6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13A-16 or 15d-16 of

The Securities Exchange Act of 1934

For the month of March 2020

COMMISSION FILE Number. 000-29338

CORREVIO PHARMA CORP.

(Translation of registrant’s name into English)

1441 Creekside Drive, 6th floor

Vancouver, British Columbia, V6J 4S7, CANADA

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

DOCUMENTS INCLUDED AS PART OF THIS REPORT

Exhibit	Description
99.1	Annual Information Form for the fiscal year ended December 31, 2019.
99.2	Audited Consolidated Financial Statements for the fiscal year ended December 31, 2019.
99.3	Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2019.
99.4	Material Change Report and News Release dated March 30, 2020 - Correvio Reports Full Year 2019 Financial Results
99.5	Consent of KPMG LLP

Exhibits 99.1, 99.2, 99.3, 99.4 and 99.5 of this report on Form 6-K are incorporated by reference into the Company’s registration statement on Form F-10 (File No. 333-225852) and registration statements on Form S-8 (File No. 333-225015 and File No. 333-225014). 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CORREVIO PHARMA CORP.
	(Registrant)
Date: March 30, 2020	By:	/s/ Justin Renz
		Name: Justin Renz
		Title: President and Chief Financial Officer

EX-99.1

Exhibit 99.1

CORREVIO PHARMA CORP.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2019

march 27, 2020

TABLE OF CONTENTS

Page

REFERENCE INFORMATION	2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	2
CORPORATE STRUCTURE	7
GENERAL DEVELOPMENT OF THE BUSINESS	7
Three Year History	8
NARRATIVE DESCRIPTION OF THE BUSINESS	13
General	13
Summary of Our Products and Product Candidates	13
Our Strategy	14
Our Products and Product Candidates	15
Production Methods and Components	20
Specialized Skill and Knowledge	21
Foreign Operations	21
U.S. Export Controls and Economic Sanctions	21
Competition	21
Patents and Proprietary Protection	21
Regulatory Environment	22
Employees	26
RISK FACTORS	26
DIVIDENDS AND DISTRIBUTIONS	45
CAPITAL STRUCTURE	45
MARKET FOR SECURITIES	45
PRIOR SALES	46
DIRECTOR AND EXECUTIVE OFFICERS	49
CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS	54
CONFLICTS OF INTEREST	55
AUDIT COMMITTEE INFORMATION	55
LEGAL PROCEEDINGS AND REGULATORY ACTIONS	56
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	56
TRANSFER AGENT AND REGISTRARS	57
MATERIAL CONTRACTS	57
INTERESTS OF EXPERTS	58
ADDITIONAL INFORMATION	58
SCHEDULE “A” AUDIT COMMITTEE MANDATE	59

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CORREVIO PHARMA CORP.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2019

March 27, 2020

REFERENCE INFORMATION

In this annual information form, a reference to the “Corporation”, “Company”, “Correvio”, “we”, “us”, “our” and similar words refer to Correvio 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, 2020, the exchange rate for conversion of U.S. dollars into Canadian dollars was $1.00 = Cdn.$ 1.4056 based upon the Bank of Canada daily exchange rate.

Unless otherwise stated, the information set forth in this annual information form is as of December 31, 2019.

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 possible regulatory path forward with respect to BRINAVESS^® (“BRINAVESS”) with the U.S. Food and Drug Administration (“FDA”);

· our plans to obtain the maximum possible extension of patent term that might be available covering the use of BRINAVESS;

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

· our expected commercialization of XYDALBA^TM (“XYDALBA”) in certain European countries and select countries in the Middle East;

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

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

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

· the cost of post-authorization commitments if we receive necessary regulatory approvals;

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

· our belief regarding the merit of the ongoing class action lawsuit and our intention to vigorously defend such lawsuit;

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· our plans to regain compliance with the Nasdaq (as defined herein) minimum bid price and minimum market value requirements within the prescribed grace periods;

· our possible eligibility for additional time to regain compliance with such requirements upon expiration of the prescribed compliance periods;

· our expectation that our common shares will continue to be listed and trade on the Nasdaq during the prescribed compliance periods;

· the proposed acquisition by ADVANZ PHARMA (as defined herein) of all of our issued and outstanding common shares pursuant to the Proposed Arrangement (as defined herein) and the expected terms, timing and closing of the transaction;

· our expectations for the receipt of the necessary securityholder and court approvals and satisfaction of other customary closing conditions in connection with the Proposed Arrangement;

· the intended delisting of our common shares from the TSX (as defined herein) and Nasdaq and ceasing of our status as a reporting issuer in connection with the completion of the Proposed Arrangement;

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

· our ability to enroll patients in our clinical trials and complete enrollment in registries being performed as part of regulatory agency follow-up measures;

· 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;

· payments and royalties expected upon the achievement of certain sales milestones;

· 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, manufacturing 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;

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· the manufacturing capabilities 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 business strategy and potential acquisitions of additional companies, products or technologies related or complimentary to our current operations;

· 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 the meeting held for Correvio securityholders to consider and, if deemed advisable, approve the Proposed Arrangement will proceed as planned, the assumption that the Supreme Court of British Columbia will hear our applications for the interim and final orders required in connection with the Proposed Arrangement, 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 assumption that our partners/distributors will continue to operate in the same manner and order products at similar levels.

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 risk factors, including the risks outlined under the heading “Risk Factors” in this annual information from. 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;

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· worldwide pandemics, such as the recent outbreak of the novel coronavirus known as COVID-19, may adversely impact multiple aspects of our business;

· 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 the CRG term loan or are unable to meet minimum annual revenue and liquidity covenants, we could have a covenant violation;

· we are subject to certain restrictive covenants;

· we are dependent on four 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;

· third parties may be unable to produce products at a price that has been agreed upon, or which is commercially viable;

· we rely on collaborative partners for the licensing and supply of certain products;

· 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 clinical, 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, execution failure or unforeseen reasons;

· we rely on third party distributors in many markets to sell our products and such third parties may fail to meet their quality, regulatory, licensing, commercialisation or general distributor 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;

· 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 confidential information under our control;

· clinical trials for our product candidates are expensive and time-consuming, and their outcome is uncertain and the vernakalant IV program has been on full clinical hold in the United States since November 9, 2010;

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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;

· 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;

· our common shares may be delisted from the Nasdaq, which could affect their market price and liquidity. If our common shares were to be delisted, investors may have difficulty in disposing of their shares;

· 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;

· we are subject to risks inherent in foreign operations;

· there is an increased focus on privacy and data protection issues in countries around the world, including regions and countries where we operate (e.g., Europe and Switzerland);

· 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-authorization 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;

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

·the United Kingdom’s exit from the European Union may result in regulatory costs and challenges that could have a material adverse impact on our business;

·the conditions precedent to the Proposed Arrangement may not be satisfied;

·we may face continuing risks if the Proposed Arrangement is not completed;

·management time and attention may be diverted from the existing business of Correvio;

·completion of the Proposed Arrangement is subject to the condition that a material adverse effect has not occurred; and

·failure to complete the Proposed Arrangement could negatively impact our future business, operations and the price of common shares.

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).

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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, 2019, for an additional discussion of factors that could affect our future performance.

CORPORATE STRUCTURE

Correvio was incorporated on March 7, 2018, under the laws of the Canada Business Corporations Act (the “CBCA”), in connection with a reorganization of Cardiome Pharma Corp. (“Cardiome”) by way of a plan of arrangement (the “Arrangement”). On March 19, 2018, Correvio entered into a definitive arrangement agreement (the “Arrangement Agreement”) with Cipher Pharmaceuticals Inc. (“Cipher”) and Cardiome. Under the terms of the agreement, Cipher acquired Cardiome’s Canadian business portfolio in exchange for cash consideration of C$25.5 million. As a result of the Arrangement, Correvio acquired, and currently holds, all of Cardiome’s pre-transaction assets and assumed liabilities, but excluding the Canadian business portfolio. Pursuant to the Arrangement, Cardiome shareholders received common shares, on a one-for-one ratio, of Correvio. Correvio obtained a substitution listing on the Nasdaq Stock Market (“Nasdaq”) and on the Toronto Stock Exchange (the “TSX”) and has succeeded to Cardiome’s reporting obligations.

The following table lists the principal subsidiaries of Correvio and their jurisdictions of incorporation or organization as of December 31, 2019. All such entities are 100% owned, directly or indirectly, by Correvio:

Subsidiary Name	Jurisdiction of Incorporation or Organization
Correvio LLC	Delaware, U.S.A.
Correvio International S.a.r.l.	Switzerland

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.

GENERAL DEVELOPMENT OF THE BUSINESS

Correvio 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. Correvio strives to find innovative, differentiated medicines that provide therapeutic and economic value to patients, physicians and healthcare systems. Correvio currently has two marketed, in-hospital cardiology products in Europe and other territories outside of the United States, AGGRASTAT and BRINAVESS. In addition, Correvio has licensed the marketing rights to the following products outside of the United States: a development stage drug/device combination product candidate, TREVYENT^® (“TREVYENT”); an antibiotic, XYDALBA; and a cephalosporin antibiotic, ZEVTERA^®/MABELIO^® (“ZEVTERA/MABELIO”).

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Three Year History

Arrangement Agreement with Cipher Pharmaceuticals Inc.

On March 19, 2018, we entered into the Arrangement Agreement with Cipher pursuant to which Cipher acquired our Canadian business portfolio by way of a court approved plan of arrangement under the CBCA.

Cipher acquired all of the issued and outstanding shares of Cardiome following a restructuring of Cardiome, and Cardiome shareholders received common shares, on a one-for-one ratio, of Correvio, which acquired and held all of Cardiome’s pre-transaction assets, excluding the Canadian business portfolio being acquired by Cipher under the Arrangement.

Pursuant to the Arrangement, among other steps and procedures, the following transactions occurred:

· All of the outstanding common shares of Cardiome were assigned and transferred to Correvio in exchange for common shares of Correvio. Following the completion of the share exchange, each former shareholder of Cardiome held the same pro rata interest in Correvio as it held in Cardiome immediately prior to such share exchange.

· All of the assets and liabilities of Cardiome, other than the Canadian business portfolio acquired by Cipher, were transferred to and assumed by Correvio.

· Cipher acquired all of the outstanding common shares of Cardiome for cash consideration of C$25.5 million.

On May 9, 2018, we received shareholder approval in favor of the Arrangement. The transaction closed on May 15, 2018.

Board and Management

On May 16, 2017, we announced several changes to our senior management team. Justin Renz was appointed to the position of Chief Financial Officer, Jennifer Archibald was appointed to the position of Chief Business Operations Officer, David Dean was appointed to the position of Chief Business Development Officer, and Hugues Sachot was appointed to the position of Chief Commercial Officer. Jennifer Archibald resigned on October 31, 2017.

On January 2, 2019, we announced several changes to our senior management team and Board of Directors. Mark Corrigan was appointed to the position of Chief Executive Officer, effective March 14, 2019. Our former Chief Executive Officer, William Hunter, remained on our Board of Directors. Our Chief Financial Officer, Justin Renz, assumed the responsibilities of President of the Company, effective as of January 1, 2019. In addition, Vanda de Cian joined the Board of Directors, effective as of March 12, 2019. She serves as a member of both the governance and nominating committee and the compensation committee of our Board of Directors.

Products

SteadyMed’s NDA Submission of TREVYENT

On July 3, 2017, SteadyMed submitted a New Drug Application (“NDA”) to the FDA for TREVYENT. On August 31, 2017, SteadyMed announced that they received a Refusal to File (“RTF”) letter from the FDA relating to the NDA. In December 2017, SteadyMed announced that they had reached agreement with the FDA on the work necessary to resubmit its NDA. SteadyMed was acquired by United Therapeutics Corporation (“United Therapeutics”) on August 30, 2018. United Therapeutics resubmitted the NDA to the FDA in June 2019. The FDA accepted the NDA for review with a Prescription Drug User-Fee Act (“PDUFA”) target action date of April 27, 2020. On February 26, 2020, United Therapeutics announced their full year 2019 financial statements. These statements included updates on interactions with the FDA and stated that United Therapeutics had received a mid-cycle information request from the FDA noting several deficiencies in the TREVYENT NDA. United Therapeutics confirmed that they had provided written responses to the FDA addressing these deficiencies in hopes of preserving the current PDUFA date; however, based on their recent discussions with the FDA, United Therapeutics stated that it believed the PDUFA date could be extended beyond April 2020, and/or the FDA may issue a complete response letter if the FDA was not satisfied with United Therapeutics’ responses to the FDA’s comments. Subject to U.S. progress, we plan to submit regulatory filings for TREVYENT in Europe in 2021.

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U.S. Regulatory Update for BRINAVESS

On August 21, 2017, we received a response from the FDA’s Cardiorenal Division indicating that they did not agree that the data package we proposed would be sufficient to support an NDA resubmission. In April 2018, we announced the completion of enrollment of the 2,000-patient post-authorization safety study (“PASS”). Following a request for a Type A meeting with the FDA, in June 2018, we received a written response from the FDA regarding the regulatory path forward. The FDA informed us that it would be permissible to resubmit the BRINAVESS NDA and agreed that we could schedule a Pre-NDA meeting. In October 2018, we met with the FDA to discuss the content and format of the NDA resubmission. On October 29, 2018, we announced that, pending approval of BRINAVESS by the FDA, BRINAVESS may qualify for up to a 5-year patent extension from the U.S. Patent and Trademark Office.

On June 24, 2019, we announced that we resubmitted an NDA to the FDA. On July 25, 2019, we announced that the FDA accepted for review our resubmitted NDA. The FDA assigned a PDUFA target action date of December 24, 2019. In its acceptance letter, the FDA stated that it planned to hold an advisory committee meeting to discuss the application.

On December 10, 2019, the FDA Cardiovascular and Renal Drugs Advisory Committee (“CRDAC”) met to review our resubmitted NDA and jointly voted that the benefit-risk profile was not adequate to support approval (Vote: 2 Yes to 11 No). While the FDA is not required to follow the CRDAC’s vote, the FDA considers the committee’s recommendations when making its decision. As a result of the vote, on December 11, 2019, we announced plans to explore strategic options to maximize stakeholder value. Potential strategic alternatives that were evaluated included an acquisition, merger, business combination or other strategic transaction involving the Company or our assets.

On December 24, 2019, we announced that we received a Complete Response Letter (“CRL”) from the FDA regarding our resubmitted NDA. The CRL stated that the FDA determined it cannot approve the BRINAVESS NDA in its present form and provided recommendations needed for resubmission. In the CRL, the FDA stated that while the submitted data provides substantial evidence of BRINAVESS’ effectiveness, the data do not provide reassuring evidence of BRINAVESS’ safety. The FDA indicated that we will need to develop an approach to select patients who are at low risk of adverse cardiovascular reactions and that data from an additional, potentially uncontrolled, clinical study will be needed to assess BRINAVESS’ cardiovascular risk in the selected patient population and to support an NDA resubmission. The FDA also stated that the risk of serious cardiovascular adverse reactions will need to be much less than 1% in the selected patient population. We requested a meeting with the FDA on March 18, 2020 to discuss the design and specifics of a potential study to address the FDA’s concerns. We expect to have this meeting in the second quarter of 2020.

License Agreement for ZEVTERA/MABELIO

On September 11, 2017, we entered into a distribution and license agreement with Basilea Pharmaceutica International Ltd. (“Basilea”), for the rights to commercialize ZEVTERA/MABELIO in 34 European countries and Israel. As consideration for the rights and licenses granted, we made an upfront payment of $5.2 million to Basilea. Additional payments may be due to Basilea upon the achievement of various milestones. Royalty payments may also be due to Basilea based on achievement of pre-determined levels of annual net sales.

AGGRASTAT in China

In January 2018, we announced a label expansion for AGGRASTAT in China to include patients with STEMI. In addition, a high dose bolus regimen for AGGRASTAT was approved in China.

On March 10, 2020, we announced that we entered into an exclusive agreement with Hong Kong Teson Pharma Limited (“Teson”) for the commercialization of AGGRASTAT. The agreement covers the territories of mainland China (excluding Taiwan and Hong Kong) and Macau. Under the terms of the agreement, we received a one-time upfront payment of $3.0 million from Teson. We are eligible to receive up to an additional $0.5 million upon Teson’s first receipt of product, which is anticipated to occur in 2020. In exchange, Teson will receive exclusive rights to commercialize AGGRASTAT in the agreed to territories, at its own cost and expense.

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Financings

Base Shelf Prospectus Filings

On July 5, 2018, 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.

At the Market Issuance Sales Agreement with B. Riley FBR, Inc.

On July 10, 2018, we filed a prospectus supplement pertaining to sales under an At the Market Issuance Sales Agreement dated July 10, 2018 (the “BRFBR Sales Agreement”) with B. Riley FBR, Inc. (“BRFBR”) as agent. Pursuant to the terms of the BRFBR Sales Agreement, we could offer and sell, from time to time, through at-the-market (“ATM”) offerings on the Nasdaq, or another existing trading market in the United States with BRFBR as agent, such number of common shares as would have an aggregate offer price of up to $30.0 million subject to a limit of the lower of $13.0 million or 4,333,333 shares under such prospectus supplement. As of the date of this annual information form, we have completed the sale of all common shares qualified under the prospectus supplement. On March 1, 2019, we sent a letter to BRFBR terminating the BRFBR Sales Agreement, effective March 12, 2019. The net proceeds were used in connection with the NDA resubmission for BRINAVESS, as well as for business development and general corporate purposes.

Amended Term Loan Agreement with CRG Servicing LLC

On May 11, 2017, we amended the terms of our term loan agreement (the “first amendment”) with CRG-managed funds (the “CRG Term Loan”). Under the terms of the amended agreement, up to $50.0 million is available to us consisting of four tranches bearing interest at 13% per annum. The first tranche of $20.0 million was drawn on June 13, 2016 when we entered into the original term loan agreement and was used to extinguish existing long-term debt and for general corporate purposes. A second tranche of $10.0 million was drawn on the date of the first amendment. A third tranche of $10.0 million was drawn on August 8, 2017. The fourth tranche was never drawn. The loan matures on March 31, 2022. Under the terms of the amended agreement, an interest-only period is provided such that principal repayment begins in June 2020.

Interest is payable on a quarterly basis through the full term of the loan. Interest payments may be split, at our option, between 9% per annum cash interest and 4% per annum paid in-kind interest in the form of additional term loans until March 31, 2020. Subsequent to March 31, 2020, interest shall be payable entirely in cash. During the year ended December 31, 2019, we accrued in-kind interest of $1.7 million. On the maturity date, a back-end facility fee of 8% of the aggregate amount of the term loan, including any paid in-kind interest, will be payable to CRG.

In consideration for entering into the first amendment, 700,000 warrants with a strike price of $4.00 per common share were issued to CRG as of the date of the first amendment. The warrants may also be exercised on a “net” or “cashless” basis and have a term of 5 years.

We are required to meet certain annual revenue covenants, starting with the year ending December 31, 2016. If the revenue covenants are not met, we may exercise a cure right within 90 days of the end of the year 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. On March 27, 2018, we entered into an agreement with CRG to amend the terms of the loan to adjust the annual revenue covenants (the “second amendment”). In consideration for the second amendment, we issued 800,000 warrants with a strike price of $2.50 per common share to CRG on the date of the second amendment. The warrants may also be exercised on a “net” or “cashless” basis and have a term of 5 years.

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On May 15, 2018, the CRG Term Loan was amended in connection with the Arrangement; the borrower named in the CRG Term Loan was amended from Cardiome to Correvio.

On March 11, 2019, we announced that CRG provided us with an additional credit facility of $10.0 million, to be drawn at our discretion, in increments of $2.5 million through September 30, 2019, subject to the achievement of certain revenue and market capitalization requirements. The facility bore interest at 13% per annum and carried the same terms and conditions as the CRG Term Loan. No funds were drawn under the additional credit facility.

On December 17, 2019, we further amended the CRG Term Loan, such that certain product rights could be sold. Upon receiving proceeds from the sale of these product rights, on March 9, 2020, we made a repayment of $2.0 million to CRG, of which $1.8 million related to a prepayment of principal, $0.1 million related to the back-end facility fee of 8% applicable to the prepayment, and $0.1 million related to interest expense and prepayment fees.

During the first quarter of 2020, we entered into an agreement with CRG to amend certain covenants related to the CRG Term Loan, including lowering the annual revenue threshold for 2019 from US$36.0 million to US$32.0 million. As a result of the retrospective amendment to the annual revenue covenant, we were in compliance with all covenants for the year ended December 31, 2019.

We are also required to meet an ongoing minimum liquidity covenant. As part of the amendment in the first quarter of 2020 described above, the minimum liquidity covenant was also waived for a certain period of time. Such waiver period will end on the earlier of June 30,2020 and the termination of the ADVANZ Arrangement Agreement (as defined herin).

At Market Issuance Sales Agreement with Cantor Fitzgerald & Co.

On March 13, 2019, we filed a prospectus supplement pertaining to sales under an at market issuance sales agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co. Under the terms of the Cantor Sales Agreement, we could offer and sell, from time to time, through ATM offerings, our common shares having an aggregate value of up to $50.0 million, subject to a maximum of $12.0 million that could be offered and sold under such prospectus supplement. During the year ended December 31, 2019, we sold 6,932,063 common shares under the Cantor Sales Agreement for gross proceeds of $7.5 million. Subsequent to the year ended December 31, 2019, we sold 10,777,186 common shares for gross proceeds of $4.5 million. We completed the sale of all common shares qualified under the prospectus supplement. A portion of the net proceeds were used for the NDA filing for BRINAVESS and we intend to use the remaining net proceeds for preparations for future launches, business development opportunities and general corporate purposes.

Underwritten Public Offering

On August 7, 2019, we closed an underwritten public offering (the “Offering”) of 9,200,000 common shares at a price of $1.50 per common share, for aggregate gross proceeds of $13.8 million, before deducting the underwriting commission and estimated Offering expenses payable by us.  The number of common shares issued included the exercise in full of the underwriter’s over-allotment option to purchase an additional 1,200,000 common shares on the same terms and conditions.

We used the net proceeds from the Offering (including net proceeds received in connection with the over-allotment option) for preparations for future product launches, the NDA filing for BRINAVESS, and potential business development opportunities. During the year ended December 31, 2019, we incurred approximately $4.5 million of costs related to the NDA filing for BRINAVESS, and approximately $0.5 million of costs related to potential business development opportunities. We used the remaining net proceeds for working capital and general corporate purposes, including funds needed to meet our minimum liquidity requirements under the CRG Term Loan.

Securities Class Action Complaint

On December 12, 2019, a putative securities class action complaint was filed against us and certain of our current and past officers (collectively “the Defendants”) in the United States District Court for the Southern District of New York. The Court appointed co-lead plaintiffs on February 25, 2020. The complaint purports to be on behalf of investors who purchased or otherwise acquired Correvio securities during the period from October 23, 2018 to December 5, 2019, inclusive (the “Class Period”), and were damaged thereby.

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The complaint alleges, among other things, that we made materially false and misleading statements and omissions regarding our business, operational and compliance policies. Specifically, the complaint alleges that we made false and/or misleading statements and/or failed to disclose that data supporting the resubmitted NDA for BRINAVESS did not minimize the significant health and safety issues observed in connection with the drug’s original NDA and that the foregoing substantially diminished the likelihood that the FDA would approve the resubmitted NDA, which purportedly artificially inflated the market value of our securities. An amended complaint is due on May 1, 2020.

The plaintiffs have not specified an amount of alleged damages in the action. Because this action is in the early stages, the possible loss or range of losses, if any, arising from the litigation cannot be estimated. We believe that the claims asserted in the complaint are without merit and intend to defend the lawsuit vigorously.

Nasdaq Notification Regarding Deficiencies in Minimum Bid Price and Market Value of Listed Securities

On January 24, 2020, the Nasdaq sent us a notification letter stating that we were not in compliance with the minimum bid price per share for our ordinary shares. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of US$1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the closing bid price of our common shares for the 30 consecutive business days from December 10, 2019, we no longer meet the minimum bid price requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided 180 calendar days, or until July 22, 2020, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, our common shares must have a closing bid price of at least US$1.00 for a minimum of 10 consecutive business days. In the event that we do not regain compliance by July 22, 2020, we may be eligible for additional time to regain compliance or may face delisting.

On January 27, 2020, Nasdaq sent us a notification letter stating that we were not in compliance with the minimum market value requirements set forth in the Nasdaq Listing Rules. Nasdaq Listing Rule 5550(b)(2) requires companies to maintain a minimum market value of US$35 million, and Nasdaq Listing Rule 5810(c)(3)(C) provides that a failure to meet the market value requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on our market value for the 30 consecutive business days from December 10, 2019 to January 24, 2020, we no longer meet the minimum market value requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have been provided 180 calendar days, or until July 27, 2020, to regain compliance with Nasdaq Listing Rule 5550(b)(2). To regain compliance, our market value must exceed US$35 million for a minimum of 10 consecutive business days. In the event that we do not regain compliance by July 27, 2020, we may be eligible for additional time to regain compliance or may face delisting.

The notification letters do not impact our listing on the Nasdaq at this time. We intend to monitor the closing bid price between now and July 22, 2020 and the market value of our common shares between now and July 27, 2020 and intend to cure the deficiencies within the prescribed compliance periods. We expect that our common shares will continue to be listed and trade on the Nasdaq during these compliance periods. Our business operations are not affected by the receipt of the notification letters. We are also listed on the TSX and the notification letters do not affect our compliance status with such listing.

Proposed Arrangement

Further to the Company’s plans to explore strategic options to maximize stakeholder value, at the direction of the Company’s Board of Directors, Piper Sandler & Co. commenced their initial outreach to prospective bidders on January 7, 2020 and sent process letters to 80 potential bidders in connection with a sale process targeted at canvassing selected potential buyers about their interest in pursuing an acquisition transaction involving the Company, of which 32 executed non-disclosure agreements in order to pursue further discussions with the Company. Such parties were given access to the virtual data room established by the Company.

