commission (the “SEC”) under a registration statement on Form F-10 (together, the “Base Shelf Prospectuses”). The Base Shelf Prospectuses provide for the potential offering in Canada and the United States of up to an aggregate of $250 million of the Company’s common shares, preferred shares, debt securities, warrants, subscription receipts and units from time to time over a 25-month period.

On March 7, 2016, the Company filed an Amended and Restated At Market Issuance Sales Agreement (the “Sales Agreement”) with FBR Capital Markets & Co. (“FBR”) and MLV & Co. LLC (“MLV”). The Company entered into the Sales Agreement only as a result of the acquisition by FBR of MLV. The Company also filed a prospectus supplement, in connection with the filing of the Base Shelf Prospectuses, pertaining to the Sales Agreement under which the Company may issue common shares through ATM offerings with FBR and MLV as agents, up to an aggregate of $6,900. As at December 31, 2016, no shares have been issued and $6,900 remains available under the prospectus supplement.

(ii) On August 13, 2015, the Company completed a prospectus offering of 2,875,000 common shares from treasury at a price of US$8.00 per common share for gross proceeds of $23,000.

(iii) On July 29, 2016, the Company closed an underwritten public offering of 11,500,000 common shares from treasury at a price of US$3.00 per common share for gross proceeds of $34,500.

(iv) On January 12, 2016, the Company completed a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”) which allows LPC to purchase up to an aggregate value of $20 million worth of common shares in the capital of the Company. In consideration for entering into the agreement, the Company issued 48,856 common shares to LPC as a commitment fee. No proceeds were received for these shares which were valued at $335 and recorded as a share issuance cost. During the year ended December 31, 2016, the Company issued 160,000 common shares under the Purchase Agreement to LPC for gross proceeds $841.

On March 7, 2016, the Company filed a prospectus supplement, in connection with the filing of the Base Shelf Prospectuses, pertaining to the Purchase Agreement, under which the Company may sell its common shares to LPC up to an aggregate of $6,900. On December 22, 2016, the Company filed an amendment to this prospectus supplement. The Company’s closing share price must be equal to or greater than US$1.00 in order for a purchase to be effected. As at December 31, 2016, no shares have been issued and $6,900 remains available under the prospectus supplement.

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Share-based compensation(Tables)

12 Months Ended

Dec. 31, 2016

Share-based Compensation [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

Details of the stock option transactions for the years ended December 31, 2016 and 2015 are summarized as follows:

					Weighted
			Weighted		average		Aggregate
			average		remaining		intrinsic
			exercise price		contractual life		value
	Number		(CAD$)		(years)		(CAD$)
Outstanding as at December 31, 2014		1,278,290		4.68		3.34		8,411
Options granted		382,900		10.84
Options exercised		(129,236)		3.76
Options forfeited		(45,097)		8.76
Options expired		(14,260)		41.69
Outstanding as at December 31, 2015		1,472,597		5.88		2.88		8,024
Options granted		617,500		5.97
Options forfeited		(72,200)		4.94
Options expired		(16,340)		20.22
Outstanding as at December 31, 2016		2,001,557		5.82		2.72		1,110
Exercisable as at December 31, 2016		1,292,969		5.20		2.13		1,004

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

At December 31, 2016, stock options to executive officers and directors, employees and consultants were outstanding as follows:

	Options outstanding						Options exercisable
			Weighted		Weighted				Weighted
			average		average				average
			remaining		exercise				exercise
Range of			contractual		price				price
exercise prices (CAD$)	Number		life (years)		(CAD$)		Number		(CAD$)
$1.65 to $2.08		409,000		1.02		1.67		358,568		1.67
$2.09 to $5.63		454,683		1.68		3.78		430,983		3.71
$5.64 to $7.37		550,000		4.47		6.20		106,932		6.20
$7.38 to $13.09		587,874		3.07		9.92		396,486		9.74
		2,001,557		2.72		5.82		1,292,969		5.20

Schedule Of Nonvested Option Activity [Table Text Block]

A summary of the Company’s non-vested stock option activity and related information for the year ended December 31, 2016 is as follows:

	Number		Weighted average
	of		grant-date fair value
Non-vested options	options		(U.S.$)
Non-vested at December 31, 2015		512,784		3.96
Granted		617,500		2.00
Vested		(417,744)		2.56
Forfeited		(3,952)		2.35
Non-vested at December 31, 2016		708,588		2.27

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The estimated fair value of the stock options granted was determined using the Black-Scholes option pricing model with the following weighted-average assumptions:

	December 31,			December 31,
	2016			2015
Dividend yield		-			-
Expected volatility		65.7	%		78.4	%
Risk-free interest rate		0.7	%		0.6	%
Expected average life of the options		3.1 years			3.4 years
Estimated forfeiture rate		-			-

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

Details of RSU transactions for the year ended December 31, 2016 are summarized as follows:

			Weighted		Weighted
			average		average		Aggregate
			grant date		remaining		intrinsic
			fair value		contractual		value
	Number		(USD$)		life (years)		(USD$)
Outstanding as at December 31, 2015		132,108	$	8.91		2.16	$	1,058
RSUs granted		50,782		4.43				218
RSUs vested		(49,682)		9.03				205
RSUs forfeited		(13,505)		9.00
Outstanding as at December 31, 2016		119,703	$	6.95		1.71	$	334

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Basic and diluted loss per share(Table)

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

Basic loss per share is calculated as set forth below:

Year ended December 31	2016		2015
Net loss	$	(19,619)	$	(24,462)
Weighted average number of common shares for basic loss per share		25,255,413		18,198,840
Loss per share – basic	$	(0.78)	$	(1.34)

Diluted loss per share is calculated as set forth below:

Year ended December 31	2016		2015
Net loss	$	(19,619)	$	(24,462)
Less: recovery of fair value of liability classified awards		(433)		-
Diluted loss available to common shareholders	$	(20,052)	$	(24,462)
Weighted average number of common shares for basic loss per share		25,255,413		18,198,840
Plus: incremental shares from assumed exercise		62,783		-
Diluted weighted average number of common shares for diluted loss per share		25,318,196		18,198,840
Loss per share – diluted	$	(0.79)	$	(1.34)

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Commitments (Tables)

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Future minimum payments under the various operating leases are as follows:

2017	$	414
2018		414
2019		379
2020		328
2021		187
Thereafter		546
Total minimum payments required	$	2,268

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Income taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

The components of loss before income taxes consist of the following:

	2016		2015
Canadian	$	(13,602)	$	(11,574)
Foreign		(5,865)		(12,899)
Loss before income taxes	$	(19,467)	$	(24,473)

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The reconciliation of income tax computed at statutory tax rates to income tax expense (recovery), using a 26.0% (2015 – 26.0%) statutory tax rate, is:

	December 31,			December 31,
	2016			2015
Loss before income taxes	$	(19,467)		$	(24,473)
Statutory tax rate		26.0	%		26.0	%
Income tax recovery at Canadian statutory income tax rates	$	(5,061)		$	(6,363)
Change in valuation allowance		4,197			4,290
Permanent differences		343			447
Tax rate differences		450			291
Foreign exchange and other differences		223			1,324
Income tax expense (recovery)	$	152		$	(11)

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

Significant components of the Company’s deferred tax assets are shown below:

	December 31,		December 31,
	2016		2015
Deferred tax assets:
Tax loss carryforwards	$	80,963	$	76,694
Research and development deductions and investment tax credits		27,709		29,116
Tax values of depreciable assets in excess of accounting values		3,230		2,773
Share issue costs and other		1,413		544
Total deferred tax assets		113,315		109,127
Valuation allowance		(112,855)		(108,658)
Net deferred tax assets	$	460	$	469

Investment Tax Credits and Non-Capital Losses [Table Text Block]

The Company’s Canadian federal and provincial investment tax credits and non-capital losses for income tax purposes expire as follows:

	Investment		Non-capital
	tax credits		losses
2017	$	975	$	-
2018		145		-
2019		501		3,384
2020		481		34,506
2021		528		6,478
Thereafter until 2035		13,882		283,087
	$	16,512	$	327,455

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Segmented information (Tables)

