2

If this report is an annual or transition report, indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes  [   ]     No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the
past 90 days.
Yes ü   No ¨[X]    No[   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-
accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act. (Check one):

Large Accelerated Filer [   ]         Accelerated Filer [X]       Non-Accelerated Filer [   ]

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements
included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial
statement item the registrant has elected to follow:

Item 17 ü[X]    Item 18 ¨ [   ]

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes  [   ]     No [X]

As of May 31, 2005,2008, the rate for Canadian dollars was US $0.7967$1.0070 for Cdn $1.00.

2

3

TABLE OF CONTENTS

4

3

45

GLOSSARY OF TERMS

The following words and phrases shall have the meanings set forth below:

"angina"means chest pain;

"angioplasty"means the surgical repair of a blood vessel;

"anti-hypertensive"means blood pressure reducing;

"arrhythmia" means irregular heart rhythm;

"bioavailability”means the degree to which a drug or other substance becomes available to the target in the body after administration;

“CABG”means coronary artery bypass graft;

"Computer Aided Drug Design" means a method for design of new therapeutic molecules using computer generated models of the drug and its molecular target;

"FDA"means the United States Food and Drug Administration;

"GCP"means Good Clinical Practices;

"GLP"means Good Laboratory Practice;Practices;

"GMP" means Good Manufacturing Practice;Practices;

"IND" means Investigative New Drug application to a regulatory authority for first human testing of a new drug;

"in-vitro" means test tube;

"in-vivo" means live animal;

"ischemia" means the lack of blood flow;

"myocardial infarction" means scarring and death to portions of the heart wall;

"myocardial ischemia" means blockages to parts of the heart muscle;

"NDA" means New Drug Application, which is a request made to the FDA for commencement of product sales and marketing;

"NDS" means New Drug Submission, which is a request made to the HPBTPD for commencement of product sales and marketing;

"NSAID" means non-steroidal anti-inflammatory drugs;

"pharmacodynamics" means the fundamental processes through which a drug(s) exerts its effects on living organisms;

"pharmacokinetics" means the uptake, biotransformation, distribution, metabolism and elimination of a drug(s) by the body, including both total amounts and tissue and organ concentrations;

"reperfusion" means the resumption of blood flow;

"TPD" means the Canadian Therapeutic Products Directorate, formerly the Canadian Health Protection Branch;

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As used in this annual report, the “Corporation” or “Company” refers to “Medicure Inc.”, the company resulting from the amalgamation of Medicure Inc. and Lariat Capital Inc., and “Medicure” refers to “Medicure Inc.” prior to its amalgamation with Lariat Capital Inc. Unless otherwise indicated, all references to dollar amounts in this annual report are to Canadian dollars.

FORWARD LOOKING STATEMENTS

Medicure Inc. cautions readers that certain important factors (including without limitation those set forth in this Form 20-F) may affect the Corporation’s actual results in the future and could cause such results to differ materially from any forward-looking statements that may be deemed to have been made in this Form 20-F annual report, or that are otherwise made by or on behalf of the Corporation. For this purpose,This Annual Report contains forward-looking statements and information which may not be based on historical fact, which may be identified by the words “believes,” “may,” “plan,” “will,” “estimate,” “continue,” “anticipates,” “intends,” “expects,” and similar expressions and the negative of such expressions. Such forward looking statements include, without limitation, statements regarding:

• our intention to further advance our commercial operation and increase AGGRASTAT® product revenue;

• our intention to raise capital through equity or debt financings, collaborative or other arrangements with third parties or through other sources of financing;

• our ongoing corporate restructuring plan;

• our intention to discover and develop new pharmaceuticals;

• our intention to license the sale and distribution of any products we may commercialize to larger, international pharmaceutical companies;

• our plan to move forward with a clinical development program for MC-1 in chronic indications;

• our intention to build a pipeline of pre-clinical products over the next several years, including our drug product candidates currently at the discovery and preclinical stages of development;

• our evaluation of other drug candidates for potential license with the objective of further broadening our product and patent portfolio; and

• our licensing and research collaboration discussions, from time to time, with larger pharmaceutical firms and other biotechnology firms relating to the potential development and commercialization of our product candidates.

Such forward-looking statements containedand information involve a number of assumptions as well as known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements and information including, without limitation:

• the ability to meet its debt obligations;

• dependence on collaborative partners;

• sufficient working capital to meet current obligations;

• our ability to continue as a going concern;

7

• the competitive landscape in the annual reportmarkets which we compete, pricing and/or Medicare/Medicaid positioning for AGGRASTAT®;

• the availability of capital on acceptable terms to pursue the commercialization of AGGRASTAT® and to carry on research and development programs related to MC-1 or other products;

• unanticipated interruptions in our manufacturing operations;

• significant changes in foreign exchange rate;

• the impact of new discoveries and scientific information that are not statementsaffect the competitive positioning of historical fact may be deemed to be forward-looking statements. Without limiting AGGRASTAT® and/or its competitors;

• the generalityimpact of competitive products and pricing;

• the compliance with all long-term debt covenants and obligations;

• the expense and outcome of certain legal and regulatory proceedings and expense thereto;

• the nature of the market for MC-1 in the treatment of chronic cardiovascular and metabolic indications;

• the regulatory approval process leading to commercialization;

• fluctuations in operating results, and other risks as detailed from time to time in our filings with the SEC and the Canadian Securities Administrators;

• our ability to anticipate and manage the risks associated with the foregoing, words such as “may,” “except,” “believe,” “anticipate,” “intend,” “could,” “estimate,”contractual disagreements with third parties;

• the unpredictability of protection provided by our patents;

• the results of continuing safety and efficacy studies by industry and government agencies;

• the regulatory environment and decisions by regulatory bodies impacting our products, fees relating or “continue,” orour and the negative or other variationsfeasibility of comparable terminology, are intendedadditional clinical trials;

• the company’s stage of development;

• lack of product revenues;

• the company’s limited marketing experience

• additional capital requirements;

• risks associated with the completion of clinical trials and obtaining regulatory approval to identify forward-looking statements.