On March 15, 2020, the Company entered into an arrangement agreement (the “ADVANZ Arrangement Agreement”) with ADVANZ PHARMA Corp. Limited (“ADVANZ PHARMA”) and Mercury Pharma Group Limited (“Mercury”), pursuant to which ADVANZ PHARMA’s wholly-owned subsidiary Mercury has agreed to acquire all of the issued and outstanding common shares of Correvio by way of a court approved plan of arrangement under the CBCA (the “ Proposed Arrangement”). The total purchase price of the transaction is approximately $76 million, which includes the repayment of Correvio’s outstanding debt of approximately $48 million. Under the terms of the transaction, ADVANZ PHARMA will be paying $0.42 per common share of Correvio (the “Consideration”), subject to applicable withholdings. ADVANZ PHARMA intends to pay for the acquisition of Correvio with cash on hand.

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As part of the transaction, (i) each holder of an in-the-money share purchase option of Correvio that is outstanding immediately prior to the effective time of the Proposed Arrangement will be acquired for cancellation in consideration for a cash payment equal to the product obtained by multiplying the amount by which the Consideration exceeds the exercise price per share of such in-the-money option by the number of shares underlying such option, subject to applicable withholdings; (ii) each holder of a restricted share unit or phantom share unit of Correvio that is outstanding immediately prior to the effective time will be acquired for cancellation for a cash payment equal to the Consideration, subject to applicable withholdings; and (iii) all out-of-the-money share purchase options of Correvio will be cancelled for no consideration.

A meeting of Correvio securityholders will be held no later than May 20, 2020 for such securityholders to consider and, if deemed advisable, approve the Proposed Transaction. Closing is subject to obtaining such securityholder approval, obtaining an interim and final order approving the transaction from the Supreme Court of British Columbia, and certain other customary conditions as set out in the ADVANZ Arrangement Agreement.

Each of Correvio, Mercury and ADVANZ have provided representations and warranties customary for a transaction of this nature and Correvio has provided customary interim period covenants regarding the operation of its business in the ordinary course during such period. In addition, Correvio has agreed to certain non-solicitation covenants and has agreed to pay a termination fee of $3.5 million in the event that it accepts a superior proposal, changes its recommendation that Correvio securityholders vote in favour of the transaction or in certain other circumstances, subject to certain customary exceptions.

In connection with the Proposed Transaction and subject to closing, Correvio will apply to have its shares delisted from the TSX and Nasdaq and Correvio will cease to be a reporting issuer under Canadian and U.S. securities law.

The Board unanimously approved the transaction, which remains subject to approval by Correvio securityholders. The Board received an opinion from its financial advisor, Piper Sandler & Co., that subject to the assumptions and limitations contained therein, the transaction is fair, from a financial point of view, to the shareholders.

The foregoing description of the Proposed Arrangement is qualified in all respects by the full text of the ADVANZ Arrangement Agreement. A copy of the ADVANZ Arrangement Agreement, which appends a copy of the plan of arrangement, is available on Correvio’s SEDAR profile at www.sedar.com. Further details regarding the Proposed Arrangement will be set out in Correvio’s management information circular, which will be made available on Correvio’s SEDAR prior to the meeting of Correvio securityholders. 

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 in Europe and other territories outside of the United States, AGGRASTAT and BRINAVESS. In addition, we have licensed the marketing rights to the following products outside of the United States: a development stage drug/device combination product candidate, TREVYENT; an antibiotic, XYDALBA; and a cephalosporin antibiotic, ZEVTERA/MABELIO.

Summary of Our Products and Product Candidates

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 commercially available in markets outside of the United States and is currently registered and approved in more than 60 countries worldwide.

BRINAVESS (vernakalant (IV)) is a novel, atrial-preferential antiarrhythmic agent, which was approved in the European Union in September 2010 and is currently registered and approved in over 40 countries (not including the United States) 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.

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Both AGGRASTAT and BRINAVESS are commercially available outside of the United States, through our own direct sales force within Europe as well as through our global distributor and partner network in the Middle East, Latin America, Asia and Africa. We have a comprehensive global distributor and partner network that allows our products to be commercialized in many countries worldwide.

XYDALBA 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. We have launched XYDALBA commercially in Germany, the United Kingdom, France, Ireland, Finland, Luxembourg, the Netherlands, Spain and Sweden.

ZEVTERA/MABELIO is a cephalosporin antibiotic for intravenous administration with rapid bactericidal activity against a wide range of Gram-positive and Gram-negative bacteria, including methicillin-susceptible and resistant Staphylococcus aureus (MSSA, MRSA) and susceptible Pseudomonas spp. ZEVTERA/MABELIO is currently approved for sale in 13 European countries and several non-European countries for the treatment of adult patients with community-acquired pneumonia (CAP) and hospital-acquired pneumonia (HAP), excluding ventilator-associated pneumonia (VAP). ZEVTERA/MABELIO is currently marketed in Germany, Italy, the United Kingdom, France, Austria, Spain and Switzerland.

TREVYENT is a development stage drug/device combination product that combines SteadyMed Ltd’s (“SteadyMed”) PatchPump™ technology, a drug delivery device, with treprostinil, a vasodilatory prostacyclin analogue to treat pulmonary arterial hypertension (“PAH”). PatchPump™ is a proprietary, disposable, parenteral drug administration platform that is prefilled and preprogrammed at the site of manufacture. SteadyMed was acquired by United Therapeutics on August 30, 2018. United Therapeutics controls the marketing, registration and regulatory approvals of TREVYENT in the United States.

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 in currently approved countries and seeking approvals in additional countries. We intend to launch XYDALBA in countries where we have received approval to sell. We have launched XYDALBA commercially in Germany, the United Kingdom, France, Ireland, Finland, Luxembourg, the Netherlands, Spain and Sweden.

•Successfully commercializing ZEVTERA/MABELIO in currently approved countries and seeking approvals in additional countries. We intend to launch ZEVTERA/MABELIO in countries where we have received approval to sell. Initially, we intend to focus our sales efforts on launching ZEVTERA/MABELIO in Germany, Italy, the United Kingdom, France, Austria, Spain and Switzerland through our direct sales force.

• Continuing to support the 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 the approval of governmental authorities 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.

• Attaining Approval to Commercialize TREVYENT in Europe and the Middle East. We licensed TREVYENT from SteadyMed for marketing outside the United States, and subject to U.S. progress, plan to submit regulatory filings in Europe in 2021.

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•Successfully commercializing BRINAVESS in currently approved countries. We intend to continue to sell BRINAVESS in countries where it is presently approved, marketed and reimbursed. We intend to focus our sales efforts on promoting BRINAVESS product sales in Europe via a fully dedicated direct sales force. 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.

•Exploring strategic opportunities to expand our product offering and product pipeline through in-licensing and/or acquisitions or opportunities to advance our products or realize value through dispositions or fundamental transactions. We continuously evaluate in-licensing and acquisition opportunities that complement our product and operational capabilities. As well, from time to time, we may evaluate potential partnerships, strategic collaborations, out-licensing or dispositions to realize value or generate resources to advance certain of our products. At any given time, we may have entered into confidentiality agreements, non-binding letters of intent or may be in the process of conducting or being subject to due diligence with respect to potential strategic opportunities. Priority for in-licensing or acquisitions will be given to later-stage or approved product opportunities that could be sold through our existing European in-hospital acute care sales force. Priority for strategic collaborations or out-licensing or dispositions would be given to parties with experience in, and resources for, the late-stage development and/or marketing of drugs in our therapeutic areas, and priority for dispositions or fundamental transactions would be given to parties with adequate resources and acceptable completion risk.

• 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 matters, medical information systems, commercial manufacturing and distribution to external organizations.

Our Products and Product Candidates

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.

We have 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.

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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”.

In December 2017, we announced the signing of a license and distribution agreement with ZAO Firma Euroservice that will advance AGGRASTAT towards registration and commercialization in Russia.

Applications for the extension of the indication statement for AGGRASTAT are continuing worldwide. In January 2018, we announced a label expansion for AGGRASTAT in China to include patients with STEMI. In addition, a high dose bolus regimen for AGGRASTAT was approved in China.

On March 10, 2020, we announced that we entered into an exclusive agreement with Teson for the commercialization of AGGRASTAT. The agreement covers the territories of mainland China (excluding Taiwan and Hong Kong) and Macau. Under the terms of the agreement, we received a one-time upfront payment of $3.0 million from Teson. We are eligible to receive up to an additional $0.5 million upon Teson’s first receipt of product, which is anticipated to occur in 2020. In exchange, Teson will receive exclusive rights to commercialize AGGRASTAT in the agreed to territories, at its own cost and expense.

BRINAVESS for Atrial Fibrillation

BRINAVESS contains vernakalant hydrochloride, which is an antiarrhythmic medicine that acts preferentially in the atria to prolong atrial refractoriness and to rate-dependently slow impulse conduction and has been approved for the conversion of atrial fibrillation to sinus rhythm.

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.

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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.

North America

In December 2006, our former partner, Astellas Pharma US, Inc. (“Astellas”), filed a 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.

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, Sharpe & Dohme (“Merck”), we initiated discussions with the FDA to determine the next steps for the development of vernakalant (IV) in the United States.

Following completion of additional nonclinical studies in 2017, we proposed resubmission of the NDA based on six years of accumulated safety data from sales of BRINAVESS in 33 countries, augmented by interim results from over 1,100 patients enrolled in the PASS being conducted in Europe, SPECTRUM (PASS). In August 2017, we received the FDA’s Cardiovascular and Renal Products Division response indicating that they did not agree that the data supported NDA resubmission.

In April 2018, we announced the completion of enrollment of the 2,000-patient PASS. This 2,000-patient observational study has collected 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.

In September 2018, we reported preliminary results of the study. Zero deaths were reported and safety outcomes of interest were observed in 0.8% (95% confidence interval: 0.5% - 1.4%) of cases. Over 70% (95% confidence interval: 68.1% - 72.2%) of AF episodes were successfully converted to sinus rhythm in a median time to conversion of 11 minutes. The full clinical study report has been completed. We plan to publish the data in 2020.

Following a request for a Type A meeting with the FDA, in June 2018, we received a written response from the FDA regarding the regulatory path forward. The FDA informed us that it would be permissible to resubmit the BRINAVESS NDA and agreed that we may schedule a Pre-NDA meeting. In October 2018, we met with the FDA to discuss the content and format of the NDA resubmission.

On October 29, 2018, we announced that, pending approval of BRINAVESS by the FDA, BRINAVESS may qualify for up to a 5-year patent extension from the U.S. Patent and Trademark Office.

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On June 24, 2019, we announced that we resubmitted an NDA to the FDA. On July 25, 2019, we announced that the FDA accepted for review our resubmitted NDA. The FDA assigned a target action date of December 24, 2019 under the PDUFA. In its acceptance letter, the FDA stated that it planned to hold an advisory committee meeting to discuss the application.

On December 10, 2019, the FDA CRDAC met to review our resubmitted NDA and jointly voted that the benefit-risk profile was not adequate to support approval (Vote: 2 Yes to 11 No). While the FDA is not required to follow the CRDAC’s vote, the FDA considers the committee’s recommendations when making its decision. As a result of the vote, on December 11, 2019, we announced plans to explore strategic options to maximize stakeholder value. Potential strategic alternatives that were evaluated included an acquisition, merger, business combination or other strategic transaction involving the Company or our assets.

On December 24, 2019, we announced that we received a CRL from the FDA regarding our resubmitted NDA. The CRL stated that the FDA determined it cannot approve the BRINAVESS NDA in its present form and provided recommendations needed for resubmission. In the CRL, the FDA stated that while the submitted data provides substantial evidence of BRINAVESS’ effectiveness, the data do not provide reassuring evidence of BRINAVESS’ safety. The FDA indicated that we will need to develop an approach to select patients who are at low risk of adverse cardiovascular reactions and that data from an additional, potentially uncontrolled, clinical study will be needed to assess BRINAVESS’ cardiovascular risk in the selected patient population and to support an NDA resubmission. The FDA also stated that the risk of serious cardiovascular adverse reactions will need to be much less than 1% in the selected patient population. We requested a meeting with the FDA on March 18, 2020 to discuss the design and specifics of a potential study to address the FDA’s concerns. We expect to have this meeting in the second quarter of 2020.

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 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, Merck began its commercial launch of BRINAVESS 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 assumed 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 Merck for the continued transfer of marketing authorizations. On a per country basis, regulatory and commercialization responsibilities were transferred to us upon agencies’ approvals of marketing authorization transfers. However, as a result of routine regulatory requirements, the transfers were 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 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. In May 2018, Eddingpharm enrolled its first patient in a Phase 3 clinical study evaluating BRINAVESS. Approximately 240 patients were expected to be enrolled at an estimated 30 clinical trial sites in China. Eddingpharm has placed this trial on hold pending discussion of path forward with the China Food and Drug Administration’s Center for Drug Evaluation. In August 2018, BRINAVESS was selected by the China Food and Drug Administration’s Center for Drug Evaluation as one of 48 therapies assessed as “clinically urgently needed new drugs” and consequently, potentially eligible for priority review.

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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’ (“UAE”) Ministry of Health, respectively, seeking approval of BRINAVESS. In 2018, the MAA was approved in the UAE.

In November 2017, we announced the launch of Brinavess in South Africa.

In February 2018, our partner, ATCO Laboratories Ltd., filed an MAA in Pakistan seeking approval of BRINAVESS.

In August 2018, we announced results from a clinical survey assessing patients with acute AF in Belgian hospitals demonstrating reduced hospitalization in patients treated with BRINAVESS. As a result of these data, BRINAVESS received reimbursement approval from the National Institute for Health and Disability Insurance in Belgium.

XYDALBA

In May 2016, we announced the execution of an exclusive license agreement with 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 Correvio’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 in February 2017, we initiated the launch of XYDALBA in France. In June 2017, we announced that we entered into a license and distribution agreement with Tzamal Medical Ltd. to advance the commercialization of XYDALBA in Israel. In October 2017, we initiated the launch of XYDALBA in Sweden, Finland and the Republic of Ireland. As consideration for the rights and licenses granted, we made non-refundable payments to Allergan of US$13.0 million, along with incurring other transaction costs during the year ended December 31, 2016.

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.

ZEVTERA/MABELIO

In September 2017, we entered into a distribution and license agreement with Basilea, for the rights to commercialize ZEVTERA/MABELIO (ceftobiprole medocaril sodium) in 34 European countries and Israel. ZEVTERA/MABELIO is a cephalosporin antibiotic for intravenous administration with rapid bactericidal activity against a wide range of gram-positive and gram-negative bacteria, including methicillin-susceptible and resistant Staphylococcus aureus (MSSA, MRSA) and susceptible Pseudomonas spp. ZEVTERA/MABELIO is currently approved for sale in 13 European countries and several non-European countries for the treatment of adult patients with community-acquired pneumonia (CAP) and hospital-acquired pneumonia (HAP), excluding ventilator-associated pneumonia (VAP). As consideration for the rights and licenses granted, we made an upfront payment of CHF 5.0 million (US$5.2 million) to Basilea. Additional payments may be due to Basilea upon the achievement of various milestones. Royalty payments may also be due to Basilea based on achievement of pre-determined levels of annual net sales.

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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 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.

TREVYENT is a development stage drug/device combination 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.

In April 2017, we announced that SteadyMed completed a successful clinical study of TREVYENT. The study enrolled 60 healthy adult volunteers in an in-clinic setting designed to examine the performance of the PatchPump used by TREVYENT. The goals of the study were to evaluate the safety and performance functions of the PatchPump delivery system as well as the tolerability of the on-body application of the product. According to SteadyMed, the results indicated that the PatchPump devices performed as intended in all categories of evaluation, including dose accuracy and precision.

On July 3, 2017, SteadyMed submitted an NDA to the FDA for TREVYENT. On August 31, 2017, SteadyMed announced that they received a RTF letter from the FDA relating to the NDA. In December 2017, SteadyMed announced that they had reached agreement with the FDA on the work necessary to resubmit its NDA. SteadyMed was acquired by United Therapeutics on August 30, 2018. United Therapeutics resubmitted the NDA to the FDA in June 2019. The FDA accepted the NDA for review with a PDUFA target action date of April 27, 2020. On February 26, 2020, United Therapeutics announced their full year 2019 financial statements. These statements included updates on interactions with the FDA and stated that United Therapeutics had received a mid-cycle information request from the FDA noting several deficiencies in the TREVYENT NDA. United Therapeutics confirmed that they had provided written responses to the FDA addressing these deficiencies in hopes of preserving the current PDUFA date; however, based on their recent discussions with the FDA, United Therapeutics stated that it believed the PDUFA date could be extended beyond April 2020, and/or the FDA may issue a complete response letter if the FDA was not satisfied with United Therapeutics’ responses to the FDA’s comments. Subject to U.S. progress, we plan to submit regulatory filings for TREVYENT in Europe in 2021.

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.”

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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 some of the specialized work required, such as pharmacovigilance, regulatory, medical information services, commercial manufacturing, and distribution to external organizations. See “Risk Factors – We are dependent upon our key personnel to achieve our business objectives.”

Foreign Operations

We have operations in various countries in Europe, the United States and Canada. 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

Correvio is a global, innovation-driven pharmaceutical business with worldwide operations (directly and through distributors). Correvio 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 (which was granted) to sell AGGRASTAT through specified intermediaries and distributors into certain hospitals in Iran. Although this issue has now been resolved, Correvio (or any of our subsidiaries or distributors) must continue to ensure that any future sales into Iran (or other countries which are subject to economic sanctions) are 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.

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 facing 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.

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. See “Risk Factors – We rely on proprietary technology, the protection of which can be unpredictable and costly.”

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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 and adherence to Good X Practices (“GXP”); quality guidelines and regulations. GXP includes Good Manufacturing Practices (“GMP”), Good Laboratory Practices (“GLP”), Good Clinical Practices (“GCP”), Good Pharmacovigilance Practices (“GVP”), Good Distribution Practices (“GDP”) and Good Promotion Practices (“GPP”) amongst others and cover research through to regulatory approval and commercialisation. In the United States and Europe, these activities are subject to rigorous regulation by the FDA and the EMA 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 manufactured and commercialised.

Our success is ultimately dependent on obtaining and maintaining marketing approvals for Correvio’s and our collaborative partners’ drugs, 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.”

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.

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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.

Under the PDUFA, 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.

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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.

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.

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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.

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.

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Employees

As of December 31, 2019, we had approximately 133 employees located in various countries in Europe, Chadds Ford, Pennsylvania, and Vancouver, British Columbia. 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, 2019.

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 our products 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:

· 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 our products 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 are required to perform additional pre-clinical studies and/or clinical trials;

· we consummate suitable business development opportunities;

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

· we are required to conduct pharmacoeconomic studies for reimbursement and/or post-authorization studies for assessment of real-world use and safety; or

· we do not obtain as favorable pricing as expected from the national market access agencies.

We have a history of incurring operating losses and negative cash flows from operations. Based on current projections, we may not have sufficient capital to fund our current planned operations during the next twelve-month period. We are dependent on our ability to raise additional debt or equity financing or monetize intellectual property rights through strategic partnerships or sublicensing arrangements and to meet annual revenue and liquidity covenants under our CRG Term Loan in order to meet our current planned operations during the next twelve-month period. There can be no assurance that we will be able to raise such additional financing. These factors raise substantial doubt about our ability to continue as a going concern within one year from the financial statements’ issuance date.

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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 and the acquisition of AGGRASTAT, XYDALBA, TREVYENT, and ZEVTERA/MABELIO only been engaged in research and development. Before Merck obtained marketing approval for BRINAVESS in the European Union, Iceland and Norway in September 2010, and launched BRINAVESS 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. There can be no assurance 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, 2019 and December 31, 2018. 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 or through the monetization of intellectual property rights through strategic partenrships or sublicensing arrangements. 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.

Worldwide pandemics, such as the recent outbreak of the novel coronavirus COVID-19, may adversely impact multiple aspects of our business.

Pandemics such as COVID-19 can have a significant impact on our business and our current plans, such as delaying or preventing the completion of the Proposed Arrangement. Such pandemics have the potential to disrupt our global supply chain, including our ability to manufacture, supply and/or distribute our products. We may no longer have the ability to source active pharmaceutical ingredients or excipients necessary to manufacture products. In addition, our third-party manufacturers, fillers, and/or labelers may no longer be able to perform their services. Similarly, our logistics providers may no longer be able to effectively service our customers. We may also see a slowdown, temporary suspension, or complete stoppage of operations in certain geographic locations impacted by an outbreak. Such an event may require us to entirely cease operations in a given location for a period of time.

Pandemics may prevent or delay the distribution of products and/or activities that are required for the proper distribution to our customers (e.g. quality and or regulatory reviews), and hence result in us incurring penalties and/or sanctions from regulatory authorities, contracting parties, or in the cancellation of contracts. Any prolonged restrictive measures put in place by governments, non-governmental organizations, or local authorities in any of the jurisdictions in which we operate, hold assets, or do business may have a material and adverse effect on our financial and/or operating performance. In addition, a pandemic may result in our distributors, suppliers, and/or partners no longer being able to do business with us based upon a force majeure.

Pandemics can also impact our employees, including their mobility, health and/or safety. For example, our employees typically visit numerous hospitals on a regular basis. To the extent employee mobility is limited, or to the extent such visits represent a safety risk to the employee, we may no longer call on such hospitals during a pandemic. Failure to call on such hospitals may result in a reduction in the sales of our products.

Pandemics can also impact the global financial markets, limiting our ability to get financing, loans and/or debt, or trade credits.

We may also see an increase of sales of certain products due to a pandemic (e.g., antibiotics). If there is a substantial increase in sales we may not be able to meet the demand or supply requirements, violating our distribution agreements, bid and tender agreements and/or governmental requirements to guarantee supply.

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:

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

· we experience delays or unexpected increases in costs in connection with obtaining regulatory approvals or commercializing any acquired products in the various markets where we hope to commercial those products;

· higher than anticipated acquisition costs and expenses;

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

· disruption of our ongoing business;

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

· 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 or are unable to meet minimum annual revenue or liquidity covenants, we could have a covenant violation.

Under the CRG Term Loan, we are required to make regular quarterly payments and meet minimum annual revenue and liquidity covenants. To the extent that we are unable to generate sufficient cash flow to make our regularly scheduled payments or meet our minimum annual revenue covenants, 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 the CRG Term Loan impose financial and other restrictions on us. Under the CRG Term Loan, 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 the CRG Term Loan or if we are not in compliance with the specified financial covenants, as adjusted by the second amendment, 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 four 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, supply chain interruptions, unexpected side effects, regulatory proceedings, material product liability and/or intellectual property 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.

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 competes with include generic competitors such as flecainide, propafenone, ibutilide and amiodarone. Competitors of XYDALBA include Cubicin from Merck, Tygacil from Pfizer, and generic competitors such as linezolid, vancomycin and teicoplanin. Competitors of ZEVTERA/MABELIO include Zinforo from Pfizer, Cubicin from Merck, and generic competitors such as linezolid, ceftazidime and piperacillin tazobactam.

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 subjects 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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Our operations could be adversely affected by events outside of our control, such as disease outbreaks, health epidemics or pandemics.

We may be impacted by business interruptions resulting from disease outbreaks, health epidemics or pandemics, such as the recent outbreak of the novel coronavirus known as COVID-19. An outbreak, or fear of an outbreak, of any of the foregoing could adversely impact us by: delaying or preventing the completion of the Proposed Arrangement; causing operating, manufacturing supply chain, clinical trial and project development delays and disruptions; disrupting global financial markets and our ability to obtain financing; causing a decline in global share prices; delaying the completion of services which may require the Company to incur penalties or sanctions under contracts, incur additional non-compensable costs or result in the cancellation of contracts; causing risks to employee safety; disrupting the mobility of people; causing labour shortages; and causing travel and shipping disruption and shutdowns. It is unknown whether and how the Company may be affected if such epidemic persists for an extended period of time. Any of the foregoing could have a material adverse impact on our business, operating results and financial condition.

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.

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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 collaborative partners for the licensing and supply of certain products.

Our activities require us to enter into various arrangements with corporate collaborators for the licensing and supply of our products. We intend to attract corporate partners and enter into additional collaborations. There can be no assurance, however, that we will be able to establish such additional collaborations on favourable terms, if at all, or that our current or future collaborations will be successful.

The existence or occurrence of one or more of the following circumstances and events, for example, could have a material adverse impact on the Company’s operations and financial condition: disagreement with collaborative partners on how to conduct business efficiently; inability of collaborative partners to meet their contractual obligations; or disputes arising between collaborative partners. Should any current or future collaborative partner fail to develop, manufacture, supply or commercialize successfully any product to which it has rights, or any partner’s product to which we have rights, or to timely meet its obligations, our business may be adversely affected. Failure of a collaborative partner to continue to participate in any particular program could delay or halt the commercialization of products generated from such program. In addition, there can be no assurance that the collaborative partners will not pursue other technologies or develop alternative products either alone or in collaboration with others, including our competitors, as a means for developing treatments for the diseases targeted by our programs.

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, public health emergencies, 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.

We rely on third parties for the execution of a significant portion of our clinical, 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, execution failure or unforeseen reasons.

We rely on third parties to perform critical services, including preclinical testing, clinical trial management, analysis and reporting, 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, execution failure public health emergencies, natural disasters, or economic, social and/or political instability. 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 new drug submissions, 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.

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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 in several major European markets. 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.

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.

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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 countries have been severely impacted by the widespread economic recession that began in 2008, the effect of which continued until recently, and will be impacted by the widespread economic impact of the COVID-19 pandemic. 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 and around the world, account collection from hospitals in certain regions takes longer now than in the past and may be further delayed. 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.

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.