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

The Company recognizes segmentation based on geography as follows:

Year ended December 31, 2016	Europe			Rest of World			Total
Revenue	$	10,931		$	14,325		$	25,256
Cost of goods sold		2,585			3,725			6,310
Gross margin		8,346			10,600			18,946
Gross margin %		76	%		74	%		75	%

Year ended December 31, 2015	Europe			Rest of World			Total
Revenue	$	10,572		$	10,338		$	20,910
Cost of goods sold		3,191			3,396			6,587
Gross margin		7,381			6,942			14,323
Gross margin %		70	%		67	%		68	%

Property and equipment by geographic area were as follows:

As at December 31	2016		2015
Europe	$	116	$	95
Rest of World		432		645
	$	548	$	740

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Summary of significant accounting policies (Details)	12 Months Ended
	Dec. 31, 2016
Laboratory equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Production equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	7 years
Computer equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years
Computer equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Software [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years
Software [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Furniture and office equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Furniture and office equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	7 years

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Summary of significant accounting policies (Details 1)	12 Months Ended
	Dec. 31, 2016
Trade name [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	10 years
Marketing rights [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	10 years
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	10 years

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Summary of significant accounting policies (Details Textual)	12 Months Ended
	Dec. 31, 2016
Investment Maturity Period	90 days or less

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Recent accounting pronouncements (Details Textual) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Unamortized Debt Issuance Expense	$ 609	$ 402
Other Current Assets [Member]
Unamortized Debt Issuance Expense		88
Other Noncurrent Assets [Member]
Unamortized Debt Issuance Expense		$ 314

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Restricted cash (Details Textual) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Property Available for Operating Lease [Member]
Restricted Cash and Cash Equivalents, Current	$ 104	$ 0
Restricted Cash Held In Escrow [Member]
Restricted Cash and Cash Equivalents, Current	1,000	1,000
Bank Guarantees For Sales Contracts With Various Hospitals And Health Authorities [Member]
Restricted Cash and Cash Equivalents, Current	$ 1,443	$ 1,196

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Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Finished goods	$ 1,757	$ 1,193
Work in process	562	703
Raw materials	2,299	2,505
Total	$ 4,618	$ 4,401

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Inventories (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Inventory Write-down	$ 159	$ 2,028
Unsold Inventory [Member]
Inventory Write-down		$ 1,125

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Property and equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Cost	$ 1,685	$ 1,701
Accumulated amortization	1,137	961
Net book value	548	740
Laboratory equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	625	625
Accumulated amortization	625	598
Net book value	0	27
Production equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	97	96
Accumulated amortization	48	30
Net book value	49	66
Software [Member]
Property, Plant and Equipment [Line Items]
Cost	161	152
Accumulated amortization	85	57
Net book value	76	95
Computer equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	216	240
Accumulated amortization	177	149
Net book value	39	91
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Cost	399	399
Accumulated amortization	107	70
Net book value	292	329
Furniture and office equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	187	189
Accumulated amortization	95	57
Net book value	$ 92	$ 132

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Property and equipment (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Amortization expense	$ 201	$ 203
Computer Equipment [Member]
Accumulated Depreciation, Depletion and Amortization, Property, Plant and Equipment, Period Increase (Decrease)	$ 25	$ 0

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Intangible assets (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Cost	$ 34,151	$ 21,273
Accumulated amortization	9,799	7,052
Net book value	24,352	14,221
Marketing rights [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	15,830	15,830
Accumulated amortization	4,948	3,365
Net book value	10,882	12,465
Trade name [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	1,131	1,131
Accumulated amortization	353	240
Net book value	778	891
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Patents, Cost	4,347	4,312
Accumulated amortization	3,642	3,447
Net book value	705	$ 865
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	12,843
Accumulated amortization	856
Net book value	$ 11,987

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Intangible assets (Details 1) $ in Thousands	Dec. 31, 2016 USD ($)
2017	$ 3,158
2018	3,126
2019	3,104
2020	3,083
2021	$ 3,048

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Intangible assets (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Amortization of Intangible Assets	$ 2,783	$ 1,974
Licensing Agreements [Member]
Finite-lived Intangible Assets Acquired	$ 13,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	10 years