  As used in this annual report,market the "Corporation” refersCompany’s products;

• the ability to “Medicure Inc.”,protect its intellectual property and

• additional risks and uncertainties relating to the company resulting from the amalgamation of Medicure Inc.Company and Lariat Capital Inc., “Medicure” refers to “Medicure Inc.” prior to its amalgamation with Lariat Capital Inc. and “Lariat” refers to Lariat Capital Inc. prior to its amalgamation with Medicure Inc. Unless otherwise indicated, all references to dollar amounts in this annual report are to Canadian dollars.

  Additional information about the Corporation maybusiness can be found atwww.sedar.com.in the “Risk Factors” section of this Annual Report.

These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements and information. The Company disclaims any obligation to update any

8

such factors or to publicly announce the result of any revisions to any of the forward-looking statements and information contained herein to reflect future results, events or developments, except as otherwise required by applicable law.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A. Directors and Senior Management

Not applicable

B. Advisers

Not applicable

C. Auditors

Not applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The selected financial data of the Corporation as at May 31, 20052008 and 20042007 and for the fiscal years ended May 31, 2005,2008, 2007 and 2004 and 20032006 was extracted from the audited consolidated financial statements of the Corporation included in this annual report on Form 20-F. The information contained in the selected financial data is qualified in its entirety by reference to the more detailed consolidated financial statements and related notes included in Item 17 - - Financial Statements, and should be read in conjunction with such financial statements and with the information appearing in Item 5 - Operating and Financial Review and Prospects. The attachedselected financial data as at May 31, 2003, 20022006, 2005 and 20012004 and for the fiscal years ended May 31, 20022005 and 20012004 was extracted from the audited financial statements of the Corporation not included in this annual report. Reference is made to Note 914 of the consolidated financial statements of the Corporation included herein for a discussion of the material measurement differences between Canadian GAAP and U.S. GAAP, and their effect on the Corporation’s financial statements. Except where otherwise indicated, all amounts are presented in accordance with Canadian GAAP.

6

To date, the Corporation has not generated sufficient cash flow from operations to fund ongoing operational requirements and cash commitments. The Corporation has financed its operations principally through the sale of its equity securities. Whilesecurities and the Corporation believes it has sufficient capital and liquidity to finance current operations, nevertheless, itsissuance of debt. The Corporation’s ability to continue operations is dependent on the ability of the Corporation to obtain additional financing. See “Item 3 - Key Information - D. Risk Factors.” Based on the Corporation’s current plans, the Corporation’s available working capital will be sufficient into fiscal 2007.

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Under Canadian Generally Accepted Accounting Principles (in Canadian dollars):

10

Under U.S. Generally Accepted Accounting Principles (in Canadian dollars):

7

Note 1: Includes 1,280,000 Class A common shares outstanding. On March 1, 2003 all of the issued and outstanding Class A common shares – totalling 1,280,000 shares – were converted into common shares of the Corporation on the basis of one common share for each Class A common shares in accordance with the Corporation’s Articles of Continuance. Prior to the conversion, the Class A common shares were identical in all respects to the common shares, except that the holders were eligible for the Manitoba Equity Tax Credit until February 28, 2003.

Comparability of Data

On November 22, 1999, Lariat acquired all of the issued and outstanding common shares of Medicure in consideration for the issuance of 9,500,000 common shares of Lariat. As control of Lariat passed to the former shareholders of Medicure resulting in a reverse acquisition, Medicure is deemed to be the acquirer for accounting purposes. Accordingly, the net assets of Medicure are included in the balance sheet at their book values and the deemed acquisition of Lariat is accounted for by the purchase method with the net assets of Lariat recorded at their fair value at the date of acquisition.

The selected financial data for the fiscal years ended May 31, 2008, 2007, 2006, 2005 2004, 2003, 2002 and 20012004 includes the operations of Medicure International Inc., a Barbados corporation (“Medicure International”), commencing June 1, 2000. The selected financial data for the year ended May 31, 2001 includes the operations of2000, and Medicure Pharma Inc., a United States corporation, and Medicure Europe Limited, a United Kingdom corporation, commencing SeptemberJune 1, 1999 combined with the activities of Lariat beginning on November 22, 1999, the effective date of the reverse takeover.2006.

Dividends

No cash dividends have been declared nor are any intended to be declared. The Corporation is not subject to legal restrictions respecting the payment of dividends except that they may not be paid to renderif the Corporation is, or would after the payment be, insolvent. Dividend policy will be based on the Corporation's cash resources and needs and it is anticipated that all available cash will be required to further the Corporation’s research and development activities for the foreseeable future.

Exchange Rates

Unless otherwise indicated, all reference to dollar amounts are to Canadian dollars. The following table sets out the exchange rates for one Canadian dollar expressed in terms of one U.S. dollar for the periods indicated. Rates of exchange are obtained from the Bank of Canada and believed by the Registrant to approximate closely the noon buying rates in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank in New York.

811

Notes:
⁽¹⁾ Figures are extracted from daily exchange rates

As of June 30, 2005,August 21, 2008, the exchange rate to convert one Canadian dollar into the U.S. dollar was 0.8160..9579.