Also, there has been heightened governmental scrutiny recently over the manner in which drug manufacturers set prices for their marketed products. For example, in the United States, there have been several Congressional inquiries and proposed bills designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. In addition, in July 2019, President Trump announced plans to issue an executive order to require pharmaceutical companies to offer lower drug prices to the United States government. Further, in May 2018, President Trump and the Secretary of the U.S. Department of Health and Human Services (HHS) released the “American Patients First Blueprint” and have recently begun implementing certain portions. The initiative includes proposals to increase generic drug and biosimilar competition, enable the Medicare program to negotiate drug prices more directly and improve transparency regarding drug prices and ways to lower consumers’ out-of-pocket costs. Many states also have proposed or enacted legislation that seeks to indirectly or directly regulate pharmaceutical drug pricing, such as by requiring biopharmaceutical manufacturers to publicly report proprietary pricing information or to place a maximum price ceiling on pharmaceutical products purchased by state agencies. Such initiatives and legislation may cause added pricing pressures on our products and product candidates.

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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 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 and the vernakalant (IV) program has been on full clinical hold in the United States since November 2010.

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 we choose to and are able to restart the development program, there can be no assurance that the trials will be feasible or successful. Clinical trials, including any post-authorization safety studies for our products, 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 contract 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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In addition, on May 30, 2018, the federal Right to Try Act was signed into law. The law, among other things, provides a federal framework for patients to access certain investigational new drug products that have completed a Phase 1 clinical trial. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA approval under the FDA expanded access program. While there is no obligation to make product candidates available to eligible patients as a result of the Right to Try Act, new and emerging legislation regarding expanded access to unapproved drugs could negatively impact enrollment in our clinical trials and our business in the future.

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 Correvio, 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 and/or unreliable 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.

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). In October 2018, we met with the FDA to discuss the resubmission of the BRINAVESS NDA. The clinical program in the United States remains on full clinical hold.

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. Correvio 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;

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· restrictive labelling or onerous Risk Evaluation and Mitigation Strategy programmes;

· timing of market approvals and market entry;

· 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.

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.

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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.

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 licenses, marketing rights, trade name and patents associated with our product portfolio. As of December 31, 2019, the carrying value of our intangible assets was approximately $22.2 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.

Our common shares may be delisted from the Nasdaq, which could affect their market price and liquidity. If our common shares were to be delisted, investors may have difficulty in disposing of their shares.

Our common shares are currently listed on the Nasdaq and on the TSX under the symbol “CORV”. We must meet continuing listing requirements to maintain the listing of our common shares on the Nasdaq. For example, for continued listing, the Nasdaq requires, among other things, that listed securities maintain a minimum closing bid price of not less than US$1.00 per share. On January 24, 2020, we received a notice from the Nasdaq indicating that the minimum bid price for our common shares had fallen below US$1.00 for 30 consecutive business days, and that, therefore, we were no longer in compliance with Nasdaq Marketplace Rule 5550(a)(2) - bid price. We have 180 calendar days or until July 22, 2020, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of our common shares will need to be at least US$1.00 per share for a minimum of 10 consecutive business days. On March 27, 2020, the closing price of the common shares was US$0.355 on the Nasdaq. On January 27, 2020, we received a notice from the Nasdaq indicating that the market value of our listed securities had fallen below US$35 million for 30 consecutive business days, and that, therefore, we were no longer in compliance with Nasdaq Marketplace Rule 5550(b)(2). We have 180 calendar days or until July 27, 2020, to regain compliance with the minimum bid price requirement. To regain compliance, the market value of our listed securities must exceed US$35 million for a minimum of 10 consecutive business days. On March 27, 2020, the market value of our listed securities was US$23,497,800 on the Nasdaq. In addition to the specified criteria for continued listing, the Nasdaq also has broad discretionary public interest authority that it can exercise to apply additional or more stringent criteria for the continued listing of the common shares, or suspend or delist securities even though the securities meet all enumerated criteria for continued listing on the Nasdaq. We cannot assure you that the Nasdaq will not exercise such discretionary authority. There can be no assurance that our common shares will remain listed on the Nasdaq. If we fail to meet any of the Nasdaq’s continued listing requirements, our common shares may be delisted. Any delisting of our common shares may adversely affect a shareholder’s ability to dispose, or obtain quotations as to the market value, of such shares.

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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.

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. Accordingly, there may be less information concerning us publicly available than there is for U.S. public companies. 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.

Compliance with these additional disclosure and timing requirements under U.S. 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 or to foreign private issuers not eligible to use the multijurisdictional disclosure system, as applicable, which could limit our ability to access the capital markets in the future.

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, 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;

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· 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.

We are required to comply with export controls, trade restrictions, and economic sanctions imposed by governments around the world which have jurisdiction over our operations, and which may prohibit or restrict transactions in certain countries and / or with certain designated persons or entities. For example, our operations in the United States and U.S. persons working for us are subject to U.S. economic sanctions administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), which restricts our business dealings with certain countries and parties. Certain of our companies may make sales of pharmaceutical products into a country that is regulated by OFAC (e.g., Iran). While we work to ensure that we are compliant with all international export controls, trade restrictions and economic sanctions (including OFAC), any violation of such laws may result in criminal or civil penalties, and we may be subject to other liabilities, which could materially adversely affect our business, financial condition or results of operations.

There is an increased focus on privacy and data protection issues in countries around the world, including regions and countries where we operate (e.g., Europe and Switzerland).

Correvio is subject to a significant number of privacy and data protection laws and regulations globally, many of which place restrictions on Correvio’s ability to transfer, access and use personal data across its business. As an example, there has been increased attention to privacy and data protection issues in Europe, where the new EU General Data Protection Regulation 2016/679 (“GDPR”) became effective in May 2018. The new regulations require a substantial infrastructure for compliance, and businesses must now report any data breaches within 72 hours if they have an adverse effect on user privacy. Failure to comply with the regulations may subject violators to fines of up to 20 million Euros, or, up to 4% of the annual worldwide turnover of the preceding financial year in the case of an enterprise (whichever is greater). The legislative and regulatory landscape for privacy and data protection continues to evolve, including for example, changes to the Federal Data Protection Act (“DPA”) in Switzerland, where Correvio International Sàrl is headquartered. Correvio has adopted a compliance program associated with the requirements of GDPR and DPA. Nevertheless, 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 GDPR, DPA, or other currently developing laws associated with data privacy in Europe or elsewhere. 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.

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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 current or 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 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 current or 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. For example, 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), and remains on full clinical hold.

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.

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. Obtaining regulatory approvals for our products does not ensure we will be granted renewals of these approvals. There is no guarantee that we will obtain the necessary renewals for any of our current marketing authorisations. Failure to obtain the necessary renewals for our current products and marketing authorisations could have a material adverse affect on our business.

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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 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-authorization 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, EMA and similar agencies in other jurisdictions to maintain records regarding product safety and to report to regulatory authorities adverse reactions. 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 reactions 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. Further, with the implementation of the Falsified Medicines Directive in Europe, in February 2019, all of Correvio supplies will be required to confirm to anti-tampering packaging requirements and serialisation requirements. We are reliant on our secondary packagers, labellers, wholesalers and distributors to implement packaging requirements appropriately and within the requisite time period. We are further reliant on the national medicines verification organisations (“NMVOs”) and the European medicines verification organisation (“EMV”) and pharmacies, hospitals and end-users having established compliance systems to allow for tracking of supplies, including sales and returns, in relation to the anti-tampering packaging and serialisation requirements. As we will be dependent on NMVOs, the EMV and end-users having established the necessary compliance systems to allow tracking of supplies, we will have limited ability to ensure these processes are in compliance with applicable requirements of the Falsified Medicines Directive. 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;

· refusals to renew our current marketing authorisations;

· 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 others;

· refusal by Qualified Person in Europe to release product to market;

· 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 our 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.

The United Kingdom’s exit from the European Union may result in regulatory costs and challenges that could have a material adverse impact on our business.

On June 23, 2016, the United Kingdom held a referendum on its membership in the European Union, in which United Kingdom voters approved an exit from the European Union (“Brexit”). On March 29, 2017, the United Kingdom formally notified the European Council pursuant to Article 50 of the Treaty of Lisbon of its intention to leave the European Union. On January 31, 2020 (“Exit Day”), the United Kingdom ceased to be a member state of the European Union. European Union law applicable to the United Kingdom continues to apply to and in the United Kingdom for the duration of a transition period which is presently scheduled to expire on December 31, 2020 (the “Transition Period”). During the Transition Period, the European Union and the United Kingdom will negotiate the terms of their future relationship. There is no assurance that such negotiations will be successful or certainty that European Union law will continue to apply in and to the United Kingdom following the expiration of the Transition Period. Since the regulatory framework for pharmaceutical products in the United Kingdom covering quality, safety and efficacy, clinical trials, marketing authorisations, commercial sales and distribution is derived from European Union directives and regulations, Brexit could materially impact the future regulatory regime which applies to our products and the approval of our product candidates in the United Kingdom. We could face new regulatory costs and challenges that could have a material adverse effect on our business, financial condition, cash flows and results of operations. Until the expiration of the Transition Period and the future relationship between the European Union and the United Kingdom is established, it is difficult to anticipate Brexit’s potential impact.

There can be no certainty that all conditions precedent to the Proposed Arrangement will be satisfied. 

The completion of the Proposed Arrangement is subject to a number of conditions precedent, some of which are outside of our control, including receipt of court orders. There can be no certainty, nor can we provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. If the Proposed Arrangement is not completed, the announcement of the Proposed Arrangement and the dedication of substantial resources to the completion thereof could have a negative effect on our current business relationships.  In addition, the market price of our shares may decline if, for any reason, the ADVANZ Arrangement Agreement is terminated, whether or not we are required to pay a termination fee to ADVANZ PHARMA. 

We may face continuing risks if the Proposed Arrangement is not completed.

If the Proposed Arrangement is not approved by securityholders or if the Proposed Arrangement is not completed for any other reason, it is expected that management will operate our business in a manner similar to that in which it is being operated today and securityholders will continue to be subject to the same risks to which they are currently subject. In connection with and prior to entering into the ADVANZ Arrangement Agreement, on March 12, 2020, we entered into the fourth amending agreement to the CRG Term Loan. Pursuant to such amendment, CRG has waived, for a period of time only, certain liquidity covenants otherwise applicable to us. Such waiver period will end on the earlier to occur of June 30, 2020 and the termination of the ADVANZ Arrangement Agreement. Therefore, if the Proposed Arrangement is not completed for any reason, or is not completed prior to June 30, 2020 (being the outside date), we will likely be offside of our obligations under the CRG Term Loan. CRG could thereafter take certain enforcement action against us. After the Outside Date, there can be no assurance that we will have sufficient liquidity to satisfy our obligations to CRG or otherwise.

Management time and attention may be diverted from our existing business.

Significant management time and attention will be diverted from our existing business in order to undertake the Proposed Arrangement, which could have an adverse impact on us. For example, if management’s attention is diverted from day-to-day operations, customers and suppliers could seek to adversely modify or terminate their existing relationships with us.

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Completion of the Proposed Arrangement is subject to the condition that a material adverse effect has not occurred

The completion of the Proposed Arrangement is subject to the condition that, among other things, there shall not have occurred a Material Adverse Effect (as defined in the ADVANZ Arrangement Agreement) on or prior to the date of the ADVANZ Arrangement Agreement which is continuing as at the effective date of the Proposed Arrangement and since the date of the ADVANZ Arrangement Agreement, there has not occurred a Material Adverse Effect. Although a Material Adverse Effect excludes certain events, including events in some cases that are beyond our control, there can be no assurance that a Material Adverse Effect will not occur prior to the effective time of the Proposed Arrangement. If such a Material Adverse Effect occurs and ADVANZ PHARMA does not waive same, the Proposed Arrangement would not proceed.

Failure to complete the Proposed Arrangement could negatively impact our future business, operations and the price of our common shares.

If the Proposed Arrangement is not completed for any reason, the market price for our common shares may decline if, for any reason, the ADVANZ Arrangement Agreement is terminated, whether or not we are required to pay a termination fee to ADVANZ PHARMA. In addition, our clients and strategic partners, in response to the announcement of the Proposed Arrangement, may delay or defer decisions concerning us. Any delay or deferral in those decisions by clients and/or strategic partners could have a material adverse effect on our business and operations if the transaction is not completed. Similarly, current and prospective employees and registered representatives may experience uncertainty about future roles with us and this may adversely affect our ability to attract or retain key management, sales, marketing and registered personnel in the event the Proposed Arrangement is not completed. 

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 without par value and an unlimited number of preferred shares without par value. As of March 27, 2020, we had 66,190,987 common shares and no preferred shares of any series issued and outstanding. In addition, as of March 27, 2020, there were 4,468,100 common shares issuable upon the exercise of outstanding stock options at a weighted-average exercise price of Cdn.$4.69 per common share and 3,805,773 common shares reserved for future grant or issuance under our Incentive Stock Option Plan (the “Incentive Stock Option Plan”). There are also 91,118 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.

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: “CORV”) and on the Nasdaq in the United States (trading symbol: “CORV”).

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 2019	$5.25	$2.70	$4.80	410,219
February 2019	$5.71	$3.92	$4.30	360,282
March 2019	$5.87	$3.38	$4.28	588,788
April 2019	$4.28	$3.14	$3.23	266,313
May 2019	$3.94	$2.60	$3.00	255,628
June 2019	$3.26	$2.72	$2.72	176,985
July 2019	$3.09	$2.27	$2.40	214,904
August 2019	$2.85	$1.92	$2.69	222,027
September 2019	$3.66	$2.52	$2.60	173,345
October 2019	$2.71	$2.16	$2.64	108,099
November 2019	$3.42	$2.54	$2.75	291,197
December 2019	$3.02	$0.46	$0.54	2,654,341

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Prior Sales

The following table sets forth information in respect of our common shares that we issued upon the exercise of stock options granted under our Incentive Stock Option Plan during the year ended December 31, 2019:

Exercise Date	Number of Options	Exercise Price
March 13, 2019	62,500	Cdn.$4.01(1)
Total	62,500

⁽¹⁾ exercised on a cashless basis

The following table sets forth information in respect of our common shares that we issued upon the vesting of RSUs granted under our Restricted Share Unit Plan, net of tax, during the year ended December 31, 2019:

Vesting Date	Number of Common Shares
March 19, 2019	5,608
March 21, 2019	3,464
March 28, 2019	500
April 18, 2019	332
May 7, 2019	166
May 10, 2019	166
June 5, 2019	1,000
June 13, 2019	333
August 9, 2019	166
August 22, 2019	500
August 23, 2019	13,000
September 13, 2019	2,000
November 21, 2019	3,333
Total	30,568

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, 2019:

Grant Date	Number of Options	Grant Price
March 15, 2019	905,000	$3.91
March 15, 2019	200,000	Cdn.$5.23
June 25, 2019	400,000	$3.91
June 25, 2019	50,000	$2.31
June 25, 2019	60,000	Cdn.$3.00
Total	1,615,000

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The following table sets forth information in respect of the RSUs that we granted under our Restricted Share Unit Plan during the year ended December 31, 2019:

Grant Date	Number of RSUs
January 2, 2019	1,500
February 7, 2019	5,500
February 14, 2019	500
March 1, 2019	3,000
March 15, 2019	76,751
March 18, 2019	500
March 25, 2019	1,000
April 1, 2019	1,500
April 8, 2019	500
May 1, 2019	1,500
May 15, 2019	5,000
June 5, 2019	500
August 20, 2019	13,000
September 11, 2019	2,000
October 1, 2019	1,000
December 1, 2019	1,500
Total	115,251

The following table sets forth information in respect of our common shares that we issued during the year ended December 31, 2019:

Issuance Date	Number of Securities	Issue Price
January 4, 2019	27,985	US$2.36(1)
January 7, 2019	24,107	US$2.34(1)
January 8, 2019	44,805	US$2.26(1)
January 9, 2019	194,705	US$2.25(1)
January 10, 2019	640	US$2.26(1)
January 14, 2019	26,100	US$2.20(1)
January 15, 2019	301,350	US$2.18(1)
January 16, 2019	2,351,089	US$2.11(1)
March 21, 2019	625,000	US$3.20(2)
May 9, 2019	49,000	US$2.86(2)
May 10, 2019	344	US$2.85(2)
May 16, 2019	4,000	US$2.74(2)
May 17, 2019	11,895	US$2.60(2)
May 22, 2019	4,000	US$2.56(2)
May 23, 2019	7,200	US$2.42(2)
May 24, 2019	66,602	US$2.33(2)
May 28, 2019	1,500	US$2.30(2)
May 31, 2019	1,019,627	US$2.20(2)
June 3, 2019	6,300	US$2.27(2)
June 4, 2019	11,722	US$2.26(2)
June 7, 2019	100	US$2.27(2)
June 10, 2019	400	US$2.31(2)
June 12, 2019	12,040	US$2.25(2)
June 13, 2019	14,200	US$2.25(2)
June 14, 2019	2,120	US$2.25(2)
June 18, 2019	10,000	US$2.28(2)

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June 18, 2019	10,000	US$2.28(2)
June 19, 2019	6,493	US$2.40(2)
June 20, 2019	17,000	US$2.43(2)
June 21, 2019	3,000	US$2.32(2)
June 24, 2019	87,000	US$2.29(2)
June 25, 2019	65,000	US$2.34(2)
June 27, 2019	50,000	US$2.29(2)
August 7, 2019	9,200,000	US$1.50(3)
November 18, 2019	6,384	US$2.28(2)
November 19, 2019	23,860	US$2.22(2)
December 11, 2019	853,600	US$0.47(2)
December 12, 2019	1,041,613	US$0.40(2)
December 26, 2019	1,289,200	US$0.52(2)
December 30, 2019	453,770	US$0.44(2)
December 31, 2019	1,189,093	US$0.41(2)
Total	19,102,844

Notes:

⁽¹⁾ Common Shares were issued pursuant to the BRFBR Sales Agreement and proceeds were used for general corporate purposes. The stated issue price represents the average issue price of our Common Shares sold during the day.

⁽²⁾ Common Shares were issued pursuant to the Cantor Sales Agreement and proceeds were used for general corporate purposes. The stated issue price represents the average issue price of our Common Shares sold during the day.

⁽³⁾ Common Shares were issued pursuant to the Offering and proceeds were used for preparations for future product launches, the NDA filing for BRINAVESS, and potential business development opportunities.

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, 2019.

ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER

The following table sets forth the number and percentage of securities of the Company held, to the Company’s knowledge, in escrow or that are subject to a contractual restriction on transfer as at the date hereof.

Designation of class	Number of Securities Held in Escrow	Percentage of Class
Common Shares(1)	1,194,909	1.8%
Options(1)	4,467,100	100.0%
Phantom Share Units(1)	48,952	77.8%

⁽¹⁾ In connection with the Proposed Arrangement, each senior officer and director of the Company entered into a voting and support agreement pursuant to which such individuals have agreed, subject to customary carve-outs and exceptions, not to sell any common shares or other securities of the Company until the earlier of (i) the closing of the Proposed Arrangement and (ii) the termination of the ADVANZ Arrangement Agreement.

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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.

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	April 2019 to present – Retired; February 2017 to April 2019 – CEO and Chairman, Aurinia Pharmaceuticals; July 2007 to January 2017 – Retired
William L. Hunter(4)(5) British Columbia, Canada Director	June 11, 2007	March 2019 to present – Chief Executive Officer, Canary Medical Inc.; July 2012 to March 2019 – Chief Executive Officer, Correvio Pharma Corp.
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
Robert J. Meyer(4)(6) Virginia, United States Director	September 25, 2015	January 2018 to present – Principal, Drug and Biological Products, Greenleaf Health; March 2013 to December 2017 – Director for Translational and Regulatory Sciences at the University of Virginia School of Medicine
Vanda De Cian(1)(2) Lipari Messina, Italy Director	March 12, 2019	January 2012 to present - Independent consultant for various entities in the pharmaceutical industry
Mark H. Corrigan Massachusetts, United States Chief Executive Officer	June 22, 2015	March 2019 to present – Chief Executive Officer, Correvio Pharma Corp.; August 2016 to March 2019 – Retired; July 2014 to July 2016 – Chairman of the Board, Epirus Pharmaceuticals; January 2010 to June 2014 – President and Chief Executive Officer, Zalicus Inc.

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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
Justin Renz Massachusetts, United States President and Chief Financial Officer	May 16, 2017	January 2019 to present – President and Chief Financial Officer, Correvio Pharma Corp.; May 2017 to December 2018 – Chief Financial Officer, Correvio Pharma Corp.; August 2014 to April 2017 – Chief Financial Officer, Karyopharm Therapeutics; September 2006 to July 2014 – Chief Financial Officer, Zalicus Inc.
Sheila M. Grant British Columbia, Canada Chief Operating Officer	August 1, 2003	March 2013 to present – Chief Operating Officer, Correvio Pharma Corp.
David D. McMasters Washington, United States General Counsel	January 1, 2015	November 2012 to present – General Counsel, Correvio Pharma Corp.
David C. Dean British Columbia, Canada Chief Business Development Officer	June 22, 2015	May 2017 to present – Chief Business Development Officer, Correvio Pharma Corp.; June 2015 to May 2017 – VP, Investor Relations and Business Development, Correvio Pharma Corp.; January 2013 to June 2015 – Director and Research Analyst, Cormark Securities Inc.
Hugues Sachot St. Gregoire, France Chief Commercial Officer	June 22, 2015	May 2017 to present – Chief Commercial Officer, Correvio Pharma Corp.; March 2013 to May 2017 – SVP, Sales, Correvio Pharma Corp.; September 2007 to February 2013 – VP, Commercial, Angiotech Pharmaceuticals

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

⁽²⁾ Member of the Corporate Governance and Nomination Committee. Mr. O’Shea 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. Meyer is the Chair of this Committee.
(5)	The principal business of Canary Medical Inc. is improving healthcare outcomes through the continuous collection, analysis, and monetization of data derived from proprietary, smart medical devices that self-report on function, diagnostic information, patient activity, side effects and treatment failure for up to 20 years.
(6)	The principal business of Greenleaf Health is offering U.S. Food and Drug Administration regulatory strategic consulting to life sciences companies.

As of March 27, 2020, our directors and executive officers beneficially owned, or exercised control of or direction over, directly or indirectly, in the aggregate1,194,909 (1.8%) 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 has been a member of Correvio’s Board of Directors since 2006, and currently serves as the Chair of the Compensation Committee and as a member of the Corporate Governance and Nominating Committee and the Audit Committee. Dr. Glickman served as the Chief Executive Officer and Chairman of the Board for Aurinia Pharmaceuticals until April 2019. He previously was co-founder, Chairman and Chief Executive Officer of Aspreva Pharmaceuticals. 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 Chair of the Board of Vigil Health Solutions Inc., a healthcare services company. Dr Glickman has also served as Chair of the Board for ESSA Pharmaceuticals Inc. since 2010. Dr. Glickman was also the founder and a director of Ontario Molecular Diagnostics and co-founded Probtec Corporation. He has previously served as Chairman of Life Sciences B.C., director of the Canadian Genetic Disease Network and as a member of the Canadian federal government’s National Biotechnology Advisory Committee.

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William Hunter, M.D., Chief Executive Officer & Director.

Dr. William Hunter has been a member of Correvio’s Board of Directors since 2007 and has served as the Company’s President and CEO from July 2012 to March 2019. During his tenure at Cardiome/Correvio, the Company grew from 8 employees to 140, increased revenues from $1 million to $29 million annually, acquired 6 hospital products and launched 5 of them through its own direct sales force in Europe. Prior to Correvio, Dr. Hunter co-founded and served as President and Chief Executive Officer of Angiotech Pharmaceuticals (1992-2011). After founding Angiotech while still in medical school in 1992, he grew the Company to become a profitable, diversified, device company with over 1,400 employees, several thousand commercially available products, and 12 facilities in 5 countries. Dr. Hunter currently also serves as President and CEO of Canary Medical, a company that utilizes implanted sensor, battery and transmission technology to create “smart” implanted medical devices that can “self-report” on function, activity, wear, complications and patient outcomes for up to 20 years. Dr. Hunter currently serves as a director of Rex Bionics Plc, SummatiX Plc and Adherium Plc. Dr. Hunter received his BSc from McGill University and his MSc and MD from the University of British Columbia. Dr. Hunter has also served as a practicing physician in British Columbia and has over 200 patents and patent applications to his name.

W. James O’Shea, Chairman.

Mr. O’Shea has been a member of Correvio’s Board of Directors since 2014, and currently serves as Chair of the Board as well as chair of the Corporate Governance and Nominating Committee. From October 1999 to March 2007, Mr. O’Shea was President and Chief Operating Officer at Sepracor Inc., then a publicly held pharmaceutical company, 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. While at Zeneca, he also held several management positions of increasing responsibility in international sales and marketing in the U.S. and U.K. Mr. O’Shea is past Chairman of the National Pharmaceutical Council and has previously sat on the boards of Prostrakan Group Plc and Zalicus Pharmaceuticals. Mr. O’Shea is a graduate of Liverpool Lord Byron University, where he received an honors degree in applied physics from the Institute of Physics.

Arthur H. Willms, Director.

Mr. Willms has been a member of Correvio’s Board of Directors since 2015, and currently serves as Chair of the Corporation’s Audit Committee and as a member of the Compensation Committee. Mr. Willms held senior roles over more than 25 years at Westcoast Energy Inc., most recently as President and Chief Operating Officer, a role he remained in until his retirement. Mr. Willms is past chair of the Vancouver Symphony Orchestra, past chair of the Pacific Coast Gas Association and past vice-chair of the BC Lotteries Corporation. He has sat on the boards of Union Gas Ltd., Foothills Pipelines Ltd., Gibraltar Mines Ltd., PeBen Oilfield Services Inc., Gulf Canada Inc., Advanced Applied Physics Solutions Inc., 2010 Olympic Games Operating Trust and Angiotech Pharmaceuticals. He is currently on the boards of Naikun Wind Energy Group and the Pacific Autism Family Center. Mr. Willms has been a lecturer in Economics at the University of Calgary and holds a Bachelor of Arts Degree in Education, a Bachelor of Science Degree in Mathematics, and a Masters Degree in Economics from the University of Calgary.

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Robert J. Meyer, M.D., Director.