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Accounts payable and accrued liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Trade accounts payable	$ 3,924	$ 3,474
Employee-related accruals	2,637	3,744
Interest payable on deferred consideration (note 11)	24	45
Other accrued liabilities	1,436	3,225
Total	$ 8,021	$ 10,488

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Long term debt (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Principal amount	$ 20,000	$ 10,000
Less: unamortized debt issuance costs	(609)	(402)
Long-term debt, net of unamortized debt issuance costs	19,391	9,598
Less: current portion, net of unamortized debt issuance costs	0	(3,912)
Long-term Debt, Excluding Current Maturities	$ 19,391	$ 5,686

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Long term debt (Details 1) $ in Thousands	Dec. 31, 2016 USD ($)
2017	$ 0
2018	0
2019	7,500
2020	10,000
2021	2,500
Total repayments	$ 20,000

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Long term debt (Details Textual) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Jul. 18, 2014	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2017	Jun. 13, 2016
Debt Instrument [Line Items]
Write off of Deferred Debt Issuance Cost		$ 256
Gain (Loss) on Extinguishment of Debt		(1,402)	$ 0
Debt Prepayment And Exit Fees Expenses		1,146
Revenue Recognition, Milestone Method, Revenue Recognized		$ 5,000
CRG- managed Funds [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity					$ 30,000
Long-term debt					$ 20,000
Debt Instrument, Maturity Date		Mar. 31, 2021
Debt Instrument, Interest Rate, Stated Percentage					14.00%
CRG- managed Funds [Member] | Scenario, Forecast [Member]
Debt Instrument [Line Items]
Long-term debt				$ 5,000
Senior Secured Term Loan Facility [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 22,000
Long-term debt			$ 10,000
Debt Instrument, Interest Rate Terms	LIBOR plus 8%
Line of Credit Facility, Expiration Period	48 months
Senior Secured Term Loan Facility [Member] | First Tranche [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 12,000
Senior Secured Term Loan Facility [Member] | Second Tranche [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 10,000

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Deferred consideration (Details Textual) - Correvio LLC [Member] $ in Thousands	Nov. 18, 2013 USD ($)
Business Combination Equity Interests Issued Percentage	19.90%
Business Combination, Contingent Consideration, Liability, Total	$ 12,000
Business Acquisition Percentage of Product Sales	10.00%
Business Acquisition Percentage Of Interest Accrued	10.00%

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Share capital (Details) - shares			1 Months Ended	12 Months Ended
		Aug. 13, 2015	Jul. 29, 2016	Dec. 31, 2016		Dec. 31, 2015
Balance (in shares)				20,147,337
Issued to Lincoln Park Capital Fund, LLC		2,875,000	11,500,000
Balance (in shares)				31,884,420		20,147,337
Common Stock [Member]
Balance (in shares)				20,147,337		16,591,002
Issued through at-the-market offering	[1]					554,247
Issued through common share offering				11,500,000	[2]	2,875,000	[3]
Issued upon vesting of restricted share units, net of tax				28,227		7,246
Issued upon exercise of options in cashless transaction						10,431
Issued for cash upon exercise of options						109,411
Issued to Lincoln Park Capital Fund, LLC				11,708,856		3,429,247
Balance (in shares)				31,884,420		20,147,337
Lincoln Park Capital Fund, LLC [Member] | Common Stock [Member]
Issued to Lincoln Park Capital Fund, LLC	[4]			208,856

