Theratechnologies inc.
TSX : TH

Theratechnologies inc.

January 23, 2008 15:05 ET

2007: A Year of Major Accomplishments for Theratechnologies

Strong progress in clinical program Commercialization plan advancing Sound financial position

MONTREAL, CANADA--(Marketwire - Jan. 23, 2008) - Theratechnologies (TSX:TH) today announced its financial results for the year ended November 30, 2007 and reviewed corporate highlights for the year. The Company reported a sound financial position with $62 million in liquidities.

"It was clearly a great year for Theratechnologies," said Yves Rosconi, President and Chief Executive Officer, commenting on 2007. "After announcing positive results for the first pivotal tesamorelin study in December 2006, we moved quickly into our confirmatory Phase 3 study. Recruitment was completed faster than for the first phase 3 study and we are looking forward to top-line results by mid year. The positive Phase 3 results and rapid execution of the overall development program have kept us on course to submit a New Drug Application (NDA) for tesamorelin in the United States by the end of 2008," he noted.

"In parallel with the progress in the clinic, preparatory work for the eventual commercialization of tesamorelin intensified in 2007," Mr. Rosconi continued. "This work included discussions with potential commercial partners and detailed assessments of the sales potential for tesamorelin that point to a large and exciting market opportunity," Mr. Rosconi said.

"We have planned another busy and fruitful year in 2008," Mr. Rosconi stated. "The completion of the tesamorelin clinical program and the NDA submission are top priorities. As we did in 2007, we intend to execute our 2008 business plan well and in a timely way in order to continue building value for shareholders," Mr. Rosconi concluded.

Strong progress in clinical program

Confirmatory Phase 3 trial: recruitment and randomization completed

In September, 2007 recruitment ended for the Company's confirmatory Phase 3 clinical trial using tesamorelin, which was more rapidly than its first Phase 3 trial with a similar number of patients.

Positive 26- and 52-week results for the first Phase 3 tesamorelin trial

On October 1(st), 2007, the Company announced positive 52-week results of its Phase 3 clinical trial, evaluating the long-term safety profile of tesamorelin, in patients with HIV-associated lipodystrophy. The 52-week results were consistent with the safety profile of the 26-week results disclosed in December 2006 and showed that tesamorelin was well tolerated. Tesamorelin's efficacy was also confirmed as patients on treatment for 52 weeks lost 18% of their visceral adipose tissue compared to baseline.

Clinical data presented at four international scientific conferences and published in the New England Journal of Medicine

Throughout the year, the Company presented clinical data at major international scientific conferences, such as: the 14(th) Conference on Retroviruses and Opportunistic Infections in Los Angeles, the 89(th) annual meeting of the Endocrine Society in Toronto, the 9(th) International Workshop on Adverse Drug Reactions and Lipodystrophy in HIV, in Sydney, and the 11(th) European AIDS Conference in Madrid. The results from the 26-week Phase 3 clinical trial, using tesamorelin, were also published in the December 6, 2007 edition of New England Journal of Medicine, a prestigious top-tier medical journal.

Commercialization plan advancing

Additional patent protection for tesamorelin

At the beginning of January 2008, the Company announced that the United States Patent and Trademark Office has issued Patent Number 7,316,997 entitled "GH Secretagogues and Uses Thereof" to Theratechnologies. This patent covers methods of treatment of HIV-associated lipodystrophy using tesamorelin. The granting of this patent extends the patent protection of tesamorelin in HIV-associated lipodystrophy until the year 2023.

Market size estimates for HIV-associated lipodystrophy

In December 2007, the Company presented its commercial evaluation of the HIV-associated lipodystrophy market based on updated market research performed by pharmaceutical industry specialists. The reported number of HIV patients for 2007 is 1.9 million patients(1) in the US & Europe and this number is projected to be 2.3 million patients in 2012. The estimated number of patients with HIV-lipodystrophy in 2012 is estimated to be approximately 380,000, with a projected market potential for the US and Europe between US $811 million to US $1.3 billion.