B. Capitalization and Indebtedness

Not applicable

C. Reasons for the Offer and Use of Proceeds

Not applicable

D. Risk Factors

The Corporation is subject to a number of risks dueCorporation’s business entails significant risks. In addition to the natureusual risks associated with a business, the following is a general description of certain significant risk factors which are applicable to the Corporation.

Going concern risk

The Company recorded a loss of $57,403,000 and negative cash flows from operations of $41,865,000 in the year ended May 31, 2008 and the Company reported an accumulated deficit of $135,233,000 as at May 31, 2008. In March 2008, the Company announced a significant corporate restructuring stemming from the unfavourable results of the Phase 3 MEND-CABG II trial. This restructuring included a significant reduction in numbers of staff and in resources allocated to certain programs. Based on the Company’s operating plan, its existing working capital is not sufficient to meet the cash requirements to fund the Company’s currently planned operating expenses, capital requirements, working capital requirements, long-term debt obligations and commitments beyond the end of the 2009 fiscal year without additional sources of cash and/or deferral, reduction or elimination of significant planned expenditures. The Company’s plan to address the expected shortfall of working capital is to secure additional funding within the next six months and to increase operating revenue and reduce operating expenses. There is no certainty that the Company will be able to obtain any sources of financing on acceptable terms, or at all, or that it will increase product revenue or reduce operating expenses to the extent necessary.

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The ability of the Company to continue as a going concern and to realize the carrying value of its businessassets and discharge its liabilities when due is dependent on many factors, including, but not limited to the present stageactions taken or planned, some of developmentwhich are described above, which management believes will mitigate the adverse conditions and events which raise doubt about the validity of business. The following factors shouldthe “going concern” assumption used in preparing these financial statements. There is no certainty that these and other strategies will be considered:

THE CORPORATION’S PROSPECTS MUST BE CONSIDERED IN LIGHT OF THEDIFFICULTIES FREQUENTLY ENCOUNTERED BY COMPANIES IN THE RESEARCH AND DEVELOPMENT STAGE. MOREOVER, THE CORPORATION IS A RECENTLY PUBLIC CORPORATION WITH A LIMITED HISTORY OF OPERATIONS WHICH MAKESEVALUATION OF ITS PROSPECTS DIFFICULT.

The Corporation began operations in 1997 and its common shares were listed onsufficient to permit the Canadian Venture Exchange from November 23, 1999Company to March 14, 2002. The Corporation commenced trading on the Toronto Stock Exchange (TSX) on March 15, 2002 and on the American Stock Exchange (Amex) on February 17, 2004.continue as a going concern.

The Corporation has concentrated onengaged in a restructuring program designed to reduce costs and conserve capital which may not be successful.

Following MC-1’s failure to achieve its endpoint as announced in February 2008, the Corporation engaged in a restructuring effort which led to the downsizing of 50 staff and consultants in order to reduce expenses and conserve capital. The restructuring may negatively impact the ability of the Corporation to retain qualified management, staff and consultants which may further limit the Corporation’s ability to continue its commercial operations as well as its ongoing research and development activities.

Prior to the acquisition of AGGRASTAT®, the Corporation had no products in commercial production or use. As such, the Corporation was considered to be a development-stage enterprise for accounting purposes prior to the acquisition. The Corporation expects to continue to incur substantial losses and has a limitedmay never achieve profitability, which in turn may harm its future operating history. The Corporation's prospects must be consideredperformance and may cause the market price of its stock to decline.

With the exception of AGGRASTAT®, the Corporation’s products are in lightthe development stage and accordingly, its business operations are subject to all of the risks expenses and difficulties frequently encountered withinherent in the establishment and maintenance of a development stage company in a highly competitive industry, characterized by frequent new product introductions. The Corporation has had no earningsdeveloping business enterprise, such as those related to date,competition and may never have earnings or positive cash flow in the future. As a result of these factors, it is difficult to evaluate the Corporation’s business and prospects for future profitability, and its success is more uncertain than if it had a longer or more proven history of operations.

THE CORPORATION EXPECTS TO CONTINUE TO INCUR SUBSTANTIAL LOSSES AND MAY NEVER ACHIEVE PROFITABILITY, WHICH IN TURN MAY HARM THE FUTURE OPERATING PERFORMANCE AND MAY CAUSE THE MARKET PRICE OF THECORPORATION’S STOCK TO DECLINE.viable operations management.

The Corporation has incurred net losses every year since inception in 1997 and as of May 31, 2005, had an accumulated deficit of $33,520,492.1997. The Corporation incurred net losses of $57,402,521 for the year ended May 31, 2008, $31,703,386 for the year ended May 31, 2007, $12,607,074 for the year ended May 31, 2006, $14,865,910 for the year ended May 31, 2005, and $5,989,086 for the year ended May 31, 2004, $4,193,688 for the year ended May 31, 2003, $3,875,087 for the year ended May 31, 2002 and $3,232,010 for the year ended May 31, 2001.

92004.

The Corporation anticipates that its losses will not only continue for the foreseeable future but will increase significantly principally from expenditures relating to its research and development efforts and clinical trials.future. The long-term profitability of the Corporation’s operations is uncertain, and may never occur, andoccur. The Corporation’s long-term profitability will be directly related to the success of its research and development activities which dependability to develop a commercially viable drug product or products. This in turn depends on numerous factors, including the following:

If the Corporation does achieve profitability, it may not be able to sustain or increase profitability in the future.

THE CORPORATION MAY NEVER RECEIVE REGULATORY APPROVAL IN CANADA OR ABROAD FOR ANY OF ITS PRODUCTS DEVELOPED. THEREFORE, THE CORPORATION MAY NOT BE ABLE TO SELL ANY THERAPEUTIC PRODUCTS DEVELOPED.Substantial cash payments may be required under the terms of the Corporation’s borrowings upon an event of default or change of control. Such cash payments may leave the Corporation with little or no working capital in the business or make the Corporation insolvent.