[1] On February 18, 2014, the Company completed a prospectus supplement under which the Company may issue common shares in one or more at-the-market (“ATM”) offerings up to an aggregate of $8,900. During the year ended December 31, 2015, the Company issued 554,247 common shares in the ATM offering for gross proceeds of $5,334. On March 1, 2016, the Company filed a short form base shelf prospectus with the securities regulatory authorities in Canada, other than Quebec, and the United States Securities and Exchange Commission (the “SEC”) under a registration statement on Form F-10 (together, the “Base Shelf Prospectuses”). The Base Shelf Prospectuses provide for the potential offering in Canada and the United States of up to an aggregate of $250 million of the Company’s common shares, preferred shares, debt securities, warrants, subscription receipts and units from time to time over a 25-month period. On March 7, 2016, the Company filed an Amended and Restated At Market Issuance Sales Agreement (the “Sales Agreement”) with FBR Capital Markets & Co. (“FBR”) and MLV & Co. LLC (“MLV”). The Company entered into the Sales Agreement only as a result of the acquisition by FBR of MLV. The Company also filed a prospectus supplement, in connection with the filing of the Base Shelf Prospectuses, pertaining to the Sales Agreement under which the Company may issue common shares through ATM offerings with FBR and MLV as agents, up to an aggregate of $6,900. As at December 31, 2016, no shares have been issued and $6,900 remains available under the prospectus supplement.

[2] On July 29, 2016, the Company closed an underwritten public offering of 11,500,000 common shares from treasury at a price of US$3.00 per common share for gross proceeds of $34,500.

[3] On August 13, 2015, the Company completed a prospectus offering of 2,875,000 common shares from treasury at a price of US$8.00 per common share for gross proceeds of $23,000.

[4] On January 12, 2016, the Company completed a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”) which allows LPC to purchase up to an aggregate value of $20 million worth of common shares in the capital of the Company. In consideration for entering into the agreement, the Company issued 48,856 common shares to LPC as a commitment fee. No proceeds were received for these shares which were valued at $335 and recorded as a share issuance cost. During the year ended December 31, 2016, the Company issued 160,000 common shares under the Purchase Agreement to LPC for gross proceeds $841. On March 7, 2016, the Company filed a prospectus supplement, in connection with the filing of the Base Shelf Prospectuses, pertaining to the Purchase Agreement, under which the Company may sell its common shares to LPC up to an aggregate of $6,900. On December 22, 2016, the Company filed an amendment to this prospectus supplement. The Company’s closing share price must be equal to or greater than US$1.00 in order for a purchase to be effected. As at December 31, 2016, no shares have been issued and $6,900 remains available under the prospectus supplement.

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Share capital (Details Textual) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended	12 Months Ended
	Jan. 12, 2016	Aug. 13, 2015	Jul. 29, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 22, 2016	Mar. 07, 2016	Mar. 01, 2016	Feb. 18, 2014
Common Stock Reserved For Future Issuance Amount				$ 6,900			$ 6,900
Stock Issued During Period, Shares, New Issues		2,875,000	11,500,000
Proceeds from Issuance of Common Stock		$ 23,000	$ 34,500	$ 35,341	$ 28,334
Share Price		$ 8.00	$ 3.00
Lincoln Park Capital Fund, LLC Asset Purchase Agreement [Member]
Stock Issued During Period, Shares, New Issues				160,000
Proceeds from Issuance of Common Stock				$ 841
Aggregate Value Of Common Shares Allowed To Purchase Under Asset Purchase Agreement	$ 20,000
Stock Issued During Period, Shares, Share-based Compensation, Gross	48,856
Stock Issued During Period, Value, Share-based Compensation, Gross	$ 335
Closing Share Price						$ 1.00
Market Offering [Member]
Common Stock Reserved For Future Issuance Amount									$ 8,900
Stock Issued During Period, Shares, New Issues					554,247
Proceeds from Issuance of Common Stock					$ 5,334
Potential Offering [Member]
Common Stock Reserved For Future Issuance Amount								$ 250,000
FBR Capital Markets Co And MLV Co. LLC [Member]
Common Stock Reserved For Future Issuance Amount				$ 6,900			$ 6,900