Dr. Meyer has been a member of Correvio’s Board of Directors since 2015. Dr. Meyer has over 30 years of leadership experience in academic, industry and government agencies, specifically in roles that have direct relevance to Correvio and its clinical and commercial programs. He currently serves as Principal, Drug and Biological Products at Greenleaf Health, a boutique FDA strategic advising company. He is also an Associate Professor of Public Health Sciences at the University of Virginia, where he was formerly the Director of the Virginia Center for Translational and Regulatory Sciences. He is a Medical Science Trustee for the United States Pharmacopeia Board. Dr. Meyer 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 U.S. Food and Drug Administration (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. Since 2018, Dr. Meyer has served as a director Chimerix Inc. and is currently Chair of their Compensation Committee. Since 2019, Dr. Meyer has also served as a director of Translate Bio.

Vanda De Cian, M.D., Director.

Dr. De Cian joined Correvio’s Board of Directors in March 2019, and is a member of the Compensation Committee and Governance and Nominating Committee. Dr. De Cian was previously Vice President Corporate Drug Development at Chiesi Farmaceutici S.p.A., a multinational company headquartered in Parma, Italy. Prior to Chiesi, Dr. De Cian held senior positions at Pharmacia Corp. over several years and assisted in Pharmacia’s transition subsequent to its acquisition by Pfizer Inc. During her pharmaceutical career Dr. De Cian was involved in the clinical development of several drugs including Foscarnet^TM, Mycobutin^TM, Cidofovir^TM, Rescriptor^TM, Aptivus^TM and Zyvox ^TM. Since 2012, Dr. De Cian has managed her own consulting business advising several international companies on implementing cost-efficient drug development processes.

Mark H. Corrigan, M.D., Director.

Dr. Corrigan has been a member of Correvio’s Board of Directors since 2015 and became CEO of Correvio on March 13, 2019. Dr. Corrigan is a seasoned life sciences executive who brings to Correvio nearly 30 years of pharmaceutical research, development and regulatory experience in both the U.S. and international markets. He has been involved in the successful development and approval of numerous branded drugs during his career, including Zyvox^®, Rescriptor^®, Corvert^®, Mirapex^®, Lunesta^®, Camptosar^®, Xalatan^® and Xopenex^®, among others. Prior to joining Correvio’s Board in 2015, Dr. Corrigan served as President and Chief Executive Officer of Zalicus Inc. Prior to that, he served as Executive Vice President, Research and Development at Sepracor Inc. (now Sunovion Pharmaceuticals). Prior to joining Sepracor, Dr. Corrigan spent 10 years with Pharmacia & Upjohn, Inc., culminating as Group Vice President of Global Clinical Research and Experimental Medicine. He currently serves on the Boards of multiple life science companies, including Novelion Therapeutics, Nabriva Therapeutics AG, and Tremeau Pharmaceuticals. Dr. Corrigan previously served on the Board of Cubist Pharmaceuticals prior to their acquisition by Merck. He holds a B.A. and an M.D. from the University of Virginia and received specialty training in psychiatry at Maine Medical Center and Cornell University.

Justin A. Renz, CPA, MST, MBA, President and Chief Financial Officer.

Mr. Justin Renz currently serves as Correvio’s President and Chief Financial Officer. Mr. Renz previously served as Executive Vice President, Chief Financial Officer and Treasurer at Karyopharm Therapeutics from August 2014 to April 2017, where he led core business and finance functions. Prior to Karyopharm, Mr. Renz was Executive Vice President, Chief Financial Officer and Treasurer at Zalicus Inc. (formerly CombinatoRx, Inc.), which he joined in September 2006. He oversaw multiple rounds of equity and debt financing and led the company’s asset monetization strategy and two reverse mergers, culminating with the sale of Zalicus to Epirus Pharmaceuticals in July 2014. Prior to Zalicus, Mr. Renz served in senior finance and accounting roles at Serono, Inc. and Coley Pharmaceutical Group, Inc. Earlier in his career, Mr. Renz held increasingly senior finance positions at ArQule, Inc. and Millipore Corporation. Mr. Renz began his career with Arthur Andersen LLP in 1993. He received a Bachelor of Arts in Economics and Accounting from the College of the Holy Cross, a Master of Science in Taxation from Northeastern University and a Master of Business Administration from Suffolk University.

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Sheila M. Grant, MBA, MSc, Chief Operating Officer.

Ms. Sheila Grant serves as Correvio’s Chief Operating Officer, with responsibility for overseeing Correvio’s regulatory and manufacturing operations. Prior to this role, Ms. Grant was Correvio’s VP of Product Development, with responsibility for the overall management of the vernakalant IV and oral development programs from pre-clinical studies through to commercialization. Ms. Grant’s also previously served in the role of Director of Business & Clinical Development at Correvio. Prior to joining Correvio, Ms. Grant acted as a 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., respectively. Ms. Grant holds an MBA degree from Simon Fraser University and an MSc from the London School of Hygiene and Tropical Medicine.

David D. McMasters, JD, General Counsel.

Mr. McMasters brings over three decades of experience in biotechnology, chemical patent matters and related litigation. He currently serves as Correvio’s General Counsel and Chief Compliance Officer. Previous to his position at Correvio he held the similar role at Angiotech Pharmaceuticals. In both roles he was responsible for overseeing all legal matters pertaining to the organization, including patent, copyright and intellectual property matters, as well as the coordination of any legal matters handled by outside counsel. Prior to Angiotech, Mr. McMasters served as Managing Director and CEO of Seed Intellectual Property Law Group (previously Seed and Berry) in Seattle, Washington. Mr. McMasters received his BSc (Microbiology and Immunology) from the University of Washington and his JD from Northwestern University. He is a member of the Washington State Bar and is registered to practice before the U.S. Patent and Trademark Office.

David C. Dean, MBA, MSc, Chief Business Development Officer.

Mr. David Dean is a member of Correvio’s executive team as Chief Business Development Officer and is responsible for overseeing the company’s business development activities. Mr. Dean first joined Correvio as Vice President, Business Development and Investor Relations with over 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 an MSc from the University of Ottawa (Physiology) as well as an MBA (Finance) from Queen’s University. On top of his research analyst registrations in the United States, he was also a registered representative.

Hugues Sachot, Chief Commercial Officer.

Mr. Hugues Sachot currently serves as Correvio’s Chief Commercial Officer, and is responsible for the sales, marketing and distribution of all commercialized products worldwide. Previously, he served as VP Sales & Marketing for the EMEA region, and subsequently, worldwide at Angiotech Pharmaceuticals. Prior to Angiotech, Mr. Sachot worked for 15 years at Johnson & Johnson where he held several sales and marketing director positions in Europe, including at J&J’s subsidiaries, Ethicon Endo-Surgery, Biosense Webster, and Cordis Corporation. Mr. Sachot has a B.A in economics, as well as a Master of Business Administration degree from the ESSEC-IMD Business School in Paris.

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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 while that person was acting in that capacity,

(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) while that person was acting in that capacity or 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,

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

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(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 Correvio, and other than as disclosed herein, there are no known existing or potential material conflicts of interest among Correvio, its directors and officers or a subsidiary of Correvio and any director or officer of Correvio or of a subsidiary of Correvio, 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 Correvio 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 Correvio are required by law to act honestly and in good faith with a view to the best interests of Correvio 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 Correvio, 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 Correvio 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 Correvio 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”.

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 professional 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).

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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, 2019 and December 31, 2018.

	December 31, 2019	December 31, 2018
Audit Fees(1)	Cdn.$638,533	Cdn.$543,725
Audit-Related Fees(2)	Cdn.$36,934	Cdn.$40,200
Tax Fees(3)	Cdn.$30,228	Cdn.$153,759
All Other Fees(4)	Nil	Cdn.$80,250

⁽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.

⁽⁴⁾ Other fees relate to the sale of the Canadian business portfolio pursuant to the Arrangement.

legal proceedings AND REGULATORY ACTIONS

On December 12, 2019, a putative securities class action complaint was filed against us and certain of our current and past officers (collectively the “Defendants”) in the United States District Court for the Southern District of New York. The Court appointed co-lead plaintiffs on February 25, 2020. The complaint purports to be on behalf of investors who purchased or otherwise acquired Correvio securities during the period from October 23, 2018 to December 5, 2019, inclusive (the “Class Period”), and were damaged thereby.

The complaint alleges, among other things, that we made materially false and misleading statements and omissions regarding our business, operational and compliance policies. Specifically, the complaint alleges that we made false and/or misleading statements and/or failed to disclose that data supporting the resubmitted NDA for BRINAVESS did not minimize the significant health and safety issues observed in connection with the drug’s original NDA and that the foregoing substantially diminished the likelihood that the FDA would approve the resubmitted NDA, which purportedly artificially inflated the market value of our securities. An amended complaint is due on May 1, 2020.

The plaintiffs have not specified an amount of alleged damages in the action. Because this action is in the early stages, the possible loss or range of losses, if any, arising from the litigation cannot be estimated. We believe that the claims asserted in the complaint are without merit and intend to defend the lawsuit vigorously.

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) Arrangement Agreement between ADVANZ PHARMA Corp. Limited, Mercury Pharma Group Limited and Correvio Pharma Corp. entered into on March 15, 2020 described in the section titled “General Development of the Business” in this annual information form.

2) At Market Issuance Sales Agreement between Correvio Pharma Corp. and Cantor Fitzgerald & Co. entered into on March 13, 2019 described in the section titled “General Development of the Business” in this annual information form.

3) Second Amended and Restated Term Loan Agreement between Correvio Pharma Corp. and CRG entered into on May 15, 2018 and further amended on March 15, 2020 described in the section titled “General Development of the Business” in this annual information form.

4) Arrangement Agreement between Cipher Pharmaceuticals Inc. and Correvio Pharma Corp. entered into on March 19, 2018 described in the section titled “General Development of the Business” in this annual information form.

5) Distribution Agreement between Correvio International Sarl and Basilea entered into on September 11, 2017 described in the section titled “General Development of the Business” in this annual information form.

6) Amended and Restated Term Loan Agreement between Correvio Pharma Corp. and CRG entered into on May 11, 2017 described in the section titled “General Development of the Business” in this annual information form.

7) Term Loan Agreement between Correvio 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.

8) 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.

9) 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.

10) Exclusive License and Supply Agreement by and between Correvio 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.

 57

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, 2019 and December 31, 2018, and for each of the three years ended December 31, 2019, 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.

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 18, 2019.

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, 2019.

 58

SCHEDULE “A”
AUDIT committee MANDATE

Date of Adoption: April 5, 2018

Purpose

The audit committee (the “Committee”) of Correvio 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.

 59

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.

 61

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.

 63

	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

 64

	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

 65

EX-99.2

Exhibit 99.2

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Consolidated Financial Statements

For the years ended December 31, 2019, 2018 and 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 Stockholders and Board of Directors
Correvio Pharma Corp.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Correvio Pharma Corp. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 27, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a history of incurring operating losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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

  Correvio Pharma Corp. Page 2

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company has changed its accounting policies for leases as of January 1, 2019 due to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842), and related amendments, and its accounting policies for recognizing revenues as of January 1, 2018 due to the adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), and related amendments.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the Company’s auditor since 2006.

Vancouver, Canada
March 27, 2020

 

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 Stockholders and Board of Directors
Correvio Pharma Corp.:

Opinion on Internal Control Over Financial Reporting

We have audited Correvio Pharma Corp. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements), and our report dated March 27, 2020 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’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 Report on Inernal 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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. 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 of internal control over financial reporting 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.

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.

  Correvio Pharma Corp. Page 2

Definition and Limitations of Internal Control Over Financial Reporting

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.

 

Vancouver, Canada
March 27, 2020

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Consolidated Balance Sheets

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

	December 31, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	13,299		$	15,596
Restricted cash (note 6)		1,945			1,974
Accounts receivable, net of allowance for doubtful accounts of $92 (2018 - $102)		11,987			7,723
Inventories (note 7)		3,563			4,158
Prepaid expenses and other assets		977			841
		31,771			30,292
Property and equipment (note 8)		452			512
Right-of-use assets from operating leases (note 11)		2,057			—
Intangible assets (note 9)		22,232			26,469
Long-term inventories (note 7)		1,763			1,663
Goodwill		318			318
Deferred income tax assets (note 17)		300			383
	$	58,893		$	59,637
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities (note 10)	$	11,295		$	9,403
Current portion of long-term debt (note 12)		17,688			—
Current operating lease liabilities (note 11)		812			—
		29,795			9,403
Long-term debt (note 12)		27,238			41,517
Deferred revenue		1,228			1,252
Long-term operating lease liabilities (note 11)		1,466			—
Other long-term liabilities		—			555
		59,727			52,727
Stockholders’ equity:
Common stock		385,057			359,295
Authorized - unlimited number without par value
Issued and outstanding – 55,382,228 (2018 – 36,233,162) (note 13(b))
Additional paid-in capital		42,734			40,456
Deficit		(444,928	)		(409,744	)
Accumulated other comprehensive income		16,303			16,903
		(834	)		6,910
	$	58,893		$	59,637

Commitments and contingencies (notes 16 and 19)

Subsequent events (notes 12, 13(b) and 21)

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

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Consolidated Statements of Operations and Comprehensive Loss

For the years ended December 31, 2019, 2018 and 2017

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

	December 31, 2019				December 31, 2018				December 31, 2017
Revenue:
Product and royalty revenues		$	32,634			$	27,051			$	23,811
Licensing and other fees			—				1,623				197
			32,634				28,674				24,008
Cost of goods sold			9,827				8,294				6,776
Gross margin			22,807				20,380				17,232
Expenses:
Selling, general and administration			46,319				42,578				36,694
Amortization and depreciation (notes 8 and 9)			3,941				4,143				3,517
			50,260				46,721				40,211
Operating loss			(27,453	)			(26,341	)			(22,979	)
Other (expense) income:
Gain on disposal of Canadian Operations (notes 1 and 9)			—				18,489				—
Other expense on modification of long-term debt (note 12)			—				—				(1,451	)
Interest expense			(7,512	)			(5,977	)			(5,695	)
Other expense			(303	)			(578	)			(511	)
Foreign exchange gain (loss)			263				(2,134	)			1,188
			(7,552	)			9,800				(6,469)
Loss before income taxes			(35,005	)			(16,541	)			(29,448	)
Income tax expense (note 17)			(179	)			(38	)			(363	)
Net loss		$	(35,184	)		$	(16,579	)		$	(29,811	)
Other comprehensive loss:
Foreign currency translation adjustments			(600	)			(226	)			791
Comprehensive loss		$	(35,784	)		$	(16,805	)		$	(29,020	)
Loss per common share (note 15)
Basic and diluted		$	(0.79	)		$	(0.47	)		$	(0.90	)
Weighted average common shares outstanding (note 15)
Basic			44,275,800				35,148,303				33,192,480
Diluted			44,275,800				35,148,303				33,227,924

See accompanying notes to the consolidated financial statements.

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Consolidated Statements of Stockholders’ Equity

For the years ended December 31, 2019, 2018 and 2017

(Expressed 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, 2016		31,884,420	$	344,928		$	35,812		$	(363,054	)	$	16,338		$	34,024
Net loss		—		—			—			(29,811	)		—			(29,811	)
Issuance of common stock (note 13(b))		2,453,051		8,487			—			—			—			8,487
Share issue costs		—		(1,072	)		—			—			—			(1,072	)
Common stock issued upon exercise of options (note 13(b))		265,495		384			—			—			—			384
Reallocation of additional paid-in capital arising from stock-based compensation related to exercise of options		—		360			(360	)		—			—			—
Reallocation of stock-based compensation liability arising from stock-based compensation related to exercise of options		—		29			—			—			—			29
Issuance of common shares on vesting of restricted share units, net of tax (note 13(b))		34,346		367			(432	)								(65	)
Issuance of warrants (note 12)		—		—			1,200			—			—			1,200
Stock-based compensation expense		—		—			2,223			—			—			2,223
Foreign currency translation adjustments		—		—			—			—			791			791
Balance at December 31, 2017		34,637,312		353,483			38,443			(392,865	)		17,129			16,190
Adoption of accounting standards (note 3)		—		—			—			(300	)		—			(300	)
										(393,165	)					15,890
Net loss		—		—			—			(16,579	)		—			(16,579	)
Issuance of common stock (note 13(b))		1,361,691		5,392			—			—			—			5,392
Share issue costs		—		(231	)		—			—			—			(231	)
Common stock issued upon exercise of options (note 13(b))		219,749		258			—			—			—			258
Reallocation of additional paid in capital arising from stock-based compensation related to exercise of options		—		226			(226	)		—			—			—
Issuance of common shares on vesting of restricted share units, net of tax (note 13(b))		14,410		167			(190	)		—			—			(23	)
Issuance of warrants (note 12)		—		—			936			—			—			936
Stock-based compensation expense		—		—			1,493			—			—			1,493
Foreign currency translation adjustments		—		—			—			—			(226	)		(226	)
Balance at December 31, 2018		36,233,162	$	359,295		$	40,456		$	(409,744	)	$	16,903		$	6,910
Net loss		—		—			—			(35,184	)		—			(35,184	)
Issuance of common stock (note 13(b))		19,102,844		27,670			—			—			—			27,670
Share issue costs		—		(2,069	)		—			—			—			(2,069	)
Common stock issued upon exercise of options in cashless transaction (note 13(b))		15,654		—			—			—			—			—
Reallocation of additional paid in capital arising from stock-based compensation related to exercise of options		—		90			(90	)		—			—			—
Issuance of common shares on vesting of restricted share units (note 13(b))		30,568		71			(71	)		—			—			—
Stock-based compensation expense		—		—			2,439			—			—			2,439
Foreign currency translation adjustments		—		—			—			—			(600	)		(600	)
Balance at December 31, 2019		55,382,228	$	385,057		$	42,734		$	(444,928	)	$	16,303		$	(834	)

See accompanying notes to the consolidated financial statements.

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Consolidated Statements of Cash Flows

For the years ended December 31, 2019, 2018 and 2017

(Expressed in thousands of U.S. dollars)

	December 31, 2019				December 31, 2018				December 31, 2017
Operating activities:
Net loss		$	(35,184	)		$	(16,579	)		$	(29,811	)
Items not affecting cash:
Amortization (notes 8 and 9)			3,941				4,143				3,517
Accretion of long-term debt (note 12)			1,950				794				1,549
Interest paid in-kind on long-term debt (note 12)			1,749				1,679				778
Stock-based compensation expense (note 14)			2,424				1,678				2,065
Write-down of inventory (note 7)			159				340				295
Gain on disposal of Canadian Operations (notes 1 and 9)			—				(18,489	)			—
Unrealized foreign exchange loss (gain)			129				1,863				(1,738	)
Changes in operating assets and liabilities:
Accounts receivable			(4,083	)			(2,036	)			448
Inventories			233				400				(1,533	)
Prepaid expenses and other assets			(63	)			43				510
Deferred revenue			(3	)			(1,604	)			(197	)
Accounts payable and accrued liabilities			1,725				1,930				(675	)
Other long-term liabilities			(52	)			59				(31	)
Net cash used in operating activities			(27,075	)			(25,779	)			(24,823	)
Investing activities:
Proceeds on disposal of Canadian Operations (notes 1 and 9)			376				19,095				—
Purchase of property and equipment			(129	)			(284	)			(5	)
Purchase of intangible assets (note 9)			(32	)			(4,705	)			(5,229	)
Net cash provided by (used in) investing activities			215				14,106				(5,234	)
Financing activities:
Issuance of common stock (note 13(b))			26,994				5,392				8,487
Share issue costs			(2,069	)			(231	)			(1,072	)
Issuance of common stock upon exercise of stock options (note 13(b))			—				258				384
Income tax withholdings on vesting of restricted share units			—				(23	)			(65	)
Proceeds from issuance of long-term debt			—				—				20,000
Financing fees on issuance of long-term debt (note 12)			(288	)			(21	)			(518	)
Payment of deferred consideration			—				—				(2,815	)
Net cash provided by financing activities			24,637				5,375				24,401
Decrease in cash and cash equivalents during the year			(2,223	)			(6,298	)			(5,656	)
Effect of foreign exchange rate changes on cash and cash equivalents			(103	)			(313	)			532
Cash, cash equivalents, and restricted cash, beginning of year			17,570				24,181				29,305
Cash, cash equivalents, and restricted cash, end of year (note 6)		$	15,244			$	17,570			$	24,181
Supplemental cash flow information:
Interest paid		$	3,934			$	3,778			$	3,477
Interest received			120				149				95
Net income taxes paid (received)			101				146				(334	)

See accompanying notes to the consolidated financial statements.

 1

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

1.   Basis of presentation:

Correvio Pharma Corp. (the “Company” or “Correvio”) was incorporated on March 7, 2018 under the laws of the Canada Business Corporations Act as part of a court approved Plan of Arrangement (the “Arrangement”) to reorganize Cardiome Pharma Corp. (“Cardiome”). The Company’s head office is located at 1441 Creekside Drive, Vancouver, BC, V4S 4J7.

Pursuant to the Arrangement effective May 15, 2018, substantially all of the assets and liabilities of Cardiome excluding its Canadian business portfolio were transferred to Correvio and the shareholders of Cardiome received common shares, on a one-for-one basis, of Correvio. Immediately following the reorganization of Cardiome, Cipher Pharmaceuticals Inc. (“Cipher”) acquired the Canadian business portfolio of Cardiome (“Canadian Operations”) on May 15, 2018 by way of the acquisition of all of the issued and outstanding commons shares of Cardiome for an aggregate cash consideration in Canadian dollars (C$) of C$25,500. The Canadian income tax losses and other Canadian tax pools of Cardiome remained with Cardiome and were sold to Cipher. Cardiome’s management team and employees became employees of the Company and assumed the same positions they occupied in Cardiome. As a result of the Arrangement, the Company holds all of Cardiome’s pre-transaction assets and assumed liabilities, excluding the Canadian Operations acquired by Cipher effective May 15, 2018. In the second quarter of 2018, the Company recorded a gain of $18,489, from its disposition of the Canadian Operations and the related tax balances.

The consolidated financial statements for all periods presented herein include the consolidated operations of Cardiome until May 15, 2018 and the operations of the Company thereafter. As a non-recurring related party transaction between companies under common control at the time of the Arrangement, the assets and liabilities were transferred at their carrying values using the continuity-of-interests method of accounting. For accounting purposes, the Company is considered to have continued Cardiome’s pharmaceutical business that was transferred; accordingly, these consolidated financial statements include the consolidated historical operations and changes in the consolidated financial position of Cardiome to May 15, 2018 and those of the Company thereafter. Reference in these consolidated financial statements to “the Company” refers to “Cardiome” prior to May 15, 2018.

Correvio (including its former parent Cardiome until May 15, 2018) is a specialty pharmaceutical company dedicated to offering patients and healthcare providers innovative therapeutic options that effectively and conveniently manage acute medical conditions to improve health and quality of life. Correvio strives to find innovative, differentiated medicines that provide therapeutic and economic value to patients, physicians and healthcare systems. Correvio currently has two marketed, in-hospital cardiology products, Brinavess^® (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. Correvio 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. Correvio has also licensed Zevtera^®/Mabelio^® (ceftobiprole medocaril sodium), a cephalosporin

 2

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

1.   Basis of presentation (continued):

antibiotic for the treatment of community-acquired and hospital-acquired pneumonia. In addition, Correvio 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.

As of December 31, 2019, the Company had $13,299 in cash and cash equivalents, compared to $15,596 at December 31, 2018. The Company has a history of incurring operating losses and negative cash flows from operations. Based on current projections, the Company may not have sufficient capital to fund its current planned operations during the twelve-month period subsequent to the issuance of these consolidated financial statements. On March 16, 2020, the Company announced that it had entered into an arrangement agreement dated March 15, 2020 in which ADVANZ PHARMA Corp. Limited (“ADVANZ PHARMA”) will acquire all the issued and outstanding shares of the Company, pursuant to a plan of arrangement under the Canada Business Corporations Act (note 21). The total purchase price of approximately $75,900 includes the repayment of certain of the Company’s indebtedness. The Boards of Directors of both companies have unanimously approved the transaction, which remains subject to approval by the Company’s shareholders. The Company is dependent on this transaction to meet its current planned operations during the twelve-month period subsequent to the issuance of these consolidated financial statements. There can be no assurance that the Company will be able to obtain shareholder approval to complete the transaction or raise such additional financing, as may be necessary otherwise. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the consolidated financial statements issuance date. The accompanying financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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 Correvio 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

 3

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

2.       Summary of significant accounting policies (continued):

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 allowance for doubtful accounts, stock-based compensation expense, 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 income 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.

 4

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

2.   Summary of significant accounting policies (continued):

(f)   Accounts receivable:

The Company records accounts receivable at outstanding amounts, net of any allowances for doubtful accounts. Accounts receivable generally consist of trade receivables, value-added-tax receivables, income tax receivables and other receivables.

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. Inventories not expected to be utilized within the next 12 months are classified as long-term.

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.

 5

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

 2.       Summary of significant accounting policies (continued):

(i)   Intangible assets:

Intangible assets are comprised of patent costs, trade name, marketing rights and licenses, all of which have a definite life. 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	over the license term

(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.

(k)  Impairment of long-lived assets:

Long-lived assets, including property and equipment, and definite life 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

 6

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

2.       Summary of significant accounting policies (continued):

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)   Leases:

The Company determines if an arrangement is a lease at inception. Payments under lease arrangements are primarily fixed. Certain lease agreements contain variable payments, primarily payments for maintenance and utilities, which are expensed as incurred and not included in the lease assets and liabilities.

For leases with an initial term of less than 12 months, the Company has elected not to recognize right-of-use assets and liabilities for any class of asset. The Company has elected a policy to account for lease and non-lease components as a single component for all asset classes. Lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. In general, the Company accounts for the underlying leased asset and applies a discount rate at the lease level. However, for vehicle leases, the Company utilizes the portfolio method by aggregating similar leased assets based on the underlying lease term (note 11). Operating lease expense is recognized on a straight-line basis over the lease term.