In September 2007, the Company entered into a debt financing agreement with Birmingham Associates Ltd. (Birmingham), an affiliate of Elliott Associates, L.P. (Elliott) for a US$25 million up-front cash

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payment. Under the terms of the agreement, Birmingham will receive a payment based on a percentage of AGGRASTAT® net sales. Birmingham is entitled to a return of 20 percent on the first US$15 million in AGGRASTAT® revenues, 17.5 percent on the next US$10 million, 15 percent on the next $5 million and 5 percent thereafter, subject to an escalating minimum annual return, until May 31, 2020. The minimum annual returns start at US$2.5 million in 2008 and escalate to US$6.9 million in 2017, with minimum payments over the life of the agreement aggregating US$49.7 million.

In August 2006, the Corporation entered into a term loan financing facility with a syndicate of lenders, led by Merrill Lynch Business Financial Services Inc. (Merrill) (formerly Merrill Lynch Capital Canada Inc.), Silicon Valley Bank and Oxford Finance Corporation (the “Credit Facility”). As at May 31, 2008, the balance outstanding on the Credit Facility is US$12 million. Under the Credit Facility, the Corporation’s lenders may require that all or a portion of the principal amount of the Credit Facility be repaid in cash upon the occurrence of various customary events of default (subject to certain cure periods), including but not limited to:

• the failure to pay principal, fees and/or interest due under the Credit Facility;

• the suspension of the Corporation’s common shares from trading on both the TSX and AMEX;

• the issuance of any judgments or orders against the Corporation for the payment of money (not paid or fully covered by insurance) in an aggregate amount in excess of US$375,000;

• any material default under any indebtedness of the Corporation in an aggregate principal amount exceeding US$375,000;

• any breach of any term of the credit and security agreement under which the Credit Facility was extended or in any other document delivered pursuant thereto;

• a default under any guarantee of the Credit Facility;

• an unpermitted payment by any obligor under the Credit Facility on account of any debt that has been subordinated to the Credit Facility and

• the occurrence of any fact, event or circumstance that could reasonably be expected to result in a material adverse effect.

Upon the occurrence and during the continuance of an event of default, the interest rate on the Credit Facility will be increased by 1.5% . The lenders under the Credit Facility may also require all or a portion of the Credit Facility be redeemed in cash upon a change of control. Pursuant to an amendment to the Credit Facility agreement made as of September 17, 2007, the cash amount of US$12 million was deposited in a cash collateral reserve held by Merrill and to be applied against the Corporation’s obligations under the Credit Facility.

The Corporation’s substantial debt could impair its financial condition. The Corporation is highly leveraged and has substantial debt service obligations which it may not be able to meet in the ordinary course of business.

As of May 31, 2008, the Corporation had approximately US$36.2 million of future principal repayments on its long-term debt. This substantial indebtedness could have important consequences for the Corporation. For example, it could:

• increase the Corporation’s vulnerability to general adverse economic and industry conditions, including increases to interest rates;

14

• impair the Corporation’s ability to obtain additional financing in the future for working capital needs, capital expenditures or general corporate purposes;

• require the Corporation to dedicate a significant portion of its existing cash and proceeds from any future financing transactions to the payment of principal and interest on its debt, which would reduce the funds available for its operations;

• limit the Corporation’s flexibility in planning for, or reacting to, changes in the business and the industry in which it operates; and

• place the Corporation at a competitive disadvantage compared to its competitors that have less debt.

There is no guarantee that the Corporation will be able to meet its obligations under these facilities.

The Corporation may be exposed to short-term liquidity risk.

The Corporation currently relies on trade credit as well as cash from term debt and equity issues to provide the necessary short-term financing to conduct the Corporation’s research and development activities as well as its commercial operations. Should suppliers and other creditors decline to extend short-term credit to the Corporation in the future, it may have a material adverse effect on the Company’s business prospects, financial results and financial condition.

Despite current indebtedness levels and the terms of the Credit Facility, the Corporation may still be able to incur substantially more debt. This could further exacerbate the risks associated with the Corporation’s substantial leverage.

Despite current indebtedness levels and the terms of the Credit Facility, the Corporation may still be able to incur substantial additional indebtedness in the future. Under the Credit Facility, the Corporation is permitted to incur, among other types of indebtedness, indebtedness that is subordinate to the Credit Facility. If new debt is added to the Corporation’s current debt levels, the related risks that it now faces could increase.

The Corporation may never receive regulatory approval in Canada, the United States or abroad for any of its products developed. Therefore, the Corporation may not be able to sell any therapeutic products developed.

The Corporation’s failure to obtain necessary regulatory approvals to fully market its current and future therapeutic products in one or more significant markets may adversely affect the Corporation’sits business, financial condition and results of operations. The procedure involved in obtaining regulatory approval from the competent authorities to market therapeutic products is long and costly and may delay product development. The approval to market a product may be applicable to a limited extent only or it may be refused entirely.

TheWith the exception of AGGRASTAT®, all of the Corporation’s products and technologies are currently in the preliminary research and development stages. The Corporation does not and may never have aanother commercially viable drug formulationproduct approved for marketing. To obtain regulatory approvals for the Corporation’sits products and to achieve commercial success, human clinical trials must demonstrate that the products are safe for human use and that they show efficacy. Unsatisfactory results obtained from a particular study or clinical trial relating to one or more of the Corporation’s products may cause the Corporation to reduce or abandon its commitment to that program.