Awareness program on HIV-associated lipodystrophy in the medical community

In October 2007, the Company launched an awareness program on HIV-associated lipodystrophy in the medical community, at the 11(th) European AIDS Conference in Madrid, by presenting its first scientific symposium on the subject.

MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FOURTH QUARTER

Revenues

Consolidated revenues for the three-month period ended November 30, 2007 amounted to $1,294,000 compared to $367,000 in 2006. Theratechnologies' consolidated revenues for the year ended November 30, 2007 were $3,134,000 compared to $1,649,000 in 2006. The 2007 revenues include $619,000 received as an upfront payment in the form of stock options from OctoPlus N.V., a Dutch company, in return for the Company's worldwide rights to the development and commercialization of its Glucagon-like Peptide-1 (GLP-1) program. The Company has no other service obliations under the agreement and may receive further milestone payments of up to euros 36 million (approximately CA$53M) based on development, clinical phases and commercialization, as well as royalty payments on future sales of all products developed and commercialized under the agreement. The OctoPlus stock options were valued using the Black and Scholes pricing model. Most of the remaining revenues for 2007, and substantially all of the revenues for 2006, were derived from interest on investments. Interest revenue was higher in 2007 due to an increase in funds invested following a public offering of common shares completed in February 2007 with net proceeds to the Company of $54,562,000.

(1) 1.9M HIV patients : Source CDC 2003, EuroAids 2005

R&D Activities

Consolidated research and development (R&D) expenditures, before tax credits, totalled $8,475,000 for the three-month period ended November 30, 2007 compared to $5,963,000 in 2006. For the year ended November 30, 2007, consolidated R&D expenditures, before tax credits, totalled $31,866,000 compared to $22,049,000 in 2006. The increase in R&D expenditures in the fourth quarter and during the fiscal year, reflects the level of activity with respect to the simultaneous conduct of the Company's two pivotal studies.

Other Expenses

For the year ended November 30, 2007, general and administrative expenses, selling and market development expenses, patents and amortization of other assets ("SG&A") were $8,100,000 compared to $5,513,000 in 2006. The increase in 2007 is attributable to higher stock-based compensation related to a special grant of stock options in January 2007 to all employees ($1,035,000 compared to $713,000 in 2006). This stock-based compensation has no impact on the liquidities of the Company. Secondly, the Company incurred a foreign exchange loss of $598,000 in 2007 compared to a gain of $111,000 in 2006. The increase in the costs is also associated with the growth and development of the Company.

Selling and market development expenses amounted to $2,351,000 compared to $902,000 in 2006. This increase reflects the activities associated with pre-commercialization.

Net Results

Reflecting the variations in revenues and expenses described above, the Company recorded a net loss of $10,279,000 in the three months ended November 30, 2007 compared to $6,942,000 in 2006. For the year ended November 30, 2007, the net loss was $37,588,000 compared to a net loss of $25,861,000 in 2006.

Quarterly Financial Information

The selected financial information provided below is derived from the Company's unaudited quarterly financial statements for each of the last eight quarters.



(in thousands of Canadian dollars, except per share
amounts)
-------------------------------------------------------------
-------------------------------------------------------------
2007
-------------------------------------------------------------
Q4 Q3 Q2 Q1
-------------------------------------------------------------
Revenues $1,294 $748 $805 $287
Net loss $(10,279) $(9,781) $(8,089) $(9,439)
Basic and
diluted
loss per
share $(0.19) $(0.18) $(0.15) $(0.20)
-------------------------------------------------------------
-------------------------------------------------------------
2006
-------------------------------------------------------------
Q4 Q3 Q2 Q1
-------------------------------------------------------------
Revenues $367 $412 $395 $475
Net loss $(6,942) $(7,251) $(6,221) $(5,447)
Basic and
diluted
loss per
share $(0.15) $(0.16) $(0.14) $(0.15)
-------------------------------------------------------------
-------------------------------------------------------------

The increase in revenues in 2007 results from higher liquidities compared
to 2006 associated with the financing of February 2007.The revenues of the
fourth quarter 2007 include $619,000 received as an upfront payment in the
form of stock options from OctoPlus N.V., in return for the Company's
worldwide rights to the development and commercialization of its GLP-1
program.


