827809--3/15/2006--QLT

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If there is an adverse outcome in the ongoing patent litigation with TAP Pharmaceuticals, Inc. or any other litigation or other legal actions in which we are or may become involved our business may be harmed. Sales of Eligard may be adversely affected as a result of the ongoing patent litigation with TAP Pharmaceuticals, Inc. We are dependent on third parties to market Visudyne and Eligard. The success of Visudyne, Eligard and our other products may be limited by governmental and other third-party payers. We may not successfully develop and launch replacements for our products that lose patent protection. We may not be able to obtain and enforce effective patents to protect our proprietary rights from use by competitors, and patents of other companies could require us to stop using or pay to use required technology. Resources devoted to research and development may not yield new products that achieve commercial success. The incidence of wet AMD might be reduced if therapies currently in development or currently available prevent or reduce the risk of development of wet AMD which could adversely impact the sales of Visudyne. We may be unable to manufacture or continue to manufacture efficiently Visudyne or our other products in compliance with FDA and other regulatory requirements or our product specifications. In the field of Photodynamic Therapy, or 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. We have limited experience in manufacturing products on a commercial scale and are subject to ongoing regulatory compliance requirements. If we are unable to produce enough Eligard or the other products which we manufacture to meet market demands, this could cause a decrease in revenue. We are dependent on contract manufacturers involved in the production of our Eligard products. If our supply of finished products is interrupted, our ability to maintain our inventory levels could suffer and future revenues may be delayed. We may face future product liability claims that may result from the sale of Visudyne, Eligard and our other products. Our business could suffer if we are unsuccessful in identifying, negotiating or integrating future acquisitions, business combinations or strategic alliances. We are undergoing significant strategic and organizational change. Failure to manage disruption to the business or the loss of key personnel could have an adverse effect on our business. Research, Development and Regulatory Risks We may not be successful in our efforts to expand our portfolio of products in targeted therapeutic segments. Our products in clinical trials may not achieve favorable results, may fail to achieve or maintain regulatory approvals or market acceptance, or may encounter difficulties with proprietary rights or manufacturing. If we do not achieve our projected development goals in the time frames we announce and expect, the commercialization of our products may be delayed and, as a result, our business could be harmed. Patient enrollment may not be adequate for our current trials or future clinical trials. Visudyne, Eligard or our other products may exhibit adverse side effects that prevent their widespread adoption or that necessitate withdrawal from the market. We may be unable to comply with ongoing regulatory requirements. We are subject to environmental compliance risks. Risks Relating to Our Financial Results and Condition Our future operating results are uncertain and likely to fluctuate. Future sales of Visudyne, Eligard and our other products may be less than expected. Our effective income tax rate may vary significantly and may adversely affect our results of operations and cash resources. We may need additional capital in the future, and our prospects for obtaining it are uncertain. We have convertible debt outstanding, which, if not converted into equity, will require a significant amount of cash and may adversely affect our financial position and cash resources. We may be unsuccessful in divesting our non-core dermatology business and related manufacturing facilities. The market price of our common shares is extremely volatile.

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827809--3/15/2006--QLT_INC/BC