(m)  Long-term debt:

Long-term debt is recorded under the effective interest method. Any debt issuance costs associated with an issuance of long-term debt are recorded as a direct deduction to the carrying value of the long-term debt and are amortized over the term under the effective interest method. The carrying value of the Company’s long-term debt includes any paid in-kind interest and is being accreted up to the amount payable at maturity under the effective interest method.

(n)  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 or when no further performance obligations exist.

(o)  Revenue recognition:

The Company generates revenue primarily through the sale of its commercialized products and royalties. Product revenue is recognized at a point in time. Royalty revenue is recognized in the period in which the obligation is satisfied and the corresponding sales by its corporate partner occurs. The Company also earns licensing revenue from collaboration and license agreements from the commercial sale of approved products. Licensing revenue is recognized over time.

 7

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

2.   Summary of significant accounting policies (continued):

(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 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)   Loss per share:

Basic loss per share is calculated by dividing net 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, basic and diluted loss per share are generally the same.

Diluted 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.

 8

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

3.   Accounting pronouncements adopted:

On January 1, 2019, the Company adopted Accounting Standards Update No. (“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. In July 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-11, “Leases”, which offered a transition option where companies could elect to apply the guidance using a modified retrospective approach at the beginning of the year of adoption rather than to the earliest comparative period presented in the financial statements. The Company adopted the new leasing standard on January 1, 2019 using the modified retrospective approach and used the effective date as its date of initial application. A cumulative catch-up adjustment was not required on the date of adoption. The Company elected the package of practical expedients which permits the Company to not reassess under its prior conclusions about lease identification, lease classification and initial direct costs. On adoption, the Company recognized additional operating liabilities of approximately $2,680, with corresponding right-of-use assets of the same amount, adjusted for unamortized lease inducements received of approximately $260.

During the year ended December 31, 2018, the Company adopted the Accounting Standards Codification 606 (“ASC 606”), Revenue from Contracts with Customers, using the modified retrospective method. The Company has recognized the cumulative effect of applying ASC 606 as an adjustment to the opening balance of deficit.  The comparative information has not been restated and will continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 606 did not have a material impact on its statement of operations and comprehensive loss or on its statement of cash flows. The majority of the Company’s revenue continues to be recognized when products are shipped from its warehousing and logistics facilities.  There were no changes to the treatment of cash flows and cash will continue to be collected in line with contractual terms. The cumulative effect of the adoption of ASC 606 on the Company’s consolidated January 1, 2018 balance sheet is summarized in the following table:

	December 31, 2017	Adjustments	January 1, 2018
Deferred revenue	$2,502	$300	$2,802
Deficit	($392,865)	($300)	($393,165)

The transition adjustment arose from the Company’s treatment of an upfront payment it received from one of its distributors for the rights to distribute one of the Company’s commercialized products.  The upfront payment was previously amortized immediately upon receipt over a 10-year term.  Under ASC 606, the upfront payment has been deferred.

 9

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

4.    Recent pronouncements:

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current guidance, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all recognition thresholds and will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument’s contractual life. The revised guidance is effective for fiscal years, and interim periods within those fiscal years, beginning January 1, 2023. The Company does not expect the guidance to have a material impact on its consolidated financial statements.

5.    Financial instruments:

Financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities, and long-term debt. The fair values of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued liabilities approximate carrying values because of their short-term nature. The long-term debt is classified as Level 2 of the fair value hierarchy. Based on a pricing model using observable market inputs, the Company has determined that the fair value of long-term debt at December 31, 2019 is $42,008. The carrying value of long-term debt at December 31, 2019 is $44,926 (note 12). The inputs to the pricing model included benchmark yields for debt with comparable credit risk. In prior years, the Company determined that the fair value of long-term debt approximated its carrying value.

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. At December 31, 2019, approximately $4,400 of our accounts receivable was due from one distributor. The Company monitors the creditworthiness of its customers so that it can properly assess and respond to changes in their credit profile.

 10

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

5.   Financial instruments (continued):

(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.

6.    Restricted cash:

At December 31, 2019, the Company had restricted cash relating to deposits pledged as collateral for bank guarantees for sales contracts with various hospitals and health authorities of $1,706 (December 31, 2018 - $1,739) and deposits pledged as collateral for operating lease arrangements of $239 (December 31, 2018 - $235).

The following table provides a reconciliation of cash, cash equivalents, and restricted cash that sum to the total of the amounts shown in the consolidated statement of cash flows:

	December 31,		December 31,
	2019		2018
Cash and cash equivalents	$	13,299	$	15,596
Restricted cash		1,945		1,974
Cash, cash equivalents, and restricted cash	$	15,244	$	17,570

 11

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

7.   Inventories:

	December 31,			December 31,
	2019			2018
Finished goods	$	2,618		$	3,288
Work in process		768			586
Raw materials		1,940			1,947
Inventories	$	5,326		$	5,821
Less: current		(3,563	)		(4,158	)
Long-term inventories	$	1,763		$	1,663

During the year ended December 31, 2019, the Company had a write-down of inventory of $159 (2018 – $340; 2017 - $295).

8.   Property and equipment:

			Accumulated		Net book
December 31, 2019	Cost		amortization		value
Production equipment	$	67	$	67	$	—
Software		55		55		—
Computer equipment		230		164		66
Leasehold improvements		699		315		384
Furniture and office equipment		177		175		2
	$	1,228	$	776	$	452
				Accumulated		Net book
December 31, 2018		Cost		amortization		value
Production equipment	$	67	$	42	$	25
Software		55		55		—
Computer equipment		231		138		93
Leasehold improvements		574		209		365
Furniture and office equipment		177		148		29
	$	1,104	$	592	$	512

Amortization and depreciation expense for the year ended December 31, 2019 amounted to $184 (2018 - $124; 2017 - $143).

 12

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

9.   Intangible assets:

			Accumulated		Net book
December 31, 2019	Cost		amortization		value
Licenses	$	22,113	$	6,361	$	15,752
Marketing rights		14,745		8,988		5,757
Trade name		1,053		651		402
Patents		4,080		3,759		321
	$	41,991	$	19,759	$	22,232
				Accumulated		Net book
December 31, 2018		Cost		amortization		value
Licenses	$	22,538	$	4,360	$	18,178
Marketing rights		15,028		7,667		7,361
Trade name		1,074		564		510
Patents		4,126		3,706		420
	$	42,766	$	16,297	$	26,469

In May 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 and various Middle Eastern nations. 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 during the year ended December 31, 2016. The license is being amortized over the life of the agreement of 10 years. In the second quarter of 2018, the Company made a milestone payment to Allergan of $4,537. Additional non-refundable milestone payments may be due to Allergan upon the Company’s achievement of various milestones and will be recognized when the Company considers the milestone to be probable.

In September 2017, the Company announced the execution of a distribution and license agreement with Basilea Pharmaceutica International Ltd. (“Basilea”), for the rights to commercialize Zevtera^®/Mabelio^® (ceftobiprole medocaril sodium) in 34 European countries and Israel. As consideration for the rights and licenses granted, the Company made a non-refundable payment to Basilea of CHF 5,000 ($5,200). During the year ended December 31, 2018, the Company accrued $281 for a milestone payment as the Company assessed that it was probable that a pre-determined level of annual net sales for future years would be achieved. The milestone payment has been recorded in accrued liabilities. Additional non-refundable milestone payments may be due to Basilea upon the Company’s achievement of various milestones and achievement of pre-determined levels of annual net sales. The license is being amortized over the life of the agreement of 15 years.

 13

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

9.   Intangible assets (continued):

As part of the Arrangement (note 1), the Company divested its Canadian Operations, which included $1,349 in licenses, to Cipher. A gain on disposal of the Canadian Operations of $18,489 was recognized in the second quarter of 2018.

Amortization and depreciation expense for the year ended December 31, 2019 amounted to $3,757 (2018 - $4,019; 2017 - $3,374).

The estimated aggregate amortization expense for intangible assets held at December 31, 2019, for each of the five succeeding years is expected as follows:

2020	$	3,740
2021	3,706
2022	3,682
2023	3,653
2024	2,153

10. Accounts payable and accrued liabilities:

	December 31,		December 31,
	2019		2018
Trade accounts payable	$	6,551	$	4,213
Employee-related accruals	2,643		3,249
Other accrued liabilities	2,101		1,941
	$	11,295	$	9,403

 14

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

11. Leases:

The Company leases office space, vehicles, and certain equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

For the year ended December 31, 2019
Operating lease cost	$	908
Variable lease cost	$	166
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	$	(964)

Leases	December 31, 2019
Right-of-use assets from operating leases	$	2,057
Current operating lease liabilities	$	812
Long-term operating lease liabilities	$	1,466
Weighted average remaining operating lease term (years)	3.6 years
Weighted average operating lease discount rate	6.0%

As at December 31, 2019 future annual minimum lease payments are as follows:

Operating leases
2020	$	954
2021	760
2022	497
2023	212
2024	190
Thereafter	-
Total minimum lease payments	2,613
Less imputed interest	(335)
Total lease liability	$	2,278

 15

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

11. Leases (continued):

As at December 31, 2018, future annual minimum lease payments were as follows:

2019	$	937
2020	754
2021	347
2022	199
2023	185
Thereafter	170
Total minimum lease payments	$	2,592

Rent expense for the year ended December 31, 2019 was $774 (2018 - $827; 2017 - $658).

12.   Long term debt:

	December 31,		December 31,
	2019		2018
Long-term debt	$	44,926	$	41,517
Less: current portion	(17,688)		-
Long-term debt	$	27,238	$		41,517

On June 13, 2016, the Company entered into a term loan agreement with CRG-managed funds (“CRG”) 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 long-term debt for general corporate purposes. The second and third tranches of $5,000 each were never drawn.

On May 11, 2017, the Company amended the terms of its term loan agreement (the “first amendment”). Under the terms of the amended agreement, up to $50,000 was available to the Company consisting of four tranches bearing interest at 13% per annum. The first tranche of $20,000 was drawn on June 13, 2016 when the Company entered into the original term loan agreement, and a second tranche of $10,000 was drawn on the date of the first amendment. A third tranche of $10,000 was drawn on August 8, 2017. The fourth tranche of up to $10,000 was never drawn. The loan matures on March 31, 2022 and is secured by substantially all of the assets of the Company. Under the terms of the amended agreement, an interest-only period is provided such that principal repayment begins in June 2020. The Company incurred expenses of $1,451 in connection with the modification of long-term debt in the second quarter of 2017 which is included in other expense.

 16

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

12.  Long term debt (continued):

Interest is payable on a quarterly basis through the full term of the loan. Interest payments may be split, at the Company’s option, between 9% per annum cash interest and 4% per annum paid in-kind interest in the form of additional term loans until March 31, 2020. Subsequent to March 31, 2020, interest shall be payable entirely in cash. During the year ended December 31, 2019, the Company paid in-kind interest of $1,749 (2018 - $1,679; 2017 - $778). The face value of the Company’s long-term debt at December 31, 2019 is $44,206 (December 31, 2018 - $42,457; December 31, 2017 - $40,778). On the maturity date, a back-end facility fee of 8% of the aggregate amount of the term loan will be payable to CRG, including the impact of any amounts accrued as paid in-kind interest. As a result, the Company is accruing the amount up to $47,742 under the effective interest method which will be the amount payable at maturity. The effective interest rate of the long-term debt is 17%.

In consideration for entering into the first amendment, 700,000 warrants with a strike price of $4.00 per common share were issued to CRG as of the date of the amended agreement. The warrants have a term of 5 years and are classified as equity. The warrants were fair valued at $1,200 using the Black-Scholes model and are being accounted for as a discount to the long-term debt on a proportionate basis to the fair value of the entire long-term debt as of the date of the amended agreement. The discount is being amortized to interest expense over the life of the amended agreement under the effective interest method.

The Company is required to meet certain annual revenue covenants. If the revenue covenants are not met, the Company may exercise a cure right within 90 days of year-end 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 used to repay the principal. On March 27, 2018, the Company entered into an agreement with CRG to amend the terms of the loan to adjust the annual revenue covenants (the “second amendment”). In consideration for the second amendment, the Company issued 800,000 warrants with a strike price of $2.50 per common share to CRG as of the date of the second amendment. The warrants have a term of 5 years and are classified as equity. The warrants were fair valued at $936 using the Black-Scholes model and are being accounted for as a discount to the long-term debt on a proportionate basis to the fair value of the entire long-term debt as of the date of the amended agreement. The discount is being amortized to interest expense over the life of the amended agreement under the effective interest method.

On March 11, 2019, the Company further amended its term loan agreement with CRG for an additional credit facility of $10,000, to be drawn at the discretion of the Company, in increments of $2,500 through September 30, 2019, subject to the achievement of certain revenue and market capitalization requirements (the “Additional Credit Facility”). The facility bore interest at 13% per annum and carried the same terms and conditions as the term loan agreement. As consideration for the Additional Credit Facility, the Company made a one-time payment of $250 to CRG. No funds were drawn under the Additional Credit Facility.

 17

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

12.  Long term debt (continued):

On December 17, 2019, the Company further amended its term loan agreement with CRG such that certain product rights could be sold. Upon receiving proceeds from the sale of these product rights, on March 9, 2020, the Company made a repayment of $2,000 to CRG, of which $1,777 related to a prepayment of principal, $142 related to the back-end facility fee of 8% applicable to the prepayment, $45 related to interest expense and $36 related to prepayment fees.

Subsequent to the year ended December 31, 2019, the Company entered into an agreement with CRG to amend certain covenants related to the term loan agreement, including the annual revenue covenant. As a result of the retrospective amendment to the annual revenue covenant, the Company was in compliance with all covenants for the year ended December 31, 2019.

Future repayments, assuming the Company continues to meet the amended revenue covenants, are as follows:

2020	$	17,830
2021	21,214
2022	8,698
2023	-
2024	-
Total repayments	$	47,742

13.  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.

 18

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

13.  Share capital (continued):

(b) Issued and outstanding:

	Number
Common shares	of shares
Balance, December 31, 2016	31,884,420
Issued through at-the-market offering (i)	1,958,598
Issued to Lincoln Park Capital Fund, LLC (ii)	494,453
Issued for cash upon exercise of options	215,000
Issued upon exercise of options in cashless transaction	50,495
Issued upon vesting of restricted share units, net of tax	34,346
Balance, December 31, 2017	34,637,312
Issued through at-the-market offering (iii)	1,361,691
Issued for cash upon exercise of options	200,000
Issued upon exercise of options in cashless transaction	19,749
Issued upon vesting of restricted share units, net of tax	14,410
Balance, December 31, 2018	36,233,162
Issued through at-the-market offering(iii)	2,970,781
Issued through at-the-market offering(iv)	6,932,063
Issued through common share offering(v)	9,200,000
Issued upon exercise of options in cashless transaction	15,654
Issued upon vesting of restricted share units	30,568
Balance, December 31, 2019	55,382,228

(i) On March 7, 2016, the Company filed a prospectus supplement pertaining to sales under an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with FBR Capital Markets & Co. (“FBR”) and MLV & Co. LLC (“MLV”). Under the terms of the ATM Sales Agreement, the Company could sell through at-the-market offerings, with FBR and MLV as agents, such common shares with an aggregate value of up to $30,000, subject to a maximum of $6,900 that may be offered and sold under this prospectus supplement. During the year ended December 31, 2017, 1,666,765 common shares were issued for gross proceeds of $6,890 under this prospectus supplement. On August 10, 2017, the Company filed a new prospectus supplement under which the Company could offer and sell common shares up to a maximum of $10,700. During the year ended December 31, 2017, 291,833 common shares were issued for gross proceeds of $630 under this prospectus supplement. The ATM Sales Agreement with FBR and MLV was terminated in April 2018.

(ii) On January 12, 2016, the Company completed a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”) which allowed LPC to purchase common shares with an aggregate value of up to $20,000. On March 7, 2016, the Company filed a prospectus supplement pertaining to the Purchase

 19

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

13.   Share capital (continued):

Agreement, under which LPC could purchase common shares up to a maximum of $6,900. During the year ended December 31, 2017, 494,453 common shares were issued to LPC for gross proceeds of $967 under this prospectus supplement. The Purchase Agreement was terminated in April 2018.

(iii) On July 5, 2018, 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 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 $250,000 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 July 10, 2018, the Company filed a prospectus supplement pertaining to sales under an ATM Sales Agreement with B. Riley FBR, Inc. (“BRFBR”). Under the terms of the ATM Sales Agreement, the Company could sell through at-the-market offerings, with BRFBR as agent, such common shares with an aggregate value of up to $30,000, subject to a maximum of $13,000 that may be offered and sold under this prospectus supplement. During the year ended December 31, 2019, 2,970,781 common shares were issued for gross proceeds of $6,347 under this prospectus supplement. During the year ended December 31, 2018, 1,361,691 common shares were issued for gross proceeds of $5,392 under this prospectus supplement. The ATM Sales Agreement with BRFBR was terminated on March 1, 2019.

(iv) On March 13, 2019, the Company filed a prospectus supplement pertaining to sales under an ATM Sales Agreement with Cantor Fitzgerald & Co. (“Cantor”). Under the terms of the ATM Sales Agreement, the Company could sell through at-the-market offerings, with Cantor as agent, such common shares with an aggregate value of up to $50,000, subject to a maximum of $12,000 that may be offered and sold under this prospectus supplement. During the year ended December 31, 2019, 6,932,063 common shares were issued for gross proceeds of $7,523 under this prospectus supplement, of which $676 was recorded as accounts receivable at December 31, 2019 and collected subsequent to year-end. Subsequent to December 31, 2019, 10,777,186 common shares were issued for gross proceeds of $4,476 under this prospectus supplement.

(v) On August 7, 2019, the Company closed an underwritten public offering (the “Offering”) of 9,200,000 common shares at a price of $1.50 per common share, for aggregate gross proceeds of $13,800. Cantor acted as sole book-running manager in connection with the Offering. H.C. Wainwright & Co. acted as financial advisor to the Company in connection with the Offering.

 20

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

14.  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. The maximum number of shares available for issue under the Plan is a rolling number equal to a maximum of 12.5% of the issued common shares outstanding at the time of grant. The maximum number of stock options issuable to insiders under the Plan is 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, 2019, 2018 and 2017 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, 2016	2,001,557	5.82	2.72	1,110
Options granted	1,242,500	4.16
Options exercised	(324,000)	2.16
Options forfeited	(20,000)	5.10
Options expired	(8,000)	1.70
Outstanding as at December 31, 2017	2,892,057	5.52	3.07	69
Options granted	1,082,000	2.76
Options exercised	(267,000)	1.66
Options forfeited	(30,183)	7.27
Options expired	(157,000)	4.88
Outstanding as at December 31, 2018	3,519,874	5.04	3.07	820
Options granted	1,615,000	4.97
Options exercised	(62,500)	4.01
Options forfeited	(1,000)	4.49
Options expired	(375,174)	7.30
Outstanding as at December 31, 2019	4,696,200	4.81	2.67	-
Exercisable as at December 31, 2019	3,350,514	4.86	2.11	-

The outstanding options expire at various dates ranging from March 26, 2020 to June 25, 2024.

At December 31, 2019, stock options to executive officers and directors, employees and consultants were outstanding as follows:

 21

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

14.  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$)
$2.49 to $3.25	1,085,000	2.51	2.54	880,804	2.55
$3.26 to $4.03	842,500	1.69	4.00	821,644	4.00
$4.04 to $6.26	2,353,500	3.47	5.23	1,232,866	5.34
$6.27 to $12.68	415,200	0.52	10.02	415,200	10.02
	4,696,200	2.67	4.81	3,350,514	4.86

A summary of the Company’s non-vested stock option activity and related information for the year ended December 31, 2019 is as follows:

	Number	Weighted average
	of	grant-date fair value
Non-vested options	options	(U.S.$)
Non-vested at December 31, 2018	1,204,223	1.22
Granted	1,615,000	1.78
Forfeited	(820)	1.78
Vested	(1,472,717)	1.42
Non-vested at December 31, 2019	1,345,686	1.68

At December 31, 2019, there was $1,133 (December 31, 2018 - $536) 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 (December 31, 2018 - 1.1 years).

The aggregate intrinsic value of stock options exercised during the year ended December 31, 2019 was $69 (2018 - $68; 2017 - $495).

The aggregate fair value of vested options during the year ended December 31, 2019 was $2,087 (2018 - $1,394; 2017 - $1,729).

 22

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

14.  Share-based compensation (continued):

For the year ended December 31, 2019, $2,269 was recorded as stock-based compensation expense with $15 being recorded as a recovery against liability and $2,284 being recorded against additional paid-in capital (2018 - $1,408 was recorded as stock-based compensation expense with $25 being recorded against liability and $1,383 being recorded against additional paid-in capital; 2017 - $1,663 was recorded as stock-based compensation expense with $158 being recorded as a recovery against liability and $1,821 being recorded against additional paid-in capital).

The weighted average fair value of stock options granted during the year ended December 31, 2019 was $1.78 (2018 - $1.03; 2017 - $1.53). 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,	December 31,
	2019	2018	2017
Dividend yield	-	-	-
Expected volatility	71.6%	62.1%	63.7%
Risk-free interest rate	2.1%	2.2%	1.2%
Expected average life of the options	3.9 years	4.0 years	3.8 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 history. 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.

 23

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

14.  Share-based compensation (continued):

(b) Restricted share unit plan:

The Company’s treasury-based Restricted Share Unit Plan (the “RSU Plan”) provides 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 years ended December 31, 2019, 2018 and 2017 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, 2016		119,703		$	6.95		1.71	$	334
RSUs granted		52,962			3.46				194
RSUs vested		(57,003	)		7.59				174
RSUs forfeited		(18,706	)		6.21
Outstanding as at December 31, 2017		96,956		$	4.83		1.68	$	147
RSUs granted		69,872			2.43				160
RSUs vested		(95,622	)		4.73				202
RSUs forfeited		(22,718	)		2.58
Outstanding as at December 31, 2018		48,488		$	2.63		2.50	$	119
RSUs granted		115,251			3.42				397
RSUs vested		(30,568	)		2.30				79
RSUs forfeited		(10,040	)		3.10
Outstanding as at December 31, 2019		123,131		$	3.41		2.06	$	51

At December 31, 2019, there was $225 (December 31, 2018 - $76) of total unrecognized compensation cost related to non-vested RSUs. That cost is expected to be recognized over a weighted average period of 2.1 years (December 31, 2018 - 2.4 years).

 24

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

14.  Share-based compensation (continued):

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. On May 10, 2018, in connection with the closing of the Arrangement Agreement, 69,877 RSUs vested immediately and were settled in cash. For the year ended December 31, 2018, stock-based compensation expense in connection with the accelerated vesting of these RSUs of $175 was recorded in selling, general and administration expense.

For the year ended December 31, 2019, stock-based compensation expense related to RSUs of $155 (2018 - $270; 2017 - $402) was recorded in selling, general and administration expense and recorded against additional paid-in capital.

15.  Basic and diluted loss per share:

Basic and diluted loss per share is calculated as set forth below:

Year ended December 31,	2019			2018			2017
Net loss	$	(35,184	)	$	(16,579	)	$	(29,811	)
Less: recovery of fair value of
liability classified awards		—			—			(153	)
Diluted loss available to
common shareholders	$	(35,184	)	$	(16,579	)	$	(29,964	)
Weighted average number of
common shares for basic loss per share		44,275,800			35,148,303			33,192,480
Plus: incremental shares from
assumed exercise		—			—			35,444
Diluted weighted average number of
common shares for diluted loss per share		44,275,800			35,148,303			33,227,924
Loss per share – basic and diluted	$	(0.79	)	$	(0.47	)	$	(0.90	)

 For the year ended December 31, 2017, $5 of the recovery of fair value of liability classified awards has been excluded from the calculation of diluted loss available to common shareholders due to the fact that it is anti-dilutive.

 25

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

16.  Commitments:

(a)  Commitments for clinical and other agreements:

The Company entered into various clinical and other agreements requiring it to fund future expenditures of $97 (2018 - $1,613; 2017 - $7,309).

(b)  Purchase commitments:

The Company has purchase commitments with certain suppliers who assist in the production of its commercialized products. The amount of the purchase commitment is based on physical quantities manufactured; however, as at December 31, 2019, there is an aggregate minimum purchase obligation of $156 (December 31, 2018 - $318).

17.  Income taxes:

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

	2019			2018			2017
Canadian	$	(12,667	)	$	5,015		$	(14,841	)
Foreign		(22,338	)		(21,556	)		(14,607	)
Loss before income taxes	$	(35,005	)	$	(16,541	)	$	(29,448	)

The reconciliation of income tax computed at statutory tax rates to income tax expense, using a 27.0% (2018 – 27.0%; 2017 – 26.0%) statutory tax rate, is:

	December 31,			December 31,			December 31,
	2019			2018			2017
Loss before income taxes	$	(35,005	)	$	(16,541	)	$	(29,448	)
Statutory tax rate		27.0	%		27.0	%		26.0	%
Income tax recovery at Canadian
statutory income tax rates	$	(9,451	)	$	(4,466	)	$	(7,656	)
Change in valuation allowance		11,576			(87,082	)		1,625
Disposal of Canadian Operations (notes 1 and 9)		—			81,690			—
Permanent differences		808			875			967
Expiry of investment tax credits
and non-capital losses		1,589			5,838			1,243
Tax rate differences		613			748			790
Change in U.S. statutory rate		—			—			6,394
Change in Canadian statutory rate		—			—			(2,595	)
Adjustments related to prior periods		(4,956	)		2,167			(417	)
Other differences		—			268			12
Income tax expense	$	179		$	38		$	363

 26

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

17.  Income taxes (continued):

As a result of tax legislation enacted in the U.S. at the end of 2017, the federal U.S. corporate tax rate applicable to years subsequent to 2017 was substantially reduced. The Company recorded a deferred income tax expense in respect of its U.S. operations in 2017 using the new federal rate of 21%; however, there was no impact on tax expense as a valuation allowance is provided on most of these deferred tax assets.

The Company also revalued its deferred tax assets in respect of its Canadian operations to reflect the increase in the Canadian corporate income tax rate to 27% for years subsequent to 2017. There was no impact on tax expense as a full valuation allowance is provided on these deferred tax assets.