Financial Position

Theratechnologies maintained a sound liquidity position in 2007. At November 30, 2007, liquidities amounted to $61,786,000 which include cash and bonds of $60,368,000 and tax credits receivable of $1,418,000.

During the first quarter of 2007, the Company completed a public offering for the sale and issuance of 6,875,000 common shares, including those issued pursuant to the over-allotment option, for a total cash consideration of $57,750,000. Issue costs totalled $3,188,000, resulting in net proceeds to the Company of $54,562,000. In the year ended November 30, 2007, the Company issued 867,700 common shares following the exercise of stock options, for total cash proceeds of $2,392,000. During 2007, the Company also issued 13,074 common shares to employees for a total cash consideration of $129,000 in connection with its share purchase plan.

In the three months ended November 30, 2007 the burn rate from operating activities and excluding changes in operating assets and liabilities, was $9,958,000 compared to $6,492,000 in 2006, reflecting the level of activities previously described. For the year ended November 30, 2007, the burn rate was $34,698,000 compared to $23,917,000 in 2006. The increase in the burn rate in 2007 reflects the planned increase in activities related to the Phase 3 program, including activities associated with the pre-commercialization of tesamorelin.

Changes in accounting policies

At the beginning of the fiscal year 2007, the Company adopted the following sections of the Canadian Institute of Chartered Accountants (CICA) Handbook: Section 1530 entitled "Comprehensive income", Section 3251 entitled "Equity", Section 3855 entitled "Financial Instruments - Recognition and measurement", Section 3861 entitled "Financial Instruments - Presentation and Disclosure", and Section 3865 entitled "Hedges". The adoption of these standards had no material impact on the Company's consolidated operating results (see note 2 of the Consolidated Financial Statements).

Outstanding share data

At January 18, 2008, the number of shares issued and outstanding was 54,563,465 common shares, while outstanding options granted under the stock option plan were 2,180,301. Between December 1, 2007 and January 18, 2008, 32,332 options were exercised at an average exercise price of $4,19 per share for a total cash proceeds of $135,000.

Contractual Obligations

Apart from the financing mentioned above, there were no material changes in contractual obligations occurred during the quarter, other than in the ordinary course of business.

Economic and Industry Factors

Economic and industry factors were substantially unchanged from those reported in the Company's 2006 Annual Report.

About Theratechnologies

Theratechnologies (TSX:TH) is a Canadian biopharmaceutical company that discovers innovative drug candidates in order to develop them and bring them to market. The Company targets unmet medical needs in financially attractive specialty markets. Its most advanced program is tesamorelin, now in a confirmatory Phase 3 clinical trial for a serious metabolic disorder known as HIV-associated lipodystrophy. The Company also has other projects at earlier stages of development.

Additional Information about Theratechnologies

Further information about Theratechnologies is available on the Company's website at www.theratech.com. Additional information, including the Company's Annual Information Form, is available on SEDAR at www.sedar.com.

Forward-Looking Information

This press release and the management's discussion and analysis for the fourth quarter contained herein contain certain statements that are considered "forward-looking information" within the meaning of applicable securities legislation. This forward-looking information includes, but is not limited to, information regarding the Phase 3 clinical program of tesamorelin (such as the completion and announcement of the results of the Phase 3 studies, the filing of a New Drug Application (an "NDA") with the U.S. Food and Drug Administration (the "FDA")) and the commercialization of tesamorelin in HIV-associated lipodystrophy. Words such as "will", "may", "could", "should", "outlook", "believe", "plan", "envisage", "anticipate", "expect" and "estimate", or the negatives of these terms or variations of them and the use of the conditional tense as well as similar expressions denote forward-looking information.

Forward-looking information is based upon a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company's control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, the negative results that the current Phase 3 clinical studies may yield, the risk that the Company may not obtain all required approvals from regulatory agencies to market its products, the risk that the Company's products may not be accepted by the market, the difficulties the Company may encounter in building its sales force and the delays that may occur if the Company encounters problems with a third-party supplier of services.