TheIf the Corporation wouldfails to successfully complete its clinical trials, it will not obtain approval from the Canadian Therapeutic Products Directorate, formerly the Canadian Health Protection Branch (TPD)(“TPD”), or from the United StatesU.S. Food and Drug Administration (FDA)(“FDA”), to market its leadleading product, MC-1 or its second clinical candidate, MC-4232 if it failed to successfully complete its Phase II or Phase III clinical studies.MC-4232. Regulatory approvals also may also be subject to conditions that could limit the

15

market for MC-1 or MC-4232 or make iteither product or both products more difficult or expensive to sell than anticipated. Also, regulatory approvals may be revoked for a variety of reasons at any time, including the Corporation’sfor failure to comply with regulatory requirements or poor performance of MC-1 or MC-4232 in terms of safety and effectiveness.

The Corporation’s business, financial condition and results of operations may be adversely affected if it failedfails to obtain regulatory approvals in Canada, the United States orand abroad to market and sell MC-1 or MC-4232 or any current or future therapeuticdrug products, including any limitations imposed to marketon the marketing of such products.

THE CORPORATION MAY NOT BE ABLE TO HIRE OR RETAIN THE QUALIFIED SCIENTIFIC, TECHNICAL AND MANAGEMENT PERSONNEL IT REQUIRES.The Corporation may not be able to hire or retain the qualified scientific, technical and management personnel it requires.

The Company’s business prospects and operations depend on the continued contributions of certain of the Company’s executive officers and other key management and technical personnel, certain of whom would be difficult to replace.

The Corporation is underhas a contract with CanAm Bioresearch Inc. (“CanAm”) to perform for it a significant amount of its research and development activities. Because of the specialized scientific nature of the Corporation’s business, the loss of services of CanAm may require the Corporation to attract and retain replacement qualified scientific, technical and management personnel. Competition in the biotechnology industry for such

10

personnel is intense and the Corporation may not be able to hire or retain a sufficient number of qualified personnel, which may compromise the pace and success of its research and development activities.

Also, certain management personnel of the CorporationCorporation’s management personnel are officers and/or directors of other publicly- traded companies, some publicly-traded, and will only devote part of their time to the Corporation. The Corporation does not have key manperson insurance in effect in the event of a loss of any management, scientific or other key personnel. The loss of the services of one or more of the Company’s current executive officers or key personnel or the inability to continue to attract qualified personnel could have a material adverse effect on the Company’s business prospects, financial results and financial condition.

THE CORPORATION FACES SUBSTANTIAL TECHNOLOGICAL COMPETITION FROM MANY BIOTECHNOLOGY COMPANIES WITH MUCH GREATER RESOURCES, AND IT MAY NOT BE ABLE TO EFFECTIVELY COMPETE.The Corporation faces substantial technological competition from many biotechnology companies with much greater resources, and it may not be able to effectively compete.

Technological and scientific competition in the pharmaceutical and biotechnology industry is intense. The Corporation competes with other companies in Canada, the United States and abroad to develop products designed to treat similar conditions. Many of these other companies have substantially greater financial, technical and scientific research and development resources, manufacturing and production and sales and marketing capabilities than the Corporation. SmallerSmall companies may also prove to be significant competitors, particularly through collaborative arrangements with large pharmaceutical and biotechnology companies. Developments by other companies may adversely affect the competitiveness of the Corporation’s products or technologies or the commitment of the Corporation’sits research and marketing collaborators to its programs or even render the Corporation’sits products obsolete.

The pharmaceutical and biotechnology industry is also characterized by extensive drug discovery and drug research efforts and rapid technological and scientific change. Competition can be expected to increase as technological advances are made and commercial applications for biopharmaceutical products increase. Competitors of the CorporationThe Corporation’s competitors may use different technologies or approaches to develop products similar to the products which the Corporationit is seeking to develop,developing, or may develop new or enhanced products foror processes that may be more effective, less expensive, safer or more readily available before or after the Corporation obtains approval of its products. The Corporation may not be able to successfully compete with its competitors or their products and, if it is unable to do so, the Corporation’s business, financial condition and results of operations may suffer.

THE CORPORATION MAY BE UNABLE TO ESTABLISH COLLABORATIVE AND COMMERCIAL RELATIONSHIPS WITH THIRD PARTIES.16

The Corporation may be unable to establish collaborative and commercial relationships with third parties.

The Corporation’s success of the Corporation will depend partly on its ability to enter into and to maintain various arrangements with corporate partners, licensors, licensees and others for the research, development, clinical trials, manufacturing, marketing, sales and commercialization of its products. To date,These relationships will be crucial to the Corporation has not entered intoCorporation’s intention to license to or contract with larger, international pharmaceutical companies the manufacturing, marketing, sales and distribution of any such arrangements andproducts it may nevercommercialize for production. There can be able to establish such arrangementsno assurance that any licensing or other agreements will be established on favourable terms.terms, if at all. The failure to establish successful collaborative arrangements with respect to certain products may negatively impact the Corporation'sCorporation’s ability to develop and commercialize thoseits products, and may adversely affect the Corporation’sits business, financial condition and results of operations.

The Corporation’s financing agreement with Birmingham Associates includes certain restrictive covenants on the corporations commercial and developmental products including intellectual property. The ability for the company to execute on portions of its business plan may be contingent on having collaborative relationships with Birmingham. The failure to establish or maintain this successful collaborative arrangement may negatively impact the Corporation.

The Corporation has licensed certain technologies relating to products under development and may enter into future licensing agreements. The Corporation'sCorporation’s current licensing agreements contain provisions allowing the licensors to terminate such agreements if the Corporationit becomes insolvent or breachesbreach the terms and conditions of the licensing agreement,agreements without rectifying same upon notice.such event of default in accordance with the agreement terms.

