827809--3/10/2010--QLT

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{product, candidate, development}

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{customer, product, revenue}

{tax, income, asset}

{acquisition, growth, future}

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The continued commercialization of Visudyne in the U.S. is substantially dependent on our ability to develop and maintain effective sales and marketing capabilities. If we are unable to develop and maintain effective sales and marketing capabilities, our ability to generate revenues from the sale of Visudyne in the U.S. may be harmed. We have limited experience marketing and selling products. The marketing and sale of Visudyne in the U.S. is subject to extensive regulation and aggressive government enforcement. Failure to comply with applicable laws and regulations could have a material adverse effect on our business. Our commercial success depends in part on the success of third parties to market our products, including Visudyne. Our revenues depend on coverage and reimbursement from third party payors and pricing, and if third party payors reduce or refuse coverage or reimbursement or if prices are reduced, the use and sales of our products will suffer, we may not increase our market share, and our revenues and profitability will suffer. Product development is a long, expensive and uncertain process, and we may terminate one or more of our development programs. Our current and planned clinical trials may not begin on schedule, or at all, and may not be completed on schedule, or at all. If our process related to product development, and in particular the development of our punctal plug drug delivery technology, does not result in an approved and commercially successful product, our business could be adversely affected. Our success depends largely on the successful commercialization of our technology, and in particular our drug/device combination punctal plug drug delivery technology. We face intense competition, which may limit our commercial opportunities and our ability to generate revenues. We have undertaken significant strategic and organizational changes, including the divestment of certain core and non-core assets to focus on the ocular therapeutic area. These changes and the transactions we completed carry certain risks which could have a material adverse effect on our business. The future growth of our business may depend in part on our ability to successfully identify, acquire on favorable terms, and assimilate technologies, products or businesses. We may become involved in legal proceedings from time to time and if there is an adverse outcome in our litigation or other legal actions, our business may be harmed. If we do not successfully develop and launch replacements for our products that lose patent protection, our revenues may decline and we may not be able to compete effectively. Our commercial success depends in part on our ability and the ability of our licensors to obtain and maintain patent protection on technologies, to preserve trade secrets, and to operate without infringing the proprietary rights of others. In the field of PDT we are dependent on the success and continued supply of third-party medical device companies with complementary light source and light delivery devices by third party suppliers. If our supply of Visudyne is interrupted, our ability to maintain our inventory levels could suffer and our future revenues may be reduced. We rely on third-party manufacturers and specialty wholesale distributors and other service providers for the manufacture and distribution of Visudyne. Any difficulties with such third parties could delay future revenues from our product sales. Inherent uncertainties associated with forecasting product demand and future product launch and other factors could result in our inventory becoming obsolete or reduced, possibly materially, in market value. If the facilities storing our inventory are damaged or destroyed, our ability to meet market demand for our products could be significantly affected. If our contract manufacturers fail to comply with FDA and other foreign regulatory requirements or with our product specifications, we may be unable to meet demand for our products and may lose potential revenue and be subject to claims from our licensees. We rely on our employees and consultants to keep our trade secrets confidential. Visudyne or our product candidates may exhibit adverse side effects that prevent their widespread use or that necessitate withdrawal from the market. If we fail to comply with ongoing regulatory requirements, it will materially harm our business. Our use of hazardous materials exposes us to the risk of environmental liabilities, and we may incur substantial additional costs to comply with environmental laws. Our provision for income taxes and effective income tax rate may vary significantly and may adversely affect our results of operations and cash resources. If we do not sustain profitability, our stock price may decline. Our operating results may fluctuate, which may cause our financial results to be below expectations and the market price of our securities to decline. The market price of our common shares is extremely volatile and the value of an investment in our common shares could decline. We may need additional capital in the future, and our prospects for obtaining it are uncertain We believe that we were a passive foreign investment company for the taxable year ended December 31, 2009, which could result in adverse United States federal income tax consequences to U.S. shareholders. If we fail to manage our exposure to global financial, securities market and foreign exchange risk successfully, our operating results and financial statements could be materially impacted.

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827809--3/10/2010--QLT_INC/BC