Although the forward-looking information contained in this press release and the management's discussion and analysis for the fourth quarter contained herein is based upon what the Company believes are reasonable assumptions, investors are cautioned against placing undue reliance on this information since actual results may vary from the forward-looking information. Certain assumptions made in preparing the forward-looking information and the Company's objectives include the assumption that past results obtained from the first Phase 3 clinical study will be repeated, that the time required to analyze and report the results of the Company's clinical studies will be consistent with past timing, that discussions to be held with the FDA will be positive, that market data and reports reviewed by the Company are accurate and that current relationship with the Company's third party suppliers of services and products will remain good.

Consequently, all of the forward-looking information contained in this press release and the documents incorporated herein by reference are qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences or effects on the Company, its business, financial condition or results of operation. Investors are referred to the Company's public filings available at www.sedar.com. In particular, further details and descriptions of these and other factors are disclosed in the "Risk and Uncertainties" section of the Company's Annual Information Form for the year ended November 30, 2006. The Company does not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.



Consolidated Financial Statements of
(Unaudited)

THERATECHNOLOGIES INC.

Periods ended November 30, 2007 and 2006

THERATECHNOLOGIES INC.
Consolidated Balance Sheets

November 30, 2007 and 2006
(in thousands of dollars)

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-----------------------------------------------------------------------
2007 2006
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(Audited) (Audited)

Assets

Current assets:
Cash $2,578 $16
Bonds (note 2) 27,466 18,023
Accounts receivable 451 289
Tax credits receivable 1,418 1,911
Research supplies 2,110 850
Prepaid expenses 414 391
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34,437 21,480

Bonds (note 2) 30,324 17,641
Investments in public companies (note 2) 635 836
Property and equipment 1,722 1,580
Other assets (note 3) 7,472 9,431

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$74,590 $50,968
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Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities $8,613 $6,493

Shareholders' equity:
Capital stock (note 4) 238,842 177,552
Contributed surplus 4,807 3,486

Accumulated other comprehensive loss (note 2) (333) -
Deficit (177,339) (136,563)
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(177,672) (136,563)

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Total shareholders' equity 65,977 44,475

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$74,590 $50,968
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See accompanying notes to unaudited consolidated financial statements.



THERATECHNOLOGIES INC.
Consolidated Statements of Earnings

Periods ended November 30, 2007 and 2006
(in thousands of dollars, except per share amounts)

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Fourth quarter Year
--------------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
(Unaudited) (Audited)

Revenues:
Royalties,
technologies
and other (note 5) $624 $10 $638 $197
Interest 670 357 2,496 1,452
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1,294 367 3,134 1,649

Operating costs
and expenses:
Research and
development 8,475 5,963 31,866 22,049
Tax credits (294) (334) (1,652) (954)
-----------------------------------------------------------------------
8,181 5,629 30,214 21,095
General and
administrative 2,064 1,300 7,260 4,886
Selling and
market development 689 213 2,351 902
Patents and
amortization of
other assets 240 167 840 627
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11,174 7,309 40,665 27,510

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Operating loss before
undernoted item (9,880) (6,942) (37,531) (25,861)

Loss on disposal of
investments in
public companies (399) - (57) -

-----------------------------------------------------------------------
Net loss $(10,279) $(6,942) $(37,588) $(25,861)
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Basic and diluted
loss per share
(note 4 (C)) $(0.19) $(0.15) $(0.71) $(0.60)
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Weighted average
number of common
shares outstanding 54,506,446 46,764,983 52,581,559 43,325,197
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See accompanying notes to unaudited consolidated financial statements.



THERATECHNOLOGIES INC.
Consolidated Statements of Comprehensive Loss

Periods ended November 30, 2007 and 2006
(in thousands of dollars)

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-----------------------------------------------------------------------
Fourth quarter Year
----------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
(Unaudited) (Audited)

Net loss $(10,279) $(6,942) $(37,588) $(25,861)

Unrealized gains (losses)
on available-for-sale
financial assets 628 - (412) -

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Comprehensive loss $(9,651) $(6,942) $(38,000) $(25,861)
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See accompanying notes to unaudited consolidated financial statements.