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

	December 31, 2019			December 31, 2018
Deferred tax assets:
Tax loss carryforwards	$	38,173		$	27,226
Tax values of depreciable assets in excess
of accounting values		481			69
Share issue costs and other		637			486
Total deferred tax assets		39,291			27,781
Valuation allowance		(38,991	)		(27,398	)
Net deferred tax assets	$	300		$	383

The Company also has total loss carryforwards of $162,080 (December 31, 2018 - $118,373) available to offset future taxable income: in Canada, in the amount of $12,352 (December 31, 2018 - $2,580); in Switzerland, in the amount of $106,838 (December 31, 2018 - $70,647); in the United States, in the amount of $42,525 (December 31, 2018 - $44,679); and in the United Kingdom, in the amount of $365 (December 31, 2018 - $467). The loss carryforwards expire between 2020 and 2039, except for the United Kingdom. The loss carryforwards in the United Kingdom do not expire.

The Company’s non-capital losses for income tax purposes expire as follows:

	Non-capital
	losses
2020	$	18,167
2021	16,932
2022	20,552
2023	16,820
2024	25,657
Thereafter until 2038	63,952
	$	162,080

 27

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

17.  Income taxes (continued):

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, 2019, a provision of nil (December 31, 2018 - nil) has been made in the financial statements for estimated tax liabilities. Tax years ranging from 2011 to 2019 remain subject to examination in the various countries we operate in.

18.  Related party transactions:

During the years ended December 31, 2019, 2018 and 2017, 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. The Company incurred expenses of $258 for the year ended December 31, 2019 for services provided by the consulting company relating to general corporate matters (2018 - $226; 2017 - $193). Included in accounts payable and accrued liabilities at December 31, 2019 was $28 owing to the consulting company (December 31, 2018 - $198).

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.

On December 12, 2019, a putative securities class action complaint was filed against the Company and certain of its current and past officers (collectively “the Defendants”) in the United States District Court for the Southern District of New York. The Court appointed co-lead plaintiffs on February 25, 2020. The complaint purports to be on behalf of investors who purchased or otherwise acquired Correvio securities during the period October 23, 2018 to December 5, 2019, inclusive (the “Class Period”), and were damaged thereby.

The complaint alleges, among other things, that the Company made materially false and misleading statements and omissions regarding the Company’s business, operational and compliance policies.  Specifically, the complaint alleges that the Company made false and/or misleading statements and/or failed to disclose that data supporting the resubmitted New Drug Application (“NDA”) for Brinavess^® did not minimize the significant health and safety issues observed in connection with the drug’s original NDA and that the foregoing substantially diminished the likelihood that the U.S. Food and Drug Administration would approve the

 28

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

19.  Contingencies (continued):

resubmitted NDA, which purportedly artificially inflated the market value of the Company’s securities. An amended complaint is due on May 1, 2020.

The plaintiffs have not specified an amount of alleged damages in the action. Because this action is in the early stages, the possible loss or range of losses, if any, arising from the litigation cannot be estimated. The Company believes that the claims asserted in the complaint are without merit and intends to defend the lawsuit vigorously.

(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 liability insurance that limits the exposure and enables the Company, and/or its officers and directors, to recover future amounts paid, less any deductible amounts pursuant to the terms of the respective policies.

(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 and licensing and other fees. The Company recognizes segmentation based on geography as follows:

Year ended December 31, 2019	Europe			Rest of World			Total
Revenue	$	22,425		$	10,209		$	32,634
Cost of goods sold		7,170			2,657			9,827
Gross margin		15,255			7,552			22,807
Gross margin %		68	%		74	%		70	%

 29

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

20.  Segmented information (continued):

Year ended December 31, 2018	Europe			Rest of World			Total
Revenue	$	16,165		$	12,509		$	28,674
Cost of goods sold		5,466			2,828			8,294
Gross margin		10,699			9,681			20,380
Gross margin %		66	%		77	%		71	%
Year ended December 31, 2017		Europe		Rest of World				Total
Revenue	$	10,953		$	13,055		$	24,008
Cost of goods sold		2,974			3,802			6,776
Gross margin		7,979			9,253			17,232
Gross margin %		73	%		71	%		72	%

The following table presents the Company’s revenues disaggregated by revenue source:

Year ended December 31,		2019		2018		2017
	Cardiology	$	19,358	$	22,497	$	22,753
	Antibiotic		13,276		6,177		1,255
		$	32,634	$	28,674	$	24,008

During the year ended December 31, 2019, there were three customers that individually accounted for more than 10% of total revenue. During the year ended December 31, 2019, these customers accounted for 19%, 15% and 11% of total revenue. During the years ending December 31, 2018 and 2017, there were two customers that individually accounted for more than 10% of total revenue. During the year ended December 31, 2018, these customers accounted for 17% and 14% of total revenue (2017 – 20% and 24%).

 30

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Notes to Consolidated Financial Statements

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

As at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

21.  Subsequent events:

On March 10, 2020, the Company announced that it entered into an exclusive agreement with Hong Kong Teson Pharma Limited (“Teson”) for the commercialization of Aggrastat^®. The agreement covers the territories of mainland China (excluding Taiwan and Hong Kong) and Macau. Under the terms of the agreement, the Company received a one-time upfront payment of $3,000 from Teson. The Company is eligible to receive up to an additional $500 upon Teson’s first receipt of product, which is anticipated to occur in 2020. In exchange, Teson will receive exclusive rights to commercialize Aggrastat^® in the agreed to territories, at its own cost and expense.

On March 16, 2020, the Company announced that it entered into an arrangement agreement dated March 15, 2020 in which ADVANZ PHARMA will acquire all of the issued and outstanding shares of the Company, pursuant to a plan of arrangement under the Canada Business Corporations Act. The acquisition, which will be executed through ADVANZ PHARMA’s wholly-owned subsidiary Mercury Pharma Group Limited, is expected to have a total purchase price of approximately $75,900, which includes the repayment of certain of the Company’s indebtedness. The Boards of Directors of both companies have unanimously approved the transaction, which remains subject to approval by the Company’s shareholders. The transaction is subject to customary closing conditions and is expected to be completed during the second quarter of 2020.

 31

EX-99.3

Exhibit 99.3

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This management discussion and analysis (“MD&A”) of Correvio Pharma Corp. (“Correvio”, the “Company”, “we”, “us” or “our”) for the year ended December 31, 2019 is as of March 27, 2020. We have prepared this MD&A with reference to National Instrument 51-102 “Continuous Disclosure Obligations” of the Canadian Securities Administrators. As a foreign private issuer that files its continuous reports under the U.S./Canada Multijurisdictional Disclosure System, Correvio 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, 2019 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 branded products Aggrastat^®, Brinavess^®, Trevyent^®, Xydalba™ and Zevtera^®/Mabelio^®, whether we will receive, and the timing and costs of obtaining regulatory approvals in the United States, Europe and other countries, the clinical development of our product candidates, including clinical trials for Brinavess^® in China and publication of results from our observational study in the European Union, the anticipated milestone payments to Basilea Pharmaceutica International Ltd., the submission of regulatory filings for Trevyent^®, the anticipated use of financial resources and net proceeds from financings, the availability of future proceeds under the CRG Term Loan (as defined herein), the regulatory path forward for Brinavess^®, our belief regarding the merit of the ongoing class action lawsuit and our intention to vigorously defend such lawsuit, our plans to regain compliance with the Nasdaq (as defined herein) minimum bid price and minimum market value requirements within the prescribed grace periods, our possible eligibility for additional time to regain compliance with such requirements upon expiration of the prescribed compliance periods, our expectation that our common shares will continue to be listed and trade on the Nasdaq Capital Market during the prescribed compliance periods, the proposed acquisition by ADVANZ PHARMA (as defined herein) of all of our issued and outstanding common shares pursuant to the Proposed Arrangement (as defined herein) and the expected terms, timing and closing of the transaction, our expectations for the receipt of the necessary securityholder and court approvals and satisfaction of other customary closing conditions in connection with the Proposed Arrangement, the intended delisting or our common shares from the TSX (as defined herein) and Nasdaq and ceasing of our status as a reporting issuer in connection with the completion of the Proposed Arrangement, the recognition of additional operating liabilities 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 that is included in our Annual Report on Form 40-F, but are also subject to numerous risks and uncertainties, as described in the “Risk Factors” section of our Annual Information Form that is included in our Annual Report on Form 40-F. 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 Correvio, including our most recent Annual Report on Form 40-F 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.

EXPLANATORY NOTE

Correvio was incorporated on March 7, 2018, under the Canada Business Corporations Act (the “CBCA”), in connection with a reorganization of Cardiome Pharma Corp. (“Cardiome”) by way of a plan of arrangement (the “Arrangement”). On March 19, 2018, Correvio entered into a definitive arrangement agreement (the “Arrangement Agreement”) with Cipher Pharmaceuticals Inc. ("Cipher") and Cardiome. Under the terms of the agreement, Cipher acquired Cardiome’s Canadian business portfolio in exchange for cash consideration of C$25.5 million. As a result of the Arrangement, Correvio acquired, and currently holds, all of Cardiome’s pre-transaction assets and assumed liabilities, excluding the Canadian business portfolio. Pursuant to the Arrangement, Cardiome shareholders received common shares, on a one-for-one ratio, of Correvio. Correvio obtained a substitution listing on the Nasdaq Stock Market and on the Toronto Stock Exchange (the “TSX”) and has succeeded to Cardiome’s reporting obligations in Canada and the United States.

1 

OVERVIEW

Correvio 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. Correvio (formerly known as Cardiome Pharma Corp.) began as a research and development company based in Vancouver, British Columbia, Canada. In November 2013, we acquired Correvio LLC, a privately held pharmaceutical company headquartered in Geneva, Switzerland, and its subsidiaries, thereby acquiring the marketing rights to Aggrastat^® outside of the United States. We then shifted our focus to become a specialty pharmaceutical company. 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, Aggrastat^® (tirofiban hydrochloride) and Brinavess^® (vernakalant IV). In addition, we have licensed the marketing rights to the following products: a pre-registration drug/device combination product, Trevyent^® (treprostinil sodium); a European-approved antibiotic, Xydalba™ (dalbavancin); and a cephalosporin antibiotic, Zevtera^®/Mabelio^® (ceftobiprole medocaril sodium).

Aggrastat^® is a reversible GP IIb/IIIa inhibitor (an intravenous anti-platelet drug) for use in patients with Acute Coronary Syndrome. Aggrastat^® is commercially available in markets outside of the United States and is currently registered and approved in more than 60 countries worldwide.

Brinavess^® is a novel, atrial-preferential antiarrhythmic agent, which was approved in the European Union in September 2010 and is currently registered and approved in over 40 countries (not including the United States) 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 (“ESC”) AF guidelines for the cardioversion of recent onset AF in patients with no, or minimal/moderate, structural heart disease.

Both Aggrastat^® and Brinavess^® are commercially available outside of the United States, through our own direct sales force within Europe as well as through our global distributor and partner network in the Middle East, Latin America, Asia and Africa. We have a comprehensive global distributor and partner network that allows our products to be commercialized in many countries worldwide.

Xydalba™ 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. We have launched Xydalba™ commercially in Germany, the United Kingdom, France, Ireland, Finland, Luxembourg, the Netherlands, Spain and Sweden.

Zevtera^®/Mabelio^® is a cephalosporin antibiotic for intravenous administration with rapid bactericidal activity against a wide range of Gram-positive and Gram-negative bacteria, including methicillin-susceptible and resistant Staphylococcus aureus (MSSA, MRSA) and susceptible Pseudomonas spp. Zevtera^®/Mabelio^® is currently approved for sale in 13 European countries and several non-European countries for the treatment of adult patients with community-acquired pneumonia (CAP) and hospital-acquired pneumonia (HAP), excluding ventilator-associated pneumonia (VAP). Zevtera^®/Mabelio^® is currently marketed in Germany, Italy, the United Kingdom, France, Austria, Spain and Switzerland.

Trevyent^® is a development stage drug/device combination product that combines SteadyMed Ltd’s (“SteadyMed”) PatchPump™ technology, a drug delivery device, with treprostinil, a vasodilatory prostacyclin analogue to treat pulmonary arterial hypertension (“PAH”). PatchPump™ is a proprietary, disposable, parenteral drug administration platform that is prefilled and preprogrammed at the site of manufacture. SteadyMed was acquired by United Therapeutics Corporation (“United Therapeutics”) on August 30, 2018. United Therapeutics controls the marketing, registration and regulatory approvals of Trevyent^® in the United States.

2 

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 and France. In July 2019, Esmocard^® and Esmocard Lyo^® were transferred back to its licensor, Amomed Pharma GmbH. We no longer hold licensed marketing rights for Esmocard^® and Esmocard Lyo^®.

Aggrastat^®

Aggrastat^® contains tirofiban hydrochloride, which is a reversible GP IIb/IIIa inhibitor. Aggrastat^® is indicated for the prevention of early myocardial infarction in adult patients presenting with acute coronary syndromes without ST elevation (“NSTE-ACS”) with the last episode of chest pain occurring within 12 hours and with electrocardiogram changes and/or elevated cardiac enzymes. Patients most likely to benefit from Aggrastat^® treatment are those at high risk of developing myocardial infarction within the first three to four days after onset of acute angina symptoms including, for instance, those that are likely to undergo an early percutaneous coronary intervention (“PCI”). Aggrastat^® is also indicated for the reduction of major cardiovascular events in patients with acute myocardial infarction (“STEMI”) intended for primary PCI. Aggrastat^® is intended for use with acetylsalicylic acid (“ASA”) and unfractionated heparin. 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.

In December 2017, we announced the signing of a license and distribution agreement with ZAO Firma Euroservice that will advance Aggrastat^® towards registration and commercialization in Russia.

Applications for the extension of the indication statement for Aggrastat^® are continuing worldwide. In January 2018, we announced a label expansion for Aggrastat^® in China to include patients with STEMI. In addition, a high dose bolus regimen for Aggrastat^® was approved in China.

On March 10, 2020, we announced that we entered into an exclusive agreement with Hong Kong Teson Pharma Limited (“Teson”) for the commercialization of Aggrastat^®. The agreement covers the territories of mainland China (excluding Taiwan and Hong Kong) and Macau. Under the terms of the agreement, we received a one-time upfront payment of $3.0 million from Teson. We are eligible to receive up to an additional $0.5 million upon Teson’s first receipt of product, which is anticipated to occur in 2020. In exchange, Teson will receive exclusive rights to commercialize Aggrastat^® in the agreed to territories, at its own cost and expense.

Brinavess^®

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 the vernakalant IV program 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. 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 Sharp & Dohme (“MSD”), we initiated discussions with the FDA to determine the next steps for the development of vernakalant (IV) in the United States. Following completion of additional nonclinical studies in 2017, we proposed resubmission of the NDA based on six years of accumulated safety data from sales of Brinavess^® in 33 countries, augmented by interim results from over 1,100 patients enrolled in a SPECTRUM post-authorization safety study (“PASS”) being conducted in Europe. In August 2017, we received the FDA’s Cardiovascular and Renal Products Division response indicating that they did not agree that the data supported NDA resubmission.

3 

In April 2018, we announced the completion of enrollment of a 2,000-patient SPECTRUM PASS. This 2,000-patient observational study has collected 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.

In September 2018, we reported preliminary results of the study. Zero deaths were reported and safety outcomes of interest were observed in 0.8% (95% confidence interval: 0.5% - 1.4%) of cases. Over 70% (95% confidence interval: 68.1% - 72.2%) of AF episodes were successfully converted to sinus rhythm in a median time to conversion of 11 minutes. The full clinical study report has been completed. We plan to publish the data in 2020.

Following a request for a Type A meeting with the FDA, in June 2018, we received a written response from the FDA regarding the regulatory path forward. The FDA informed us that it would be permissible to resubmit the Brinavess^® NDA and agreed that we may schedule a Pre-NDA meeting. In October 2018, we met with the FDA to discuss the content and format of the NDA resubmission.

On October 29, 2018, we announced that, pending approval of Brinavess^® by the FDA, Brinavess^® may qualify for up to a 5-year patent extension from the U.S. Patent and Trademark Office.

On June 24, 2019, we announced that we resubmitted an NDA to the FDA. On July 25, 2019, we announced that the FDA accepted for review our resubmitted NDA. The FDA assigned a target action date of December 24, 2019 under the Prescription Drug User-Fee Act (“PDUFA”). In its acceptance letter, the FDA stated that it planned to hold an advisory committee meeting to discuss the application.

On December 10, 2019, the FDA Cardiovascular and Renal Drugs Advisory Committee (“CRDAC”) met to review our resubmitted NDA and jointly voted that the benefit-risk profile was not adequate to support approval (Vote: 2 Yes to 11 No). While the FDA is not required to follow the CRDAC’s vote, the FDA considers the committee’s recommendations when making its decision. As a result of the vote, on December 11, 2019, we announced plans to explore strategic options to maximize stakeholder value. Potential strategic alternatives that were evaluated included an acquisition, merger, business combination or other strategic transaction involving the Company or our assets.

On December 24, 2019, we announced that we received a Complete Response Letter (“CRL”) from the FDA regarding our resubmitted NDA. The CRL stated that the FDA determined it cannot approve the Brinavess^® NDA in its present form and provided recommendations needed for resubmission. In the CRL, the FDA stated that while the submitted data provides substantial evidence of Brinavess^®’ effectiveness, the data do not provide reassuring evidence of Brinavess^®’ safety. The FDA indicated that we will need to develop an approach to select patients who are at low risk of adverse cardiovascular reactions and that data from an additional, potentially uncontrolled, clinical study will be needed to assess Brinavess^®’ cardiovascular risk in the selected patient population and to support an NDA resubmission. The FDA also stated that the risk of serious cardiovascular adverse reactions will need to be much less than 1% in the selected patient population. We requested a meeting with the FDA on March 18, 2020 to discuss the design and specifics of a potential study to address the FDA’s concerns. We expect to have this meeting in the second quarter of 2020.

4 

We do not plan on pursuing any further development of the vernakalant (oral) program.

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 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 assumed 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^®.

In December 2014, Eddingpharm (Asia) Macao Commercial Offshore Limited (“Eddingpharm”) acquired rights to develop and commercialize Brinavess^® in China, Taiwan, Macau and Hong Kong. Eddingpharm is responsible for any clinical trials and regulatory approvals required to commercialize Brinavess^® in the countries covered by the agreement. In May 2018, Eddingpharm enrolled its first patient in a Phase 3 clinical study evaluating Brinavess^®. Approximately 240 patients were expected to be enrolled at an estimated 30 clinical trial sites in China. Eddingpharm has placed this trial on hold pending discussion of path forward with the Chinese Food and Drug Administration’s Center for Drug Evaluation. In August 2018, Brinavess^® was selected by the China Food and Drug Administration’s Center for Drug Evaluation as one of 48 therapies assessed as “clinically urgently needed new drugs” and consequently, potentially eligible for priority review.

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’ (“UAE”) Ministry of Health, respectively, seeking approval of Brinavess^®. In 2018, the MAA was approved in the UAE.

In November 2017, we announced the launch of Brinavess^® in South Africa. In February 2018, our partner ATCO Laboratories Ltd. filed an MAA in Pakistan seeking approval of Brinavess^®.

In August 2018, we announced results from a clinical survey assessing patients with acute AF in Belgian hospitals demonstrating reduced hospitalization in patients treated with Brinavess^®. As a result of these data, Brinavess^® received reimbursement approval from the National Institute for Health and Disability Insurance in Belgium.

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^TM in the rest of the world) in the United Kingdom, Germany, France, Denmark, Iceland, Finland, Malta, Norway, Sweden, Belgium, the Netherlands, Luxemburg, Ireland and Switzerland. Xydalba^TM fits our commercial footprint as a differentiated, specialty in-hospital drug. In December 2016, we initiated the launch of Xydalba™ in the United Kingdom and Germany, and in February 2017, we initiated the launch of Xydalba™ in France. In June 2017, we announced that we entered into a license and distribution agreement with Tzamal Medical Ltd. to advance the commercialization of Xydalba^TM in Israel. In October 2017, we initiated the launch of Xydalba™ in Sweden, Finland and the Republic of Ireland.

5 

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 with 100% compliance, 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 staphylococcal and streptococcal species.

Zevtera^®/Mabelio^®

In September 2017, we entered into a distribution and license agreement with Basilea Pharmaceutica International Ltd. (“Basilea”), for the rights to commercialize Zevtera^®/Mabelio^® (ceftobiprole medocaril sodium) in 34 European countries and Israel. Zevtera^®/Mabelio^® is a cephalosporin antibiotic for intravenous administration with rapid bactericidal activity against a wide range of gram-positive and gram-negative bacteria, including methicillin-susceptible and resistant Staphylococcus aureus (MSSA, MRSA) and susceptible Pseudomonas spp. Zevtera^®/Mabelio^® is currently approved for sale in 13 European countries and several non-European countries for the treatment of adult patients with community-acquired pneumonia (CAP) and hospital-acquired pneumonia (HAP), excluding ventilator-associated pneumonia (VAP). As consideration for the rights and licenses granted, we made an upfront payment of CHF 5.0 million ($5.2 million) to Basilea. Additional payments may be due to Basilea upon the achievement of various milestones and the achievement of pre-determined levels of annual net sales.

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 and the Middle East. Pursuant to the License Agreement, SteadyMed granted us an exclusive royalty-bearing license to register and commercialize Trevyent^® in Europe and the Middle East if Trevyent^® is approved for the treatment of PAH. 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.

PAH is a medical condition affecting the heart and lungs. People who have PAH develop high blood pressure (hypertension) in the arteries of their lungs (the pulmonary arteries). 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.

Trevyent^® is a development stage drug/device combination 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.

6 

In April 2017, we announced that SteadyMed completed a successful clinical study of Trevyent^®. The study enrolled 60 healthy adult volunteers in an in-clinic setting designed to examine the performance of the PatchPump™ used by Trevyent^®. The goals of the study were to evaluate the safety and performance functions of the PatchPump™ delivery system as well as the tolerability of the on-body application of the product. According to SteadyMed, the results indicated that the PatchPump™ devices performed as intended in all categories of evaluation, including dose accuracy and precision.

In July 2017, we announced that SteadyMed submitted an NDA to the FDA for Trevyent^® in the United States. On August 31, 2017, SteadyMed announced that they received a Refusal to File (“RTF”) letter from the FDA relating to the NDA. In December 2017, SteadyMed announced that they had reached agreement with the FDA on the work necessary to resubmit its NDA. SteadyMed was acquired by United Therapeutics on August 30, 2018. United Therapeutics resubmitted the NDA to the FDA in June 2019. The FDA accepted the NDA for review with a PDUFA target action date of April 27, 2020. On February 26, 2020, United Therapeutics announced their full year 2019 financial statements. These statements included updates on interactions with the FDA and stated that United Therapeutics had received a mid-cycle information request from the FDA noting several deficiencies in the Trevyent^® NDA. United Therapeutics confirmed that they had provided written responses to the FDA addressing these deficiencies in hopes of preserving the current PDUFA date; however, based on their recent discussions with the FDA, United Therapeutics stated that it believed the PDUFA date could be extended beyond April 2020, and/or the FDA may issue a complete response letter if the FDA was not satisfied with United Therapeutics’ responses to the FDA’s comments. Subject to U.S. progress, we plan to submit regulatory filings for Trevyent^® in Europe in 2021.

Product Portfolio

The following table summarizes our portfolio of products and product candidates:

Program	Stage of Development
Aggrastat® outside of the United States	Approved in more than 60 countries worldwide.
Brinavess® outside of the United States	Approved in approximately 40 countries worldwide, including those in the European Union.
Brinavess™ United States	On clinical hold. In December 2019, CRL received for resubmitted NDA stating that the FDA could not approve the NDA in its present form.
Xydalba™	Centrally approved in the European Union. MAA filed in Switzerland and pre-registration in the Middle East.
Zevtera®/Mabelio®	Approved in 13 European countries and several non-European countries.
Trevyent®	Pre-registration worldwide. NDA resubmitted by SteadyMed to the FDA in June 2019. FDA acceptance of the resubmitted NDA in September 2019 for review with a PDUFA date of April 2020.

7 

CORPORATE UPDATE

Proposed Arrangement with ADVANZ PHARMA

Further to the Company’s plans to explore strategic options to maximize stakeholder value, at the direction of the Company’s Board of Directors, Piper Sandler & Co. commenced their initial outreach to prospective bidders on January 7, 2020 and sent process letters to 80 potential bidders in connection with a sale process targeted at canvassing selected potential buyers about their interest in pursuing an acquisition transaction involving the Company, of which 32 executed non-disclosure agreements in order to pursue further discussions with the Company. Such parties were given access to the virtual data room established by the Company.

On March 15, 2020, the Company entered into an arrangement agreement (the “ADVANZ Arrangement Agreement”) with ADVANZ PHARMA Corp. Limited (“ADVANZ PHARMA”) and Mercury Pharma Group Limited (“Mercury”), pursuant to which ADVANZ PHARMA’s wholly-owned subsidiary Mercury has agreed to acquire all of the issued and outstanding common shares of Correvio by way of a court approved plan of arrangement under the CBCA (the “Proposed Arrangement”). The total purchase price of the transaction is approximately $76 million, which includes the repayment of Correvio’s outstanding debt of approximately $48 million. Under the terms of the Proposed Arrangement, ADVANZ PHARMA will be paying $0.42 per common share of Correvio (the “Consideration”), subject to applicable withholdings. ADVANZ PHARMA intends to pay for the acquisition of Correvio with cash on hand.

As part of the transaction, (i) each holder of an in-the-money share purchase option of Correvio that is outstanding immediately prior to the effective time of the Proposed Arrangement will be acquired for cancellation in consideration for a cash payment equal to the product obtained by multiplying the amount by which the Consideration exceeds the exercise price per share of such in-the-money option by the number of shares underlying such option, subject to applicable withholdings; (ii) each holder of a restricted share unit or phantom share unit of Correvio that is outstanding immediately prior to the effective time will be acquired for cancellation for a cash payment equal to the Consideration, subject to applicable withholdings; and (iii) all out-of-the-money share purchase options of Correvio will be cancelled for no consideration.