THE CORPORATION DOES NOT HAVE MANUFACTURING OR MARKETING EXPERIENCE AND MAY NEVER BE ABLE TO SUCCESSFULLY MANUFACTURE OR MARKET ITS PRODUCTS.The Corporation is currently dependent on a single manufacturer of its sole commercial product, AGGRASTAT and on a single supplier of raw material used in the manufacture of AGGRASTAT.

The Corporation is reliant on a single supplier of the raw material for AGGRASTAT and a single third party manufacturer of the final product AGGRASTAT. If the supply of raw material or the manufacturing agreement for AGGRASTAT is terminated or interrupted and the Corporation was unable to obtain a replacement supplier or manufacturer, it could have a material adverse effect on the Company’s business prospects, financial results and financial condition.

The Corporation may fail to obtain acceptable prices or appropriate reimbursement for its products and its ability to successfully commercialize its products may be impaired as a result.

Government and insurance reimbursements for healthcare expenditures play an important role for all healthcare providers, including physicians, medical device companies, drug companies, medical supply companies, and companies, such as the Corporation, that plan to offer various products in the United States and other countries in the future. The Corporation’s ability to earn sufficient returns on its products will depend in part on the extent to which reimbursement for the costs of such products, related therapies and related treatments will be available from government health administration authorities, private health coverage insurers, managed care organizations, and other organizations. In the United States, the Corporation’s ability to have its products and related treatments and therapies eligible for Medicare or private insurance reimbursement will be an important factor in determining the ultimate success of its products. If, for any reason, Medicare or the insurance companies decline to provide reimbursement for the Corporation’s products and related treatments, the Corporation’s ability to commercialize its products would be adversely affected. There can be no assurance that the Corporation’s products and related treatments will be eligible for reimbursement.

There has been a trend toward declining government and private insurance expenditures for many healthcare items. Third-party payers are increasingly challenging the price of medical products and services.

If purchasers or users of the Corporation’s products and related treatments are not able to obtain appropriate reimbursement for the cost of using such products and related treatments, they may forgo or

17

reduce such use. Even if the Corporation’s products and related treatments are approved for reimbursement by Medicare and private insurers, of which there can be no assurance, the amount of reimbursement may be reduced at times, or even eliminated. This would have a material adverse effect on the Corporation’s business, financial condition, and results of operations.

Significant uncertainty exists as to the reimbursement status of newly approved healthcare products, and there can be no assurance that adequate third-party coverage will be available.

The Corporation does not have manufacturing or experience and has limited marketing experience and may never be able to successfully manufacture or market certain of its products.

The Corporation has no experience in large-scale manufacturing and has no experience in marketing or selling its products andexcept for limited experience marketing AGGRASTAT®. The Corporation may never be able to successfully manufacture and market certain of its products. If the TPD or FDA approves MC-1, MC-4232 or any futureother of its products, the Corporation intends to contract with and rely on third parties to manufacture, orand possible to market and sell its products. Accordingly, the quality, timing and ultimately the commercial success of such products may be outside of the Corporation’s control. Failure of or delay by a third party manufacturer of the Corporation'sCorporation’s products to comply with Good Manufacturing Practicesgood manufacturing practices or similar quality control regulations or satisfy regulatory inspections may have a material adverse effect on its future prospects. Failure of or delay by a third party in the future prospectsmarketing or selling of the Corporation. Also, providers, payersCorporation’s products or patientsfailure of the Corporation to successfully market and sell such products likewise may have a material adverse effect on its future prospects.

The Corporation has limited product liability insurance and may not acceptbe able to obtain adequate product liability insurance in the Corporation's products, even if they prove to be

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safe and effective and are approved for marketing by the TPD, the FDA and other regulatory authorities. The Corporation estimates that it may take up to three years or longer before the Corporation's initial products may be sold commercially. Other competitors may be in a position to bring competing products to market within a shorter time frame.

THE CORPORATION HAS LIMITED PRODUCT LIABILITY INSURANCE AND MAY NOT BE ABLE TO OBTAIN ADEQUATE PRODUCT LIABILITY INSURANCE IN THE FUTURE.future.

The sale and use of products under development by the Corporation, and the conduct of clinical studies involving human subjects, may entail product and professional liability risks, which are inherent in the testing, production, marketing and sale of new drugs to humans. While the Corporation has taken, and will continue to take, what it believes are appropriate precautions, there can be no assurance that the Corporationit will avoid significant liability exposure. Although the Corporation currently carries product liability insurance for clinical trials, there can be no assurance that it has sufficient coverage, or can in the future obtain sufficient coverage at a reasonable cost. An inability to obtain insurance on economically feasible terms or to otherwise protect against potential product liability claims could inhibit or prevent the commercialization of products developed by the Corporation. The obligation to pay any product liability claim or recall a product may have a material adverse effect on theits business, financial condition and future prospects of the Corporation.prospects. In addition, even if a product liability claim is not successful, adverse publicity and the time and expense of defending such a claim may significantly interfere with the Corporation’s business.

IF THE CORPORATION IS UNABLE TO SUCCESSFULLY PROTECT ITS PROPRIETARY RIGHTS, THE CORPORATION’S COMPETITIVE POSITION WILL BE ADVERSELY AFFECTED.If the Corporation is unable to successfully protect its proprietary rights, its competitive position will be adversely affected.

The Corporation’s success of the Corporation will depend partly on its ability to obtain and protect its patents and protect its proprietary rights in unpatented trade secrets.

The Corporation owns or jointly owns 1539 United States patents and has received a Notice of Allowance for two other patents from the United States Patent Office.patents. The Corporation has an additional 15 pending United States patent applications. The Corporation’s pending and any future patent applications may not be accepted by the United States Patent and Trademark Office or any other jurisdiction in which applications may be filed. Also, processes or products that may be developed by the Corporation in the future may not be patentable.