THERATECHNOLOGIES INC.
Consolidated Statement of Shareholders' Equity

Period ended November 30, 2007
(in thousands of dollars)

--------------------------------------------------------------------------
--------------------------------------------------------------------------
Accumulated
other
compre-
Capital stock hensive
---------------- Contributed income
Number Dollars surplus (loss) Deficit Total
--------------------------------------------------------------------------

Balance,
November 30,
2006 46,775,359 $177,552 $3,486 $- $(136,563) $44,475

Changes in
accounting
policies
(note 2) - - - 79 - 79

Issuance of
share
capital 6,888,074 57,879 - - - 57,879

Share issue
costs - - - - (3,188) (3,188)

Exercise of
stock options:
Cash
proceeds 867,700 2,392 - - - 2,392
Ascribed
value - 1,019 (1,019) - - -

Stock-based
compensation - - 2,340 - - 2,340

Net loss - - - - (37,588) (37,588)

Unrealized
losses on
available-for
sale
financial
assets - - - (412) - (412)

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Balance,
November 30,
2007 54,531,133 $238,842 $4,807 $(333) $(177,339) $65,977
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See accompanying notes to unaudited consolidated financial statements.



THERATECHNOLOGIES INC.
Consolidated Statements of Cash Flows

Periods ended November 30, 2007 and 2006
(in thousands of dollars)

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-----------------------------------------------------------------------
Fourth quarter Year
------------------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
(Unaudited) (Audited)

Cash flows from
operating
activities:
Net loss $(10,279) $(6,942) $(37,588) $(25,861)
Adjustments for:
Depreciation
of property
and equipment 160 126 550 569
Depreciation
of other
assets 161 125 562 476
Stock-based
compensation 220 199 2,340 899
Non-monetary
revenues
(note 5) (619) - (619) -
Loss on
disposal of
investments
in public
companies 399 - 57 -
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(9,958) (6,492) (34,698) (23,917)

Changes in
operating
assets and
liabilities:
Interest
receivable
on bonds 298 185 (364) 342
Accounts
receivable 334 11 (137) (106)
Tax credits
receivable (293) (333) 493 (933)
Research
supplies 821 63 368 (513)
Prepaid
expenses 546 172 (23) 34
Accounts
payable and
accrued
liabilities (833) 933 1,952 1,974
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873 1,031 2,289 798

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(9,085) (5,461) (32,409) (23,119)

Cash flows from
financing
activities:
Share issuance 210 43 60,271 21,893
Share issue costs (5) (52) (3,193) (1,457)
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205 (9) 57,078 20,436

Cash flows from
investing
activities:
Addition to
property
and equipment (181) (14) (547) (175)
Addition to other
assets (72) (61) (228) (226)
Disposal of other
assets - - - 80
Acquisition of
bonds (807) - (41,496) (16,082)
Disposal of bonds 5,898 4,014 19,385 18,015
Disposal of
investments
in public
companies 78 -- 779 -

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4,916 3,939 (22,107) 1,612

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Net change in cash (3,964) (1,531) 2,562 (1,071)

Cash, beginning
of period 6,542 1,547 16 1,087
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Cash, end of period $2,578 $16 $2,578 $16
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See note 6 (a) for supplemental cash flow information.

See accompanying notes to unaudited consolidated financial statements.

THERATECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Unaudited)

Periods ended November 30, 2007 and 2006
(in thousands of dollars, except per share amounts)


1. Basis of presentation:

The financial statements included in this report are unaudited and reflect normal and recurring adjustments which are, in the opinion of the Company, considered necessary for a fair presentation. These financial statements have been prepared in conformity with Canadian generally accepted accounting principles. The same accounting policies as described in the Company's latest annual report have been used, except as described in note 2 below. However, these financial statements do not include all disclosures required under generally accepted accounting principles and, accordingly, should be read in connection with the financial statements and the notes thereto included in the Company's latest annual report. These interim financial statements have not been reviewed by auditors.