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Share-based compensation (Details) - Share Compensation Plan [Member] - CAD CAD / shares in Units, CAD in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Oustanding beginning balance, Number	1,472,597	1,278,290
Options granted, Number	617,500	382,900
Options exercised, Number		(129,236)
Options forfeited, Number	(72,200)	(45,097)
Options expired, Number	(16,340)	(14,260)
Oustanding ending balance, Number	2,001,557	1,472,597	1,278,290
Exercisable, Number	1,292,969
Outstanding beginning balance, Weighted Average Exercise Price	CAD 5.88	CAD 4.68
Options granted, Weighted average exercise price	5.97	10.84
Options exercised, Weighted Average Exercise Price		3.76
Options forfeited, Weighted average exercise price	4.94	8.76
Options expired, Weighted average exercise price	20.22	41.69
Outstanding ending balance, Weighted Average Exercise Price	5.82	CAD 5.88	CAD 4.68
Exercisable, Weighted average exercise price	CAD 5.20
Options Outstanding, Weighted average remaining contractual life	2 years 8 months 19 days	2 years 10 months 17 days	3 years 4 months 2 days
Exercisable, Weighted average remaining contractual life (years)	2 years 1 month 17 days
Outstanding beginning balance, Aggregate intrinsic value	CAD 8,024	CAD 8,411
Outstanding ending balance, Aggregate intrinsic value	1,110	CAD 8,024	CAD 8,411
Exercisable, Aggregate intrinsic value	CAD 1,004

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Share-based compensation (Details 1) - Share Compensation Plan [Member] - CAD / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options outstanding, Number	2,001,557	1,472,597	1,278,290
Options outstanding, Weighted average remaining contractual life	2 years 8 months 19 days
Options outstanding, Weighted average exercise price	CAD 5.82	CAD 5.88	CAD 4.68
Options exercisable, Number	1,292,969
Options exercisable, Weighted average exercise price	CAD 5.20
$1.65 to $2.08 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, minimum	1.65
Range of exercise prices, maximum	CAD 2.08
Options outstanding, Number	409,000
Options outstanding, Weighted average remaining contractual life	1 year 7 days
Options outstanding, Weighted average exercise price	CAD 1.67
Options exercisable, Number	358,568
Options exercisable, Weighted average exercise price	CAD 1.67
$2.09 to $5.63 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, minimum	2.09
Range of exercise prices, maximum	CAD 5.63
Options outstanding, Number	454,683
Options outstanding, Weighted average remaining contractual life	1 year 8 months 5 days
Options outstanding, Weighted average exercise price	CAD 3.78
Options exercisable, Number	430,983
Options exercisable, Weighted average exercise price	CAD 3.71
$5.64 to $7.37 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, minimum	5.64
Range of exercise prices, maximum	CAD 7.37
Options outstanding, Number	550,000
Options outstanding, Weighted average remaining contractual life	4 years 5 months 19 days
Options outstanding, Weighted average exercise price	CAD 6.20
Options exercisable, Number	106,932
Options exercisable, Weighted average exercise price	CAD 6.20
$7.38 to $13.09 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, minimum	7.38
Range of exercise prices, maximum	CAD 13.09
Options outstanding, Number	587,874
Options outstanding, Weighted average remaining contractual life	3 years 25 days
Options outstanding, Weighted average exercise price	CAD 9.92
Options exercisable, Number	396,486
Options exercisable, Weighted average exercise price	CAD 9.74

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Share-based compensation (Details 2) - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Granted, Weighted average grant-date fair value	$ 2.00	$ 4.50
Share Compensation Plan [Member]
Non-vested, Number of options - Beginning balace	512,784
Non-vested, Number of options Granted	617,500	382,900
Non-vested, Number of options Vested	(417,744)
Non-vested, Number of options Forfeited	(3,952)
Non-vested, Number of options - Ending balace	708,588	512,784
Non-vested, Weighted average grant-date fair value - Beginning balace	$ 3.96
Granted, Weighted average grant-date fair value	2.00
Vested, Weighted average grant-date fair value	2.56
Forfeited, Weighted average grant-date fair value	2.35
Non-vested, Weighted average grant-date fair value- Ending balace	$ 2.27	$ 3.96

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Share-based compensation (Details 3)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Dividend yield	0.00%	0.00%
Expected volatility	65.70%	78.40%
Risk-free interest rate	0.70%	0.60%
Expected average life of the options	3 years 1 month 6 days	3 years 4 months 24 days
Estimated forfeiture rate	0.00%	0.00%