The patent protection afforded to biotechnology and pharmaceutical companies is uncertain and involves many complex legal, scientific and factual questions. There is no clear law or policy involving the degree of protection afforded under patents. As a result, the scope of patents issued to the Corporation may not successfully prevent third parties from developing similar or competitive products. Competitors may develop similar or competitive products that do not conflict with the Corporation’s patents. Litigation may be commenced by the Corporation to prevent infringement of its patents. Litigation may also

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commence against the Corporation to challenge the Corporation’sits patents that, if successful, may result in the narrowing or invalidating of such patents. It is not possible to predict how any patent litigation will affect the Corporation'sCorporation’s efforts to develop, manufacture or market its products. However, the cost of litigation to prevent infringement or uphold the validity of any patents issued to the Corporation may be significant, in which case the Corporation’sits business, financial condition and results of operations may suffer. Patents provide protection for only a limited period of time, and much of such time can occur well before commercialization commences.

Disclosure and use of the Corporation'sCorporation’s proprietary rights in unpatented trade secrets not otherwise protected by patents are generally controlled by written agreements. However, such agreements will not provide the Corporation with adequate protection if they are not honoured, others independently develop an equivalent technology, disputes arise concerning the ownership of intellectual property, or the Corporation'sits trade secrets are disclosed improperly. To the extent that consultants or other research collaborators use intellectual property owned by others in their work with the Corporation, disputes may also arise as to the rights to related or resulting know-how or inventions.

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OTHERS COULD CLAIM THAT THE CORPORATION INFRINGES ON THEIRPROPRIETARY RIGHTS, WHICH MAY RESULT IN COSTLY AND TIME CONSUMING LITIGATION.Others could claim that the Corporation infringes on their proprietary rights, which may result in costly, complex and time consuming litigation.

The Corporation’s success of the Corporation will depend partly on its ability to operate without infringing upon the patents and other proprietary rights of third parties. To the best of its knowledge, theThe Corporation is not currently aware that any of its products or processes infringeinfringes the proprietary rights of third parties. However, despite theits best efforts, of the Corporation it may be sued for infringing on the patent or other proprietary rights of third parties at any time in the future.

Such litigation, with or without merit, is time-consuming and costly and may significantly impact the Corporation’s financial condition and results of operations, even if the Corporationit prevails. If itthe Corporation does not prevail, the Corporation, in addition to any damages it may have to pay, may be required to stop the infringing activity or enter into a royalty or licensing agreement.agreement, in addition to any damages it may have to pay. The Corporation may not be able to obtain such a license or the terms of the royalty or license may be burdensome for the Corporation,it, which may significantly impair itsthe Corporation’s ability to market its products and adversely affect theits business, financial condition and results of operations.

The Corporation is subject to stringent governmental regulation, in the future may become subject to additional regulations and if it is unable to comply, its business may be materially harmed.

Biotechnology, medical device, and pharmaceutical companies operate in a high-risk regulatory environment. The TPD, FDA, and other health agencies can be very slow to approve a product and can also withhold product approvals. In addition, these health agencies also oversee many other medical product operations, such as research and development, manufacturing, and testing and safety regulation of the Corporation.

THE CORPORATION IS, AND IN THE FUTURE MAY BECOME, SUBJECT TOADDITIONAL GOVERNMENTAL REGULATIONS AND IF IT IS UNABLE TO COMPLY WITH THEM, THE CORPORATION’S BUSINESS MAY BE MATERIALLY HARMED.medical products. As a result, regulatory risk is normally higher than in other industry sectors.

The Corporation is or may become subject to various federal, provincial, state and local laws, regulations and recommendations. The Corporation is subject to various laws and regulations in Canada, relating to product emissions, use and disposal of hazardous or toxic chemicals or potentially hazardous substances, infectious disease agents and other materials, and laboratory and manufacturing practices used in connection with its research and development activities. If the Corporation fails to comply with these regulations, the Corporationit may be fined or suffer other consequences that could materially affect its business, financial condition or results of operations.

The Corporation is unable to predict the extent of future government regulations or industry standards. However, it should be assumed that government regulations or standards will increase in the future. New regulations or standards may result in increased costs, including costs for obtaining permits, delays or fines resulting from loss of permits or failure to comply with regulations.

The Corporation’s products may not gain market acceptance, and as a result it may be unable to generate significant revenues.

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THE CORPORATION WILL NEED TO RAISE ADDITIONAL CAPITAL THROUGH THE SALE OF ITS SECURITIES, RESULTING IN DILUTION TO THE EXISTINGExcept with respect to AGGRASTAT®,SHAREHOLDERS, AND WHICH MAY NOT BE AVAILABLE, ADVERSELY AFFECTING ITS OPERATIONS.the Corporation does not currently have the required clinical data and results to successfully market its product candidates in any jurisdiction; future clinical or preclinical results may be negative or insufficient to allow it to successfully market any of its product candidates; and obtaining needed data and results may take longer than planned, and may not be obtained at all.

Even if the Corporation’s products are approved for sale, they may not be successful in the marketplace. Market acceptance of any of the Corporation’s products will depend on a number of factors, including demonstration of clinical effectiveness and safety; the potential advantages of its products over alternative treatments; the availability of acceptable pricing and adequate third-party reimbursement; and the effectiveness of marketing and distribution methods for the products. Providers, payors or patients may not accept the Corporation’s products, even if they prove to be safe and effective and are approved for marketing by the TPD, the FDA and other regulatory authorities. The Corporation estimates that it may take up to two years or longer before its initial products may be sold commercially. If the Corporation’s products do not gain market acceptance among physicians, patients, and others in the medical community, its ability to generate significant revenues from its products would be limited.