2. Changes in accounting policies:

Effective with the commencement of its 2007 fiscal year, the Company adopted the recommendations of the Canadian Institute of Chartered Accountants ("CICA") Handbook Section 1530, Comprehensive Income, CICA Handbook Section 3251, Equity, CICA Handbook Section 3855, Financial Instruments - Recognition and Measurement, CICA Handbook Section 3861, Financial Instruments - Disclosure and Presentation, and CICA Handbook Section 3865, Hedges. These new Handbook Sections, which apply to fiscal years beginning on or after October 1, 2006, provide comprehensive requirements for the recognition and measurement of financial instruments, as well as standards on when and how hedge accounting may be applied.

CICA Handbook Section 1530 also establishes standards for reporting and displaying comprehensive income. Comprehensive income is defined as the change in equity from transactions and other events from non-owner sources. Other comprehensive income refers to items recognized in comprehensive income but that are excluded from net income calculated in accordance with generally accepted accounting principles. A new financial statement has been presented in relation to the new standards.

Under Handbook Section 3855, all financial instruments are classified into one of the following five categories: held-for-trading, held-to-maturity investments, loans and receivables, available- for-sale financial assets or other financial liabilities. All financial instruments, including derivatives, are included on the consolidated balance sheet and are measured at fair market value with the exception of loans and receivables, investments held-to-maturity and other financial liabilities, which are measured at amortized cost. Subsequent measurement and recognition of changes in fair value of financial instruments depend on their initial classification. Held-for-trading financial investments are measured at fair value and all gains and losses are included in net income in the period in which they arise. Available-for-sale financial instruments are measured at fair value with revaluation gains and losses included in other comprehensive income until the assets are removed from the balance sheet.

The standards also require derivative instruments to be recorded as either assets or liabilities measured at their fair value unless exempted from derivative treatment as a normal purchase and sale. Certain derivatives embedded in other contracts must also be measured at fair value. All changes in the fair value of derivatives are recognized in earnings unless specific hedge accounting criteria are met, which requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting.

As a result of the adoption of these standards, the Company has classified its bonds and investments in public companies as available-for-sale financial assets and they are now measured at fair market value. Previously, these investments were recorded at the lower of cost and fair market value. On December 1, 2006, the impact of $79 of these changes in accounting policies is included in the opening balance of accumulated other comprehensive income.

The adoption of standards of Sections 3251, 3861 and 3855 has no impact on the financial statements for the period ended November 30, 2007.



3. Other assets:

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November 30,
2007
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Accumulated Net book
Cost amortization value
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Intellectual property $7,670 $2,713 $4,957
Patent costs 1,993 1,052 941
Research supplies 1,524 - 1,524
Other assets 50 - 50

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$11,237 $3,765 $7,472
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November 30,
2006
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Accumulated Net book
Cost amortization value
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Intellectual property $7,670 $2,327 $5,343
Patent costs 1,737 876 861
Research supplies 3,152 - 3,152
Other assets 75 - 75

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$12,634 $3,203 $9,431
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4. Capital stock:

During the first quarter of 2007, the Company concluded a public offering
for the sale and issue of 6,875,000 common shares, including the over-
allotment option, for cash proceeds of $57,750. The issuance costs amounted
to $3,188.

In 2007, the Company also issued 13,074 common shares to employees for a
consideration of $129, in connection with its share purchase plan.

(a) Share option plan:

Changes in outstanding options granted under the Company's stock option
plan for the years ended November 30, 2006 and 2007 were as follows:

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Weighted
average
exercise
Number price
-----------------------------------------------------------------------

Options as at November 30, 2005 (audited) 2,300,664 $5.50
Granted 840,000 1.69
Cancelled (234,664) 6.70
Expired (355,000) 4.60

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Options as at November 30, 2006 (audited) 2,551,000 4.26

Granted 608,500 9.41
Exercised (867,700) 2.76
Cancelled (84,167) 2.80

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Options as at November 30, 2007 (audited) 2,207,633 $6.32
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Between December 1, 2007 and January 18, 2008, 32,332 options were
exercised at a weighted average price of $4.19 per share for a cash
consideration of $135.