A meeting of Correvio securityholders will be held no later than May 20, 2020 for such securityholders to consider and, if deemed advisable, approve the Proposed Arrangement. Closing is subject to obtaining such securityholder approval, obtaining an interim and final order approving the transaction from the Supreme Court of British Columbia, and certain other customary conditions as set out in the ADVANZ Arrangement Agreement.

Each of Correvio, Mercury and ADVANZ have provided representations and warranties customary for a transaction of this nature and Correvio has provided customary interim period covenants regarding the operation of its business in the ordinary course during such period. In addition, Correvio has agreed to certain non-solicitation covenants and has agreed to pay a termination fee of $3.5 million in the event that it accepts a superior proposal, changes its recommendation that Correvio securityholders vote in favour of the transaction or in certain other circumstances, subject to certain customary exceptions.

In connection with the transaction and subject to closing, Correvio will apply to have its shares delisted from the TSX and Nasdaq and Correvio will cease to be a reporting issuer under Canadian and U.S. securities law.

The Board of Directors unanimously approved the transaction, which remains subject to approval by Correvio securityholders. The Board of Directors received an opinion from its financial advisor, Piper Sandler & Co., that subject to the assumptions and limitations contained therein, the transaction is fair, from a financial point of view, to the shareholders.

The foregoing description of the Proposed Arrangement is qualified in all respects by the full text of the ADVANZ Arrangement Agreement. A copy of the ADVANZ Arrangement Agreement, which appends a copy of the plan of arrangement, is available on Correvio’s SEDAR profile at www.sedar.com. Further details regarding the Proposed Arrangement will be set out in Correvio’s management information circular, which will be made available on Correvio’s SEDAR prior to the meeting of Correvio securityholders.

Assumption and Assignment Agreement and Exclusive Supply Agreement with Teson

On March 10, 2020, we announced that we entered into an exclusive agreement with Teson for the commercialization of Aggrastat^®. The agreement covers the territories of mainland China (excluding Taiwan and Hong Kong) and Macau. Under the terms of the agreement, we received a one-time upfront payment of $3.0 million from Teson. We are eligible to receive up to an additional $0.5 million upon Teson’s first receipt of product, which is anticipated to occur in 2020. In exchange, Teson will receive exclusive rights to commercialize Aggrastat^® in the agreed to territories, at its own cost and expense.

8 

Arrangement Agreement with Cipher

On March 19, 2018, we entered into the Arrangement Agreement with Cipher and Cardiome. Pursuant to the Arrangement, among other steps and procedures, the following transactions occurred:

· All of Cardiome’s outstanding common shares were assigned and transferred to us in exchange for our common shares. Following the completion of the share exchange, each of Cardiome’s shareholders holds the same pro rata interest in us as they held in Cardiome immediately prior to such share exchange.

· All of Cardiome’s assets and liabilities, other than the Canadian business portfolio and Canadian income tax losses acquired by Cipher, were transferred to and assumed by us.

On May 9, 2018, we received shareholder approval in favor of the Arrangement. The consolidated financial statement information for all periods presented herein include the consolidated operations of Cardiome until May 15, 2018 and the operations of Correvio thereafter. For accounting purposes, the consolidated financial statement information includes the consolidated historical operations and changes in the consolidated financial position of Cardiome to May 15, 2018 and those of Correvio thereafter.

Amendment to the Term Loan Agreement with CRG-Managed Funds

On May 11, 2017, we amended the terms of our term loan agreement (the “first amendment”) with CRG-managed funds (the “CRG Term Loan”). Under the terms of the amended agreement, up to $50.0 million is available to us consisting of four tranches bearing interest at 13% per annum. The first tranche of $20.0 million was drawn on June 13, 2016 when we entered into the original term loan agreement and was used to extinguish long-term debt and for general corporate purposes. A second tranche of $10.0 million was drawn on the date of the first amendment. A third tranche of $10.0 million was drawn on August 8, 2017. The fourth tranche was never drawn. The loan matures on March 31, 2022. Under the terms of the agreement, an interest-only period is provided such that principal repayment begins in June 2020.

Under the first amendment, interest is payable on a quarterly basis through the full term of the loan. Interest payments may be split, at our option, between 9% per annum cash interest and 4% per annum paid in-kind interest in the form of additional term loans until March 31, 2020. Subsequent to March 31, 2020, interest shall be payable entirely in cash. On the maturity date, a back-end facility fee of 8% of the aggregate amount of the term loan, including any paid in-kind interest, will be payable to CRG. During the year ended December 31, 2019, we accrued in-kind interest of $1.7 million.

In consideration for the first amendment, 700,000 warrants with a strike price of $4.00 per common share were issued to CRG as of the date of the first amendment. The warrants may also be exercised on a “net” or “cashless” basis and have a term of 5 years.

We are required to meet certain annual revenue covenants, starting with the year ending December 31, 2016. If the revenue covenants are not met, we may exercise a cure right within 90 days of year-end 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 used to repay the principal. 

On March 27, 2018, we amended the annual revenue covenants (the “second amendment”) under the CRG Term Loan. In consideration for the second amendment, we issued 800,000 warrants with a strike price of $2.50 per common share to CRG as of the date of the second amendment. The warrants may also be exercised on a “net” or “cashless” basis and have a term of 5 years.

9 

On May 15, 2018, the CRG Term Loan was amended in connection with the Arrangement; the borrower named in the CRG Term Loan was amended from Cardiome to Correvio.

On March 11, 2019, we announced that CRG provided us with an additional credit facility of $10.0 million, to be drawn at our discretion, in increments of $2.5 million through September 30, 2019, subject to the achievement of certain revenue and market capitalization requirements. The facility bore interest at 13% per annum and carried the same terms and conditions as the CRG Term Loan. No funds were drawn under the additional credit facility.

On December 17, 2019, we further amended the CRG Term Loan, such that certain product rights could be sold. Upon receiving proceeds from the sale of these product rights, on March 9, 2020, we made a repayment of $2.0 million to CRG, of which $1.8 million related to a prepayment of principal, $0.1 million related to the back-end facility fee of 8% applicable to the prepayment, and $0.1 million related to interest expense and prepayment fees.

During the first quarter of 2020, we entered into an agreement with CRG to amend certain covenants related to the CRG Term Loan, including the annual revenue covenant. As a result of the retrospective amendment to the annual revenue covenant, we were in compliance with all covenants for the year ended December 31, 2019.

We are also required to meet an ongoing minimum liquidity covenant. As part of the amendment in the first quarter of 2020 described above, the minimum liquidity covenant was also amended. As of the date of this MD&A, we are in compliance with the amended minimum liquidity covenant.

At Market Issuance Sales Agreement with B. Riley FBR, Inc.

On July 10, 2018, we filed a prospectus supplement pertaining to sales under an at market issuance sales agreement (the “BRFBR Sales Agreement”) with B. Riley FBR, Inc. (“BRFBR”). Under the terms of the BRFBR Sales Agreement, we could offer and sell, from time to time, through at-the-market offerings, our common shares having an aggregate value of up to $30.0 million, subject to a maximum of $13.0 million or 4,333,333 common shares that could be offered and sold under such prospectus supplement. During the first quarter of 2019, we sold 2,970,781 common shares under the BRFBR Sales Agreement for gross proceeds of $6.3 million. We completed the sale of all common shares qualified under the prospectus supplement. On March 1, 2019, we sent a letter to BRFBR terminating the BRFBR Sales Agreement, effective March 12, 2019. The net proceeds were used in connection with the NDA filing for Brinavess^®, as well as for business development and general corporate purposes.

At Market Issuance Sales Agreement with Cantor Fitzgerald & Co.

On March 13, 2019, we filed a prospectus supplement pertaining to sales under an at market issuance sales agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co. Under the terms of the Cantor Sales Agreement, we could offer and sell, from time to time, through at-the-market offerings, our common shares having an aggregate value of up to $50.0 million, subject to a maximum of $12.0 million that could be offered and sold under such prospectus supplement. During the year ended December 31, 2019, we sold 6,932,063 common shares under the Cantor Sales Agreement for gross proceeds of $7.5 million, of which $0.7 million was recorded as accounts receivable at December 31, 2019 and collected subsequent to year-end. Subsequent to the year ended December 31, 2019, we sold 10,777,186 common shares for gross proceeds of $4.5 million. We completed the sale of all common shares qualified under the prospectus supplement. A portion of the net proceeds was used for the NDA filing for Brinavess^® and we intend to use the remaining net proceeds for preparations for future launches, business development opportunities and general corporate purposes.

10 

Underwritten Public Offering

On August 7, 2019, we closed an underwritten public offering (the “Offering”) of 9,200,000 common shares at a price of $1.50 per common share, for aggregate gross proceeds of $13.8 million, before deducting the underwriting commission and estimated Offering expenses payable by us.  The number of common shares issued included the exercise in full of the underwriter’s over-allotment option to purchase an additional 1,200,000 common shares on the same terms and conditions.

The following table sets out a comparison of how we intended to use the proceeds from the Cantor Sales Agreement and the Offering against how we actually used the proceeds following the respective closing dates.

Intended Use of Proceeds

Actual Use of Proceeds

The preparations for future product launches, the NDA filing for Brinavess®, working capital and general corporate purposes, including funds needed to meet our minimum liquidity requirements under the CRG Term Loan, and potential business development opportunities.

During the year ended December 31, 2019, we incurred $4.5 million of costs related to the NDA filing for Brinavess®, and $0.5 million of costs related to potential business development opportunities. The remaining net proceeds of $13.7 million from the Cantor Sales Agreement and the Offering have been used for working capital and general corporate purposes, including funds needed to meet our minimum liquidity requirements under the CRG Term Loan.

Securities Class Action Complaint

On December 12, 2019, a putative securities class action complaint was filed against us and certain of our current and past officers (collectively “the Defendants”) in the United States District Court for the Southern District of New York. The Court appointed co-lead plaintiffs on February 25, 2020. The complaint purports to be on behalf of investors who purchased or otherwise acquired Correvio securities during the period from October 23, 2018 to December 5, 2019, inclusive (the “Class Period”), and were damaged thereby.

The complaint alleges, among other things, that we made materially false and misleading statements and omissions regarding our business, operational and compliance policies. Specifically, the complaint alleges that we made false and/or misleading statements and/or failed to disclose that data supporting the resubmitted NDA for Brinavess^® did not minimize the significant health and safety issues observed in connection with the drug’s original NDA and that the foregoing substantially diminished the likelihood that the FDA would approve the resubmitted NDA, which purportedly artificially inflated the market value of our securities. An amended complaint is due on May 1, 2020.

11 

The plaintiffs have not specified an amount of alleged damages in the action. Because this action is in the early stages, the possible loss or range of losses, if any, arising from the litigation cannot be estimated. We believe that the claims asserted in the complaint are without merit and intend to defend the lawsuit vigorously.

Nasdaq Notification Regarding Deficiencies in Minimum Bid Price and Market Value of Listed Securities

On January 24, 2020, the Nasdaq Stock Market LLC (“Nasdaq”) sent us a notification letter stating that we were not in compliance with the minimum bid price per share for our ordinary shares. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of US$1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the closing bid price of our common shares for the 30 consecutive business days from December 10, 2019, we no longer meet the minimum bid price requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided 180 calendar days, or until July 22, 2020, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, our common shares must have a closing bid price of at least US$1.00 for a minimum of 10 consecutive business days. In the event that we do not regain compliance by July 22, 2020, we may be eligible for additional time to regain compliance or may face delisting.

On January 27, 2020, Nasdaq sent us a notification letter stating that we were not in compliance with the minimum market value requirements set forth in the Nasdaq Listing Rules. Nasdaq Listing Rule 5550(b)(2) requires companies to maintain a minimum market value of US$35 million, and Nasdaq Listing Rule 5810(c)(3)(C) provides that a failure to meet the market value requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on our market value for the 30 consecutive business days from December 10, 2019 to January 24, 2020, we no longer meet the minimum market value requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have been provided 180 calendar days, or until July 27, 2020, to regain compliance with Nasdaq Listing Rule 5550(b)(2). To regain compliance, our market value must exceed US$35 million for a minimum of 10 consecutive business days. In the event that we do not regain compliance by July 27, 2020, we may be eligible for additional time to regain compliance or may face delisting.

The notification letters do not impact our listing on the Nasdaq Capital Market at this time. We intend to monitor the closing bid price between now and July 22, 2020 and the market value of our common shares between now and July 27, 2020 and intend to cure the deficiencies within the prescribed compliance periods. We expect that our common shares will continue to be listed and trade on the Nasdaq Capital Market during these compliance periods. Our business operations are not affected by the receipt of the notification letters. We are also listed on the Toronto Stock Exchange and the notification letters do not affect our compliance status with such listing.

12 

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth selected consolidated data for the years ended December 31, 2019, 2018 and 2017 as follows:

(In thousands of U.S. dollars, except per share amounts)	2019			2018			2017
Statement of operations data:
Revenue	$	32,634		$	28,674		$	24,008
Operating loss		(27,289	)		(26,341	)		(22,979	)
Net loss		(35,184	)		(16,579	)		(29,811	)
Loss per common share – basic and diluted	$	(0.79	)	$	(0.47	)	$	(0.90	)
Balance sheet data:
Cash and cash equivalents	$	13,299		$	15,596		$	22,081
Total assets		58,893			59,637			66,812
Current portion of long-term debt, net of unamortized debt issuance costs		17,688			—			—
Long-term debt, net of unamortized debt issuance costs		27,238			41,517			40,000

RESULTS OF OPERATIONS – 2019

Year ended December 31, 2019 compared to year ended December 31, 2018

We recorded a net loss of $35.2 million (basic loss per share of $0.79) for the year ended December 31, 2019, compared to a net loss of $16.6 million (basic loss per share of $0.47) for the year ended December 31, 2018. The increase in net loss was due to the recognition of a one-time gain of $18.5 million in 2018 on the disposition of the Canadian business portfolio pursuant to the Arrangement.

Revenue

Revenue is earned through the sale of our commercialized products. 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.

Revenue for the year ended December 31, 2019 was $32.6 million compared to revenue of $28.7 million for the year ended December 31, 2018. The increase in revenue was primarily due to an increase in sales of our antibiotic products (Xydalba^TM and Zevtera^®/Mabelio^®) partially offset by a decrease in sales of our cardiology products (Aggrastat^® and Brinavess^®). For the year ended December 31, 2019, revenue from our cardiology products was $19.3 million and revenue from our antibiotic products was $13.3 million. For the year ended December 31, 2018, revenue from our cardiology products was $22.5 million and revenue from our antibiotic products was $6.2 million.

Gross Margin

Gross margin for the year ended December 31, 2019 was 69.9% compared to 71.1% for the year ended December 31, 2018. The fluctuation in gross margin was primarily due to changes in product mix as we had a higher percentage of revenues from our antibiotic products during the year ended December 31, 2019. Additionally, we recognized $1.5 million of deferred licensing revenue upon the termination of a distributor agreement in December 2018. Our gross margin for the year ended December 31, 2018 would have been lower without this licensing revenue.

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Selling, General & Administration Expense

Selling, general and administration (“SG&A”) expense for the year ended December 31, 2019 was $46.3 million compared to $42.6 million for the year ended December 31, 2018. The increase in SG&A expense was due to higher regulatory and medical costs associated with the NDA resubmission of Brinavess^® as well as higher stock-based compensation expense. These were partially offset by the one-time transaction costs associated with the Arrangement, which took place in the second quarter of 2018.

Interest Expense

Interest expense was $7.5 million for the year ended December 31, 2019, compared to $6.0 million for the year ended December 31, 2018. The increase was due to interest being accrued on a higher long-term debt principal amount under the CRG Term Loan as well as an increase in the accretion of our long-term debt under the effective interest method which is recorded as interest expense. During the year ended December 31, 2019, we accrued in-kind interest of $1.7 million.

RESULTS OF OPERATIONS – 2018

Year ended December 31, 2018 compared to year ended December 31, 2017

We recorded a net loss of $16.6 million (basic loss per share of $0.47) for the year ended December 31, 2018 compared to a net loss of $29.8 million (basic loss per share of $0.90) for the year ended December 31, 2017. The decrease in net loss was due primarily to the gain of $18.5 million that we recognized on the disposition of the Canadian business portfolio to Cipher pursuant to the Arrangement, partially offset by an increase in our SG&A expense.

Revenue

Revenue for the year ended December 31, 2018 was $28.7 million compared to revenue of $24.0 million for the year ended December 31, 2017. The increase in revenue was primarily attributable to the commercial rollout of Xydalba^TM and sales of Zevtera^®/Mabelio^®, which we acquired from Basilea in September 2017. Additionally, we recognized $1.5 million of deferred licensing revenue upon the termination of a distributor agreement in December 2018.

For the year ended December 31, 2018, revenue from our cardiology products was $22.5 million and revenue from our antibiotic products was $6.2 million. For the year ended December 31, 2017, revenue from our cardiology products was $22.8 million and revenue from our antibiotic products was $1.2 million.

Gross Margin

Gross margin for the year ended December 31, 2018 was 71.1% compared to 71.8% for the year ended December 31, 2017. The fluctuation in gross margin was primarily due to changes in product mix as we had a higher percentage of revenues from our antibiotic products during the year ended December 31, 2018. Additionally, we recognized $1.5 million of deferred licensing revenue upon the termination of a distributor agreement in December 2018. Our gross margin for the year ended December 31, 2018 would have been lower without this licensing revenue.

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Selling, General & Administration Expense

SG&A expense for the year ended December 31, 2018 was $42.6 million compared to $36.7 million for the year ended December 31, 2017. The increase in SG&A expense was due to business development and transaction costs in connection with the Arrangement, as well as expansion of our direct sales force in Europe related to the launch of our antibiotic products, Xydalba^TM and Zevtera^®/Mabelio^®.

Interest Expense

Interest expense was $6.0 million for the year ended December 31, 2018 compared to $5.7 million for the year ended December 31, 2017. The slight increase was due to interest being accrued on a higher long-term debt principal amount.

Gain on Disposal of Canadian Operations

In the second quarter of 2018, we recognized a gain of $18.5 million from the disposition of our Canadian business portfolio to Cipher pursuant to the Arrangement.

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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
	2019			2018
Revenue
Product and royalty revenue	$	11,325		$	7,394
Licensing and other fees		—			1,552
		11,325			8,946
Cost of goods sold		2,899			1,896
		8,426			7,050
Expenses
Selling, general and administration		11,327			9,859
Amortization costs		997			982
		12,324			10,841
Operating loss		(3,898	)		(3,791	)
Other expense:
Interest expense		(1,913	)		(1,561	)
Other expense		(155	)		(297	)
Foreign exchange gain (loss)		1,132			(895	)
		(936	)		(2,753	)
Loss before income taxes		(4,834	)		(6,544	)
Income tax (expense) recovery		(107	)		102
Net loss	$	(4,941	)	$	(6,442	)
Other comprehensive loss:
Foreign currency translation adjustments		(33	)		11
Comprehensive loss	$	(4,974	)	$	(6,431	)
Loss per share – basic and diluted	$	(0.10	)	$	(0.18	)
Weighted average number of common shares Basic and diluted		51,009,162			36,096,506

Revenue for the three months ended December 31, 2019 was $11.3 million compared to $8.9 million for the three months ended December 31, 2018. The increase was primarily due to an increase in the sale of our antibiotic products, partially offset by lower sales of our cardiology products. Additionally, we recognized $2.9 million of distributor orders which were expected to be shipped in the third quarter of 2019, but due to logistical constraints were not completed until the fourth quarter. This was partially offset by $1.5 million of deferred licensing revenue that we recognized in the fourth quarter of 2018 upon the termination of a distributor agreement.

SG&A expense for the three months ended December 31, 2019 was $11.3 million compared to $9.9 million for the three months ended December 31, 2018. The increase was primarily due to higher regulatory and medical costs associated with the NDA resubmission of Brinavess^® and higher stock-based compensation expense, partially offset by the reversal of a contingent liability to the Italian medicine authorities following a favorable ruling along with lower payroll-related accruals.

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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, 2019. 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.

(In thousands of U.S. dollars except per share amounts)	Three months ended
	December 31, 2019	September 30, 2019	June 30, 2019	March 31, 2019
Revenue	$ 11,325	$ 6,669	$ 7,389	$ 7,251
Cost of goods sold	2,899	2,274	2,413	2,241
Selling, general and administration	11,327	11,186	12,615	11,191
Interest expense	1,913	1,997	1,912	1,690
Net loss	(4,941)	(10,778)	(10,469)	(8,996)
Loss per share – basic and diluted	(0.10)	(0.23)	(0.26)	(0.23)
(In thousands of U.S. dollars except per share amounts)	Three months ended
	December 31, 2018	September 30, 2018	June 30, 2018	March 31, 2018
Revenue	$ 8,946	$ 7,007	$ 6,178	$ 6,543
Cost of goods sold	1,896	2,135	1,962	2,301
Selling, general and administration	9,859	9,186	12,631	10,902
Interest expense	1,561	1,686	1,667	1,063
Gain on disposal of Canadian Operations	-	-	18,489	-
Net income (loss)	(6,442)	(7,105)	5,428	(8,460)
Earnings (loss) per share – basic and diluted	(0.18)	(0.20)	0.16	(0.24)

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

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In the second quarter of 2018, we had a net income of $5.4 million, or a basic earnings per share of $0.16. The net income was due to a gain of $18.5 million that we recognized on the disposition of our Canadian business portfolio to Cipher pursuant to the Arrangement. This gain was offset by an increase in SG&A due to business development and transaction costs associated with the Arrangement of approximately $1.8 million.

In the third quarter of 2018, we had a net loss of $7.1 million, or a basic loss per share of $0.20. The $12.5 million decrease in net income from the prior quarter was due to the one-time gain on disposition of our Canadian business portfolio that we recognized in the second quarter of 2018. This was offset by an increase in revenues and a decrease in SG&A in the third quarter of 2018 due to non-recurring business development and transaction costs associated with the Arrangement incurred in the second quarter of 2018.

In the fourth quarter of 2018, our net loss decreased by approximately $0.7 million to $6.4 million, or a basic loss per share of $0.18. The decrease in net loss from the prior quarter was primarily due to higher revenues and higher gross margin. We recognized $1.5 million of deferred licensing revenue upon the termination of a distributor agreement in December 2018.

In the first quarter of 2019, our net loss increased by approximately $2.6 million to $9.0 million, or a basic loss per share of $0.23. The increase in net loss from the prior quarter was due to lower revenues and an increase in SG&A. Our revenues were lower in the first quarter of 2019 due to a one-time $1.5 million amount of deferred licensing revenue recognized in the prior quarter. Additionally, our SG&A was higher due to an increase in stock-based compensation expense and higher regulatory expenses.

In the second quarter of 2019, our net loss increased by approximately $1.5 million to $10.5 million, or a basic loss per share of $0.26. The increase in net loss from the prior quarter was due to an increase in SG&A due to higher regulatory and medical costs associated with the NDA resubmission of Brinavess^®.

In the third quarter of 2019, our net loss increased by approximately $0.3 million to $10.8 million, or a basic loss per share of $0.23. The increase in the net loss from the prior quarter was due to a decrease in revenues and higher foreign exchange losses partially offset by a decrease in SG&A expense.

In the fourth quarter of 2019, our net loss decreased by approximately $5.9 million to $4.9 million, or a basic loss per share of $0.10. The decrease in net loss from the prior quarter was due to higher revenues and foreign exchange gains. We recognized $2.9 million of distributor orders which were expected to be shipped in the prior quarter, but due to logistical constraints were not completed until the fourth quarter. Additionally, the weakening of the U.S. dollar against the Euro had a positive foreign exchange impact resulting in a $1.1 million foreign exchange gain.

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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 year ended December 31
	2019	2018	2017
Cash used in operating activities	$      (27,075)	$        (25,779)	$        (24,823)
Cash provided by (used in) investing activities	215	14,106	(5,234)
Cash provided by financing activities	24,637	5,375	24,401
Effect of foreign exchange rate on cash, cash equivalents, and restricted cash	(103)	(313)	532
Net decrease in cash, cash equivalents, and restricted cash	$ (2,326)	$ (6,611)	$ (5,124)

At December 31, 2019, we had $15.2 million in cash, cash equivalents and restricted cash, compared to $17.6 million at December 31, 2018. The decrease in cash, cash equivalents, and restricted cash for the year ended December 31, 2019 was mainly attributable to $27.1 million of cash used in operating activities offset by $24.6 million in cash provided by financing activities.

Cash used in operating activities for the year ended December 31, 2019 was $27.1 million, an increase of $1.3 million from $25.8 million for the year ended December 31, 2018. The increase in cash used was primarily due to the timing of our accounts receivable.

Cash provided by investing activities for the year ended December 31, 2019 was $0.2 million, a decrease of $13.9 million from $14.1 million for the year ended December 31, 2018. During the year ended December 31, 2019, we received the final instalment payments of $0.4 million from Cipher, partially offset by purchases of property and equipment. During the year ended December 31, 2018, we received $19.1 million in cash from Cipher, pursuant to the Arrangement. This was partially offset by a milestone payment we made to Allergan of $4.5 million and purchases of property and equipment.

Cash provided by financing activities for the year ended December 31, 2019 was $24.6 million, an increase of $19.2 million from $5.4 million for the year ended December 31, 2018. Cash provided by financing activities for the year ended December 31, 2019 consisted of net proceeds received from shares issued under the BRFBR Sales Agreement of $6.2 million, net proceeds received from shares issued under the Cantor Sales Agreement of $6.3 million, and net proceeds from the Offering of $12.4 million. Cash provided by financing activities for the year ended December 31, 2018 was $5.4 million, the majority of which related to net proceeds received from shares issued under the BRFBR Sales Agreement.