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Share-based compensation (Details 4) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Balance, Number	132,108
RSUs granted Number	50,782
RSUs vested Number	(49,682)
RSUs forfeited Number	(13,505)
Balance, Number	119,703	132,108
Balance, Fair Value	$ 8.91
RSUs granted Fair Value	4.43
RSUs vested Fair Value	9.03
RSUs forfeited Fair Value	9.00
Balance, Fair Value	$ 6.95	$ 8.91
Balance, Weighted Average Remaining Contractual Year	1 year 8 months 16 days	2 years 1 month 28 days
Balance, Aggregate Intrinsic Value	$ 1,058
RSUs granted Aggregate Intrinsic Value	218
RSUs vested Aggregate Intrinsic Value	205
Balance, Aggregate Intrinsic Value	$ 334	$ 1,058

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Share-based compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested options, unrecognized share-based compensation costs		$ 739	$ 934
Nonvested options, weighted average period for recognition of unrecognized share-based compensation costs		1 year 3 months 18 days	1 year 4 months 24 days
Intrinsic value of options exercised	[1]		$ 743
Weight average fair value of options granted		$ 2.00	$ 4.50
Fair value of options vested		$ 1,071	$ 1,404
Allocated Share-based Compensation Expense		1,152	437
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost		171	1,828
Other Liabilities [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense		1,323	1,391
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested options, unrecognized share-based compensation costs		$ 537	$ 828
Nonvested options, weighted average period for recognition of unrecognized share-based compensation costs		1 year 6 months	2 years 2 months 12 days
Allocated Share-based Compensation Expense		$ 431	$ 377
Amended Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Outstanding Stock Maximum				10.00%
Amended Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Outstanding Stock Maximum				12.50%

[1] On January 12, 2016, the Company completed a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”) which allows LPC to purchase up to an aggregate value of $20 million worth of common shares in the capital of the Company. In consideration for entering into the agreement, the Company issued 48,856 common shares to LPC as a commitment fee. No proceeds were received for these shares which were valued at $335 and recorded as a share issuance cost. During the year ended December 31, 2016, the Company issued 160,000 common shares under the Purchase Agreement to LPC for gross proceeds $841. On March 7, 2016, the Company filed a prospectus supplement, in connection with the filing of the Base Shelf Prospectuses, pertaining to the Purchase Agreement, under which the Company may sell its common shares to LPC up to an aggregate of $6,900. On December 22, 2016, the Company filed an amendment to this prospectus supplement. The Company’s closing share price must be equal to or greater than US$1.00 in order for a purchase to be effected. As at December 31, 2016, no shares have been issued and $6,900 remains available under the prospectus supplement.

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Research and development expense (Details Textual) $ in Thousands	1 Months Ended
	Jun. 30, 2015 USD ($)
SteadyMed Ltd [Member]
Research and development expense [Line Items]
Research and Development Expense	$ 3

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Basic loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Net loss	$ (19,619)	$ (24,462)
Weighted average number of common shares for basic loss per share	25,255,413	18,198,840
Loss per share - basic	$ (0.78)	$ (1.34)

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Diluted loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Net loss	$ (19,619)	$ (24,462)
Less: recovery of fair value of liability classified awards	(433)	0
Diluted loss available to common shareholders	$ (20,052)	$ (24,462)
Weighted average number of common shares for basic loss per share	25,255,413	18,198,840
Plus: incremental shares from assumed exercise	62,783	0
Diluted weighted average number of common shares for diluted loss per share	25,318,196	18,198,840
Loss per share - diluted	$ (0.79)	$ (1.34)

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Commitments (Details) $ in Thousands	Dec. 31, 2016 USD ($)
2017	$ 414
2018	414
2019	379
2020	328
2021	187
Thereafter	546
Total minimum payments required	$ 2,268

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Commitments (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Summary of Commitments [Line Items]
Operating Leases, Net Rent Expense	$ 614	$ 655
Research and Development and Other commitment	1,755	$ 2,889
Purchase Obligation, Due in Next Twelve Months	146
Purchase Obligation, Due in Second Year	146
Recorded Unconditional Purchase Obligation Due in Third Year	$ 146

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Income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Loss before income taxes	$ (19,467)	$ (24,473)
Canadian [Member]
Loss before income taxes	(13,602)	(11,574)
Foreign [Member]
Loss before income taxes	$ (5,865)	$ (12,899)