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

The fair value of the options granted was estimated at the date of grant
using the Black- Scholes option pricing model with the following weighted
average assumptions:

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2007 2006
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Risk-free interest rate 4.22% 4.08%
Volatility 68.7% 49.8%
Average option life in years 6 6
Dividend yield Nil Nil

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Dividend yield was excluded from the calculation, since it is the present
policy of the Company to retain all earnings to finance operations and
future growth.

The following table summarizes the weighted average fair value of stock
options granted during the years ended November 30, 2007 and 2006:

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Weighted
average
grant-date
Number fair value
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2007 608,500 $6.10
2006 840,000 0.88

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(C) Diluted loss per share:

Diluted loss per share was not presented as the effect of options and warrants would have been anti-dilutive. Furthermore, the exercise of 251,500 (2006 - 1,036,000) options and warrants has not been considered in such computation since their exercise prices were higher than the average market price during the reporting periods of 2007 and 2006.

5. Royalties, technologies and other:

On September 26, 2007, the Company signed a licensing agreement whereby OctoPlus N.V. ("OctoPlus") acquired the exclusive worldwide rights for the development and commercialization of its Glucagon-like Peptide-1 (GLP-1) program: a portfolio of analogues for the treatment of diabetes and other potential indications. OctoPlus's proprietary drug delivery technology in the area of controlled release will be combined with the Company's GLP-1 compounds to produce a product candidate that may reduce the required dosing frequency in diabetes therapy.

The Company received 200,000 OctoPlus stock options upon signature of the agreement. In addition, pursuant to the terms of the agreement, OctoPlus will make milestone payments to the Company of up to 36 million Euro (approximately CA$53 million), based on development, clinical phases and commercialization. Royalties on the annual net sales of any products developed and commercialized under the agreement could also be paid to the Company. OctoPlus will be responsible for all future development costs for GLP-1 portfolio compounds.

As the Company has no service obligations under the agreement, the fair value of $619 of the options received upon signature of the agreement has been recorded as revenue by the Company. The options have a contractual life of 10 years and are exercisable at the average market price of OctoPlus' shares for the 10 days preceding the date of the agreement. The options granted by OctoPlus have been classified as available-for-sale financial assets and are measured at the fair market value. The estimated fair value of the options granted was estimated using the Black-Scholes option pricing model with the following assumptions:



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November 30, September 26,
2007 2007
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Risk-free interest rate 3.8% 4.29%
Volatility 41.91% 38.75%
Option life in years 9.8 10
Dividend yield Nil Nil

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6. Supplemental information:

(a) Statement of cash flows:

The following transactions were conducted by the Company and did not impact
cash flows:

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November 30, November 30,
2007 2006
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Additions to property and equipment
included in accounts payable
and accrued liabilities $147 $2

Additions to other assets included in
accounts payable and accrued liabilities 64 36

Share issue costs included in accounts
payable and accrued liabilities - 5

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(b) General and administrative expenses include a loss on exchange of $598
for the year ended November 30, 2007 (gain of $111 for the same period
in 2006).

(C) The Company has reclassified in the net loss $84 of realized losses on
available-for-sale financial assets previously recorded in accumulated
other comprehensive income. The realized gains include a gain of $537
on disposal of the investment in Sonomed (formerly Andromed Inc.). In
2007, the Company received $628 as a result of the redemption of the
Sonomed shares held by the Company. In 2007, the Company also disposed
of its remaining shares in Thallion Pharmaceutical Inc. (formerly
Ecopia BioSciences Inc.) for $151 and realized a loss of $594.

(d) The Company received tax credits of $2,144 in 2007 (nil in 2006).

Contact Information

  • Theratechnologies Inc.
    Andrea Gilpin
    Executive Director, IR & Communications
    514-336-4804, ext. 205
    communications@theratech.com
    or
    Theratechnologies Inc.
    Luc Tanguay
    Senior Executive Vice President and Chief Financial Officer
    514-336-4804, ext. 204
    ltanguay@theratech.com