Cash used in operating activities for the year ended December 31, 2018 was $25.8 million, an increase of $1.0 million from $24.8 million for the year ended December 31, 2017. The increase in cash used was due to an increase in SG&A due to business development and transaction costs associated with the Arrangement and unrealized foreign exchange, partially offset by an increase in revenues and a decrease in inventory levels.

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Cash provided by investing activities for the year ended December 31, 2018 was $14.1 million. As part of the Arrangement, we received $18.7 million in cash during the second quarter of 2018. This was partially offset by a milestone payment we made to Allergan of $4.5 million in the second quarter of 2018. Cash used in investing activities for the year ended December 31, 2017 was $5.2 million related to the execution of a distribution and license agreement with Basilea for the rights to commercialize Zevtera^®/Mabelio^®.

Cash provided by financing activities for the year ended December 31, 2018 was $5.4 million, the majority of which related to net proceeds received from shares issued under the BRFBR Sales Agreement. Cash provided by financing activities for the year ended December 31, 2017 was $24.4 million. During the year ended December 31, 2017, we received net proceeds of $7.4 million from equity issuances under an at market issuance sales agreement that was in effect at the time and a purchase agreement with Lincoln Park Capital LLC that was in effect at the time. We also received net proceeds of $19.5 million from the CRG Term Loan, offset by the payment of our deferred consideration of $2.8 million.

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.

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

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

As of December 31, 2019, we had $13.3 million in unrestricted cash and cash equivalents, compared to $15.6 million at December 31, 2018. We have a history of incurring operating losses and negative cash flows from operations. Based on current projections, we may not have sufficient capital to fund our current planned operations during the next twelve-month period. We are dependent on our ability to raise additional debt or equity financing or monetize intellectual property rights through strategic partnerships or sublicensing arrangements and to meet revenue covenants in order to meet our current planned operations during the next twelve-month period.

20 

On March 15, 2020, we entered into the ADVANZ Arrangement Agreement, pursuant to which ADVANZ PHARMA’s wholly-owned subsidiary Mercury has agreed to acquire all of the issued and outstanding common shares of Correvio by way of a court approved plan of arrangement under the CBCA. The total purchase price of the transaction is approximately $76 million, which includes the repayment of Correvio’s outstanding debt of approximately $48 million. A meeting of Correvio securityholders will be held for such securityholders to consider and, if deemed advisable, approve the transaction. Closing is subject to obtaining such securityholder approval, obtaining an interim and final order approving the transaction from the Supreme Court of British Columbia, and certain other customary conditions as set out in the ADVANZ Arrangement Agreement. The Boards of Directors of both companies have unanimously approved the transaction. The Board of Directors of Correvio unanimously recommends that Correvio securityholders vote in favour of the Proposed Arrangement. The transaction is expected to be completed during the second quarter of 2020.

There can be no assurance that we will be able to obtain the necessary approvals to complete the transaction or that we will be able to raise such additional financing, as may otherwise be required. These factors raise substantial doubt about our ability to continue as a going concern within one year from the consolidated financial statements issuance date. However, we believe that the consolidated entity will be successful in the above matters and are currently pursuing multiple opportunities and strategies to ensure that sufficient cash resources are available to meet our current planned operations.

Contractual Obligations

As of December 31, 2019, 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)	2020	2021	2022	2023	2024	There-after	Total
Commitments for clinical and other agreements	$97	-	-	-	-	-	$97
Supplier purchase commitment	156	-	-	-	-	-	156
CRG Term Loan (1) Interest expense on CRG Term Loan (2)	17,830 5,124	21,214 2,440	8,698 172	- -	- -	- -	47,742 7,736
Operating lease obligations	954	760	497	212	190	-	2,613
Total	$24,161	$24,414	$9,367	$212	$190	-	$58,344

⁽¹⁾ Based on draws as of the date of this MD&A and assuming continued compliance with all amended covenants in connection with the amendments made to the CRG Term Loan in the first quarter of 2020.

⁽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. Based on the assumption that all interest is paid in cash.

Outstanding Share Capital

As of March 27, 2020, there were 66,190,987 common shares issued and outstanding, and 4,468,100 common shares issuable upon the exercise of outstanding stock options (of which 3,275,688 were exercisable) at a weighted average exercise price of CAD $4.69 per share, and 91,118 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 recoverability of inventories, carrying value of intangible assets, revenue recognition, bad debt and allowance for doubtful accounts, stock-based compensation expense, and contingencies.

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The significant accounting policies that we believe are the most critical in fully understanding and evaluating our reported financial results include revenue recognition, intangible assets, 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, 2019.

Revenue Recognition

We generate revenue primarily through the sale of our commercialized products and royalties. Product revenue is recognized at a point in time. Royalty revenue is recognized in the period in which the obligation is satisfied and the corresponding sales by our corporate partner occurs. We also earn licensing revenue from collaboration and license agreements from the commercial sale of approved products. Licensing revenue is recognized over time.

Intangible Assets

Intangible assets are comprised of patent costs, trade name, marketing rights and licenses, all of which have a definite life. 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, we consider 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 estimated useful life of the intangible asset.

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.

Stock-Based Compensation and Other Stock-Based Payments

Stock options and restricted share units granted to our 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 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.

22 

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.

Accounting Pronouncements Adopted

Leases

On January 1, 2019, we adopted Accounting Standards Update No. (“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. In July 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-11, “Leases”, which offered a transition option where companies could elect to apply the guidance using a modified retrospective approach at the beginning of the year of adoption rather than to the earliest comparative period presented in the financial statements. We adopted the new leasing standard on January 1, 2019 using the modified retrospective approach and used the effective date as our date of initial application. A cumulative catch-up adjustment was not required on the date of adoption. We elected the package of practical expedients which permits us to not reassess under our prior conclusions about lease identification, lease classification and initial direct costs. On adoption, we recognized additional operating liabilities of approximately $2,680, with corresponding right-of-use assets of the same amount, adjusted for unamortized lease inducements received of approximately $260.

ASC 606, Revenue from Contracts with Customers

During the year ended December 31, 2018, we adopted the Accounting Standards Codification 606 (“ASC 606”), Revenue from Contracts with Customers, to all contracts using the modified retrospective method.  We recognized the cumulative effect of applying ASC 606 as an adjustment to the opening balance of deficit. The comparative information has not been restated and will continue to be reported under the accounting standards in effect for those periods.  The adoption of ASC 606 did not have a material impact to our statement of operations and comprehensive loss and to our statement of cash flows. The majority of our revenue continues to be recognized when products are shipped from our warehousing and logistics facilities.  There were no changes to the treatment of cash flows and cash will continue to be collected in line with contractual terms. The cumulative effect of the adoption of ASC 606 on our consolidated January 1, 2018 balance sheet is summarized in the following table:

	December 31, 2017	Adjustments	January 1, 2018
Deferred revenue	$2,502	$300	$2,802
Deficit	($392,865)	($300)	($393,165)

The transition adjustment arose from our treatment of an upfront payment we received from one of our distributors for the rights to distribute one of our commercialized products.  The upfront payment was previously amortized immediately upon receipt over a 10-year term.  Under ASC 606, the upfront payment has been deferred.

23 

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current guidance, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all recognition thresholds and will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument’s contractual life. The revised guidance is effective for fiscal years, and interim periods within those fiscal years, beginning January 1, 2023. We do not expect the guidance to have a material impact on our consolidated financial statements.

RELATED PARTY TRANSACTIONS

During the years ended December 31, 2019, 2018 and 2017, 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 years ended December 31, 2019, 2018 and 2017, we incurred expenses of $0.3 million, $0.2 million and $0.2 million, respectively, for services provided by the consulting company relating to general corporate matters. Included in accounts payable and accrued liabilities at December 31, 2019 and 2018 was $0.03 million and $0.2 million, respectively, 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 $0.2 million annually in exchange for consulting services relating to general corporate matters.

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 PROCEDURES

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, 2019. 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.

24 

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, 2019, 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.

Under the supervision of our Chief Executive Officer and our Chief Financial Officer, as of December 31, 2019, 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, 2019.

The effectiveness of our internal control over financial reporting as of December 31, 2019 has been audited by KPMG LLP, the independent registered public accounting firm that audited our December 31, 2019 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, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25 

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, 2019, 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.

26 

EX-99.1

Exhibit 99.4

Form 51-102F3

MATERIAL CHANGE REPORT

Item 1.	Name and Address of Reporting Issuer
	Correvio Pharma Corp. (“Correvio” or the “Corporation”, formerly known as Cardiome Pharma Corp.)
	1441 Creekside Drive, 6th floor
	Vancouver, BC V6J 4S7
Item 2.	Date of Material Change
	March 30, 2020.
Item 3.	News Release
	Correvio issued a news release with respect to the material change on March 30, 2020. The news release was disseminated via PR Newsire and subsequently filed on Correvio’s SEDAR profile.
Item 4.	Summary of Material Change
	Correvio reported financial results for its fourth quarter and full year ended December 31, 2019. Amounts, unless specified otherwise, are expressed in U.S. dollars and in accordance with generally accepted accounting principles used in the United States of America (U.S. GAAP).
Item 5.	5.1 - Full Description of Material Change
	See attached press release.
	5.2 – Disclosure for Restructuring Transactions
	Not applicable.
Item 6.	Reliance on subsection 7.1(2) of National Instrument 51-102
	Not applicable.
Item 7.	Omitted Information
	Not applicable.
Item 8.	Executive Officer
	Justin Renz, President and Chief Financial Officer
	Telephone: 604-677-6905.
Item 9.	Date of Report
	This Material Change Report is dated March 30, 2020.

  1441 Creekside Drive, 6th Floor Vancouver, B.C. V6J 4S7 Tel: 604-677-6905 Fax: 604-677-6915

NASDAQ: CORV TSX: CORV

Correvio Reports full year 2019 FINANCIAL Results

ADVANZ PHARMA to Acquire Correvio in a Deal Valued at US$76 Million

Correvio to Hold a Meeting of Its Securityholders by No Later than May 20, 2020

Transaction Expected to Close During the Second Quarter of 2020

Vancouver, Canada, March 30, 2020 -- Correvio Pharma Corp. (NASDAQ: CORV) (TSX: CORV), a specialty pharmaceutical company focused on commercializing hospital drugs, today reported financial results for the full year ended December 31, 2019 and commented on recent accomplishments and plans.

“Our marketed products portfolio set a new annual record generating $32.6 million for the full year 2019, delivering 14% growth over our 2018 full year revenues,” said Mark H.N. Corrigan, MD, Chief Executive Officer of Correvio. “On the corporate front, earlier in March we announced our entry into an agreement for global pharmaceutical company ADVANZ PHARMA to acquire Correvio in an all-cash transaction, which includes acquiring all issued and outstanding shares and the repayment of our debt obligations. As a next step toward the closing of that transaction, we will be working to hold a securityholders’ meeting by May 20, 2020. On behalf of the entire Correvio management team and the Board of Directors, we are extremely pleased with the selection of ADVANZ PHARMA and the value of the overall transaction, and we unanimously recommend that our securityholders vote in favour of the proposed acquisition, which is expected to close during the second quarter.”

Recent Highlights

ADVANZ PHARMA to Acquire Correvio

· Correvio announced its entry into an arrangement agreement (“Arrangement Agreement”) whereby ADVANZ PHARMA Corp. Limited (TSX:ADVZ), through its wholly-owned subsidiary Mercury Pharma Group Limited, will acquire all of the issued and outstanding shares of Correvio. The acquisition is expected to have a total purchase price of approximately US$76 million, which includes the repayment of certain Correvio indebtedness. The Boards of Directors of both companies have unanimously approved the transaction, which remains subject to approval by Correvio securityholders.

Under the terms of the transaction, ADVANZ PHARMA will pay US$0.42 per issued and outstanding share, valuing Correvio’s equity at approximately US$28 million on a fully diluted basis. Correvio has agreed to hold a meeting of its securityholders by no later than May 20, 2020 in order for securityholders to consider and, if deemed advisable, approve the transaction. The transaction is subject to certain other customary closing conditions and is expected to be completed during the second quarter of 2020.

Full Year 2019 Financial Results

Amounts, unless specified otherwise, are expressed in U.S. dollars and in accordance with generally accepted accounting principles used in the United States of America (U.S. GAAP).

Correvio recorded a net loss of $35.2 million (basic loss per share of $0.79) for the year ended December 31, 2019 compared to a net loss of $16.6 million (basic loss per share of $0.47) for the year ended December 31, 2018. The increase in net loss was due to the recognition of a one-time gain of $18.5 million in 2018 on the disposition of the Canadian business portfolio to Cipher Pharmaceuticals in May 2018.

Revenue for the year ended December 31, 2019 was $32.6 million compared to revenue of $28.7 million for the year ended December 31, 2018. The 14% increase in revenue was primarily due to an increase in sales of our antibiotic products (Xydalba™ and Zevtera^®/Mabelio^®), partially offset by a decrease in sales of our cardiology products (Aggrastat^® and Brinavess^®).

Gross margin for the year ended December 31, 2019 was 69.9% compared to 71.1% for the year ended December 31, 2018. The fluctuation in gross margin was primarily due to changes in product mix as we had a higher percentage of revenues from our antibiotic products during the year ended December 31, 2019. Additionally, we recognized $1.5 million of deferred licensing revenue upon the termination of a distributor agreement in December 2018. Our gross margin for the year ended December 31, 2018 would have been lower without this licensing revenue.

SG&A expense was $46.3 million for the year ended December 31, 2019 compared to $42.6 million for the year ended December 31, 2018. The increase in SG&A expense was due to higher regulatory and medical costs associated with the resubmission of the Brinavess New Drug Application, as well as higher stock-based compensation expense. These were partially offset by the one-time transaction costs associated with the disposition of the Canadian business portfolio to Cipher Pharmaceuticals, which took place in the second quarter of 2018.

Interest expense was $7.5 million for the year ended December 31, 2019, compared to $6.0 million for the year ended December 31, 2018. The increase was due to interest being accrued on a higher long-term debt principal amount under the term loan agreement with CRG as well as an increase in the accretion of our long-term debt under the effective interest method which is recorded as interest expense. During the year ended December 31, 2019, we accrued in-kind interest of $1.7 million.

Liquidity and Outstanding Share Capital

At December 31, 2019, the Company had cash, cash equivalents, and restricted cash of $15.2 million. As of March 27, 2020, there were 66,190,987 common shares issued and outstanding, and 4,468,100 common shares issuable upon the exercise of outstanding stock options (of which 3,275,688 were exercisable) at a weighted average exercise price of CAD $4.69 per share, and 91,118 restricted share units outstanding.

About Correvio Pharma Corp.

Correvio Pharma Corp. is a specialty pharmaceutical company focused on providing innovative, high-quality brands that meet the needs of acute care physicians and patients. With a commercial presence and distribution network covering over 60 countries worldwide, Correvio develops, acquires and commercializes brands for the in-hospital, acute care market segment. The Company’s portfolio of approved and marketed brands includes: Xydalba^™ (dalbavancin hydrochloride), for the treatment of acute bacterial skin and skin structure infections (ABSSSI); Zevtera^®/Mabelio^® (ceftobiprole medocaril sodium), a cephalosporin antibiotic for the treatment of community- and hospital-acquired pneumonia (CAP, HAP); Brinavess^® (vernakalant IV) for the rapid conversion of recent onset atrial fibrillation to sinus rhythm; Aggrastat^® (tirofiban hydrochloride) for the reduction of thrombotic cardiovascular events in patients with acute coronary syndrome. Correvio’s pipeline of product candidates includes Trevyent^®, a drug device combination that is designed to deliver treprostinil, the world’s leading treatment for pulmonary arterial hypertension.

Correvio is traded on the NASDAQ Capital Market (CORV) and the Toronto Stock Exchange (CORV). For more information, please visit our web site www.correvio.com.

Forward-Looking Statement Disclaimer

Certain statements in this news release contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 or “forward-looking information” under applicable Canadian securities legislation (collectively, "forward-looking statements"). Forward-looking statements include statements that may relate to our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs and other information that may not be based on historical fact. Forward-looking statements can often be identified by the use of terminology such as "believe", "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", “look forward to” and similar expressions. Forward-looking statements are necessarily based on estimates and assumptions made by us based on our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate.

By their very nature, forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements, events or developments to be materially different from any future results, performance, achievements, events or developments expressed or implied by such forward-looking statements. These forward-looking statements include, but are not limited to, statements relating to anticipated benefits of the Arrangement to Correvio and its securityholders; the timing and receipt of required securityholder and court approvals for the Arrangement; the ability of Correvio and ADVANZ PHARMA to satisfy the other conditions to, and to complete, the Arrangement, the anticipated timing of mailing of the information circulars regarding the Arrangement, the closing of the Arrangement, the intention to seek a delisting of the common shares of Correvio on Nasdaq and TSX, expectations regarding the impact of this transaction on Correvio and ADVANZ PHARMA’s financial and operating results, strategy and business; the intention of ADVANZ PHARMA to bring additional products into its portfolio; regulatory approvals of products and the anticipated timing thereof; and the anticipated timing of the completion of the arrangement.

In respect of the forward-looking statements and information concerning the anticipated completion of the proposed Arrangement and the anticipated timing for completion of the Arrangement, Correvio has provided them in reliance on certain assumptions and believes that they are reasonable at this time, including the assumptions as to the time required to prepare and mail securityholder meeting materials, including the required management information circular; the ability of the parties to receive, in a timely manner, the necessary securityholder and court approvals; and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary securityholder and court approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Arrangement. Accordingly, you should not place undue reliance on the forward-looking statements and information contained in this news release concerning these times.

These statements reflect Correvio’s current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by Correvio, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements or information and Correvio has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: risks associated with the arrangement and acquisitions generally, such as the failure to satisfy the closing conditions contained in the arrangement agreement, the occurrence of a material adverse effect or other events which may give the parties a basis on which to terminate the arrangement agreement, the ability of the parties to complete and mail the management information circular to be prepared in connection with the special meeting of securityholders of Correvio, the ability to hold the meeting within the time frames indicated, and the approval of the transaction by the securityholders of Correvio and the risks and uncertainties facing Correvio as discussed in the annual report and detailed from time to time in our other filings with the Securities and Exchange Commission ("SEC") available at www.sec.gov and the Canadian securities regulatory authorities at www.sedar.com. In particular, we direct your attention to Correvio's Annual Report on Form 40-F for the year ended December 31, 2018 and its quarterly report filed November 14, 2019 for the third quarter of 2019. All of the risks and certainties disclosed in those filings are hereby incorporated by reference in their entirety into this news release.

While Correvio makes these forward-looking statements in good faith, given these risks, uncertainties and factors, you are cautioned not to place undue reliance on any forward-looking statements made in this press release. All forward-looking statements made herein are made as of the date hereof based on our current expectations and we undertake no obligation to revise or update such forward-looking statements to reflect subsequent events, information or circumstances, 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.

Correvio^® and the Correvio Logo are the proprietary trademarks of Correvio Pharma Corp.

Aggrastat^® and Brinavess™^® are trademarks owned by Correvio and its affiliates worldwide.

Xydalba^™ is a trademark of Allergan Pharmaceuticals International Limited, and used under license.

Zevtera^® and Mabelio^® are trademarks owned by Basilea Pharmaceutica International Ltd., and used under license.

Trevyent^® is a trademark of United Therapeutics Corporation and used under license.

All other trademarks are the property of their respective owners.

Contact:

Justin Renz

President & CFO

Correvio Pharma Corp.

604.677.6905 ext. 128

800.330.9928

jrenz@correvio.com

Argot Partners

Michelle Carroll/Claudia Styslinger

212.600.1902

michelle@argotpartners.com

claudia@argotpartners.com

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Consolidated Balance Sheets

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

	December 31, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	13,299		$	15,596
Restricted cash		1,945			1,974
Accounts receivable, net of allowance for doubtful accounts of $92 (2018 - $102)		11,987			7,723
Inventories		3,563			4,158
Prepaid expenses and other assets		977			841
		31,771			30,292
Property and equipment		452			512
Right-of-use assets from operating leases		2,057			—
Intangible assets		22,232			26,469
Long-term inventories		1,763			1,663
Goodwill		318			318
Deferred income tax assets		300			383
	$	58,893		$	59,637
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	11,295		$	9,403
Current portion of long-term debt		17,688			—
Current operating lease liabilities		812			—
		29,795			9,403
Long-term debt		27,238			41,517
Deferred revenue		1,228			1,252
Long-term operating lease liabilities		1,466			—
Other long-term liabilities		—			555
		59,727			52,727
Stockholders’ equity:
Common stock		385,057			359,295
Authorized - unlimited number without par value
Issued and outstanding – 55,382,228 (2018 – 36,233,162)
Additional paid-in capital		42,734			40,456
Deficit		(444,928	)		(409,744	)
Accumulated other comprehensive income		16,303			16,903
		(834	)		6,910
	$	58,893		$	59,637

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Consolidated Statements of Operations and Comprehensive Loss

For the years ended December 31, 2019, 2018 and 2017

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

	December 31, 2019				December 31, 2018				December 31, 2017
Revenue:
Product and royalty revenues		$	32,634			$	27,051			$	23,811
Licensing and other fees			—				1,623				197
			32,634				28,674				24,008
Cost of goods sold			9,827				8,294				6,776
Gross margin			22,807				20,380				17,232
Expenses:
Selling, general and administration			46,319				42,578				36,694
Amortization and depreciation			3,941				4,143				3,517
			50,260				46,721				40,211
Operating loss			(27,453	)			(26,341	)			(22,979	)
Other (expense) income:
Gain on disposal of Canadian Operations			—				18,489				—
Other expense on modification of long-term debt			—				—				(1,451	)
Interest expense			(7,512	)			(5,977	)			(5,695	)
Other expense			(303	)			(578	)			(511	)
Foreign exchange gain (loss)			263				(2,134	)			1,188
			(7,552	)			9,800				(6,469	)
Loss before income taxes			(35,005	)			(16,541	)			(29,448	)
Income tax expense			(179	)			(38	)			(363	)
Net loss		$	(35,184	)		$	(16,579	)		$	(29,811	)
Other comprehensive loss:
Foreign currency translation adjustments			(600	)			(226	)			791
Comprehensive loss		$	(35,784	)		$	(16,805	)		$	(29,020	)
Loss per common share
Basic and diluted		$	(0.79	)		$	(0.47	)		$	(0.90	)
Weighted average common shares outstanding
Basic			44,275,800				35,148,303				33,192,480
Diluted			44,275,800				35,148,303				33,227,924

CORREVIO PHARMA CORP.

(formerly Cardiome Pharma Corp.)

Consolidated Statements of Cash Flows

For the years ended December 31, 2019, 2018 and 2017

(Expressed in thousands of U.S. dollars)

	December 31, 2019				December 31, 2018				December 31, 2017
Operating activities:
Net loss		$	(35,184	)		$	(16,579	)		$	(29,811	)
Items not affecting cash:
Amortization			3,941				4,143				3,517
Accretion of long-term debt			1,950				794				1,549
Interest paid in-kind on long-term debt			1,749				1,679				778
Stock-based compensation expense			2,424				1,678				2,065
Write-down of inventory			159				340				295
Gain on disposal of Canadian Operations			—				(18,489	)			—
Unrealized foreign exchange loss (gain)			129				1,863				(1,738	)
Changes in operating assets and liabilities:
Accounts receivable			(4,083	)			(2,036	)			448
Inventories			233				400				(1,533	)
Prepaid expenses and other assets			(63	)			43				510
Deferred revenue			(3	)			(1,604	)			(197	)
Accounts payable and accrued liabilities			1,725				1,930				(675	)
Other long-term liabilities			(52	)			59				(31	)
Net cash used in operating activities			(27,075	)			(25,779	)			(24,823	)
Investing activities:
Proceeds on disposal of Canadian Operations			376				19,095				—
Purchase of property and equipment			(129	)			(284	)			(5	)
Purchase of intangible assets			(32	)			(4,705	)			(5,229	)
Net cash provided by (used in) investing activities			215				14,106				(5,234	)
Financing activities:
Issuance of common stock			26,994				5,392				8,487
Share issue costs			(2,069	)			(231	)			(1,072	)
Issuance of common stock upon exercise of stock options			—				258				384
Income tax withholdings on vesting of restricted share units			—				(23	)			(65	)
Proceeds from issuance of long-term debt			—				—				20,000
Financing fees on issuance of long-term debt			(288	)			(21	)			(518	)
Payment of deferred consideration			—				—				(2,815	)
Net cash provided by financing activities			24,637				5,375				24,401
Decrease in cash and cash equivalents during the year			(2,223	)			(6,298	)			(5,656	)
Effect of foreign exchange rate changes on cash and cash equivalents			(103	)			(313	)			532
Cash, cash equivalents, and restricted cash, beginning of year			17,570				24,181				29,305
Cash, cash equivalents, and restricted cash, end of year		$	15,244			$	17,570			$	24,181
Supplemental cash flow information:
Interest paid		$	3,934			$	3,778			$	3,477
Interest received			120				149				95
Net income taxes paid (received)			101				146				(334	)

EX-99.5

Exhibit 99.5

 

KPMG LLP

PO Box 10426 777 Dunsmuir Street

Vancouver BC V7Y 1K3

Canada

Telephone (604) 691-3000

Fax (604) 691-3031

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Correvio Pharma Corp.

We consent to the incorporation by reference in the registration statement (No. 333-225852) on Form F-10 and (No. 333-225015 and No. 333-225014) on Form S-8 of Correvio Pharma Corp of our reports dated March 27, 2020, with respect to the consolidated balance sheets of Correvio Pharma Corp as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes, and the effectiveness of internal control over financial reporting as of December 31, 2019, which reports appear in the Form 6-K of Correvio Pharma Corp dated March 27, 2020.

Our report dated March 27, 2020 refers to a change in accounting policies for leases as of January 1, 2019 due to the adoption of ASU 2016-02 – Leases, Revenue from Contracts with Customers (Topic 606), and related amendments.

Our report dated March 27, 2020 also contains and explanatory paragraph that states that the Company has suffered recurring losses and negative cash flows from operations, which raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Chartered Professional Accountants

March 27, 2020

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.