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Income taxes (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Summary of Income Tax [Line Items]
Loss before income taxes	$ (19,467)	$ (24,473)
Statutory tax rate	26.00%	26.00%
Income tax recovery at Canadian statutory income tax rates	$ (5,061)	$ (6,363)
Change in valuation allowance	4,197	4,290
Permanent differences	343	447
Tax rate differences	450	291
Foreign exchange and other differences	223	1,324
Income tax expense (recovery)	$ 152	$ (11)

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Income taxes (Details 2) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Deferred tax assets:
Tax loss carryforwards	$ 80,963	$ 76,694
Research and development deductions and investment tax credits	27,709	29,116
Tax values of depreciable assets in excess of accounting values	3,230	2,773
Share issue costs and other	1,413	544
Total deferred tax assets	113,315	109,127
Valuation allowance	(112,855)	(108,658)
Net deferred tax assets	$ 460	$ 469

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Income taxes (Details 3) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Tax Credit Carryforward [Line Items]
Investment tax credits	$ 16,512	$ 17,577
Non-capital losses	327,455	$ 313,062
Expire On 2017 [Member]
Tax Credit Carryforward [Line Items]
Investment tax credits	975
Non-capital losses	0
Expire On 2018 [Member]
Tax Credit Carryforward [Line Items]
Investment tax credits	145
Non-capital losses	0
Expire On 2019 [Member]
Tax Credit Carryforward [Line Items]
Investment tax credits	501
Non-capital losses	3,384
Expire On 2020 [Member]
Tax Credit Carryforward [Line Items]
Investment tax credits	481
Non-capital losses	34,506
Expire On 2021 [Member]
Tax Credit Carryforward [Line Items]
Investment tax credits	528
Non-capital losses	6,478
Thereafter until 2035 [Member]
Tax Credit Carryforward [Line Items]
Investment tax credits	13,882
Non-capital losses	$ 283,087

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Income taxes (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Summary of Income Tax [Line Items]
Tax Credit Carryforward, Amount	$ 16,512	$ 17,577
Operating Loss Carryforwards	$ 327,455	$ 313,062
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate	26.00%	26.00%
Estimated tax liabilities	$ 0	$ 0
Canada Loss Carryforwards [Member]
Summary of Income Tax [Line Items]
Operating Loss Carryforwards	188,444	173,698
Switzerland Loss Carryforwards [Member]
Summary of Income Tax [Line Items]
Operating Loss Carryforwards	93,314	93,205
United States Loss Carryforwards [Member]
Summary of Income Tax [Line Items]
Operating Loss Carryforwards	44,933	45,289
United Kingdom Loss Carryforwards [Member]
Summary of Income Tax [Line Items]
Operating Loss Carryforwards	$ 764	$ 870

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Related party transactions (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Officer [Member]
Related Party Transaction [Line Items]
Accounts payable to related party	$ 148	$ 12
Expenses from related party transactions	$ 148	63
Accounting Firm [Member]
Related Party Transaction [Line Items]
Accounts payable to related party		31
Expenses from related party transactions		$ 35

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Segmented information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Revenue	$ 25,256	$ 20,910
Cost of goods sold	6,310	6,587
Gross margin	$ 18,946	$ 14,323
Gross margin %	75.00%	68.00%
Europe [Member]
Revenue	$ 10,931	$ 10,572
Cost of goods sold	2,585	3,191
Gross margin	$ 8,346	$ 7,381
Gross margin %	76.00%	70.00%
Rest of World [Member]
Revenue	$ 14,325	$ 10,338
Cost of goods sold	3,725	3,396
Gross margin	$ 10,600	$ 6,942
Gross margin %	74.00%	67.00%

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Segmented information (Details 1) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Property and equipment	$ 548	$ 740
Europe [Member]
Property and equipment	116	95
Rest of World [Member]
Property and equipment	$ 432	$ 645

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Segmented information (Details Textual)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
One Customer [Member]
Percentage of Revenue	23.00%	28.00%
Two Customer [Member]
Percentage of Revenue	20.00%	19.00%