The Corporation hasmay not to date generated any revenues from sales. achieve its projected development goals in the time frames it announces and expects.

The Corporation sets goals for and makes public statements regarding timing of generationthe accomplishment of objectives material to its success, such as the commencement and completion of clinical trials, anticipated regulatory approval dates, and time of product launch. The actual timing of these events can vary dramatically due to factors such as delays or failures in the Corporation’s clinical trials, the uncertainties inherent in the regulatory approval process, and delays in achieving product development, manufacturing or marketing milestones necessary to commercialize its products. There can be no assurance that the Corporation’s clinical trials will be completed, that it will make regulatory submissions or receive regulatory approvals as planned, or that it will be able to adhere to its current schedule for the scale-up of manufacturing and launch of any salesof its products. If the Corporation fails to achieve one or more of these milestones as planned, that could materially affect its business, financial condition or results of operations and the price of its common shares could decline.

The Corporation’s business involves the use of hazardous material, which requires it to comply with environmental regulations.

The Corporation manufacturers Aggrastat in commercial quantities. In addition the Corporation’s research and development processes involve the controlled storage, use, and disposal of hazardous materials and hazardous biological materials. The Corporation is uncertain. Basedsubject to laws and regulations governing the use, manufacture, storage, handling, and disposal of such materials and certain waste products. Although the Corporation believes that its safety procedures for handling and disposing of such materials comply with the standards prescribed by such laws and regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, the Corporation could be held liable for any damages that result, and any such liability could exceed its resources. There can be no assurance that the Corporation will not be required to incur significant costs to comply with current or future environmental laws and regulations, or that its business, financial condition, and results of operations will not be materially or adversely affected by current or future environmental laws or regulations.

The Corporation’s insurance may not provide adequate coverage with respect to environmental matters.

Environmental regulation could have a material adverse effect on the Corporation’s current plans,results of the Corporation’s operations and its financial position.

The Corporation is subject to a broad range of environmental regulations imposed by federal, state, provincial, and local governmental authorities. Such environmental regulation relates to, among other things, the handling and storage of hazardous materials, the disposal of waste, and the discharge of

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contaminants into the environment. Although the Corporation believes that it is in material compliance with applicable environmental regulation, as a result of the potential existence of unknown environmental issues and frequent changes to environmental regulation and the interpretation and enforcement thereof, there can be no assurance that compliance with environmental regulation or obligations imposed thereunder will not have a material adverse effect on the Corporation in the future.

The Corporation is exposed to foreign exchange movements since the majority of its debt financing and its commercial sales operations are denominated in U.S. currency.

At May 31, 2008, the Corporation had US$36.2 million in debt offset by US$19.5 million in cash and cash equivalents. As well, the majority of the Corporation’s sales revenues and a substantial portion of its selling, general and administrative expenses are denominated in U.S. dollars. The Company does not utilize derivatives, such as foreign currency forward contracts and futures contracts, to manage its exposure to currency risk and as a result a change in the value of the Canadian dollar against the U.S. dollar could have a negative impact on the Company’s business prospects, financial results and financial condition.

The Corporation is exposed to changes in underlying interest rates on the portion of its debt financed based on floating interest rates.

The Company is exposed to interest rate risk on a portion of its debt financing and there are no financial contracts in place to offset this risk. An increase in underlying interest rates could have a negative impact on the Company’s financial results and financial condition.

The Corporation may need to raise additional capital through the sale of its securities, resulting in dilution to its existing shareholders. Such funds may not be available, working capital willor may not be sufficient into fiscal 2007.available on reasonable terms, adversely affecting the Corporation’s operations.

The Corporation has limited financial resources and has financed its operations through the sale of securities, primarily common shares. The Corporation has significant on-going cash expenses and limited ability to generate cash from operations. To meet its on-going cash needs the Corporation will need to continue its reliance on the sale of such securities for future financing, resulting in dilution to the Corporation’sits existing shareholders. The Corporation'sCorporation’s long-term capital requirements may be notably significant and will depend on many factors, including continued scientific progress in its product discovery and development program, progress in its pre-clinical and clinical evaluation of products and product candidates, time and expense associated with filing, prosecuting and enforcing its patent claims and costs associated with obtaining regulatory approvals. In order to meet such capital requirements, the Corporation will consider contract fees, collaborative research and development arrangements, public financing or additional private financing (including the issuance of additional equity securities) to fund all or a part of particular programs.

The Corporation’s business, financial condition and results of operations will depend on its ability to obtain additional financing which may not be available under favourable terms, if at all. The Corporation’s ability of the Corporation to arrange such financing in the future will depend in part upon the prevailing capital market

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conditions as well as theits business performance of the Corporation.performance. If the Corporation’sits capital resources are exhausted and adequate funds are not available, itthe Corporation may have to reduce substantially or eliminate expenditures for research and development, testing, production and marketing of its proposed products, or obtain funds through arrangements with corporate partners that require the Corporationit to relinquish rights to certain of its technologies or products.

FUTURE ISSUANCE OF THE CORPORATION’S COMMON SHARES WILL RESULT IN DILUTION TO THE EXISTING SHAREHOLDERS. ADDITIONALLY, FUTURE SALES OF THE CORPORATION’S COMMON SHARES INTO THE PUBLIC MARKET MAY LOWER THE MARKET PRICE WHICH MAY RESULT IN LOSSES TO THE CORPORATION’S SHAREHOLDERS.Future issuance of the Corporation’s common shares will result in dilution to its existing shareholders. Additionally, future sales of the Corporation’s common shares into the public market may lower the market price which may result in losses to its shareholders.

As of May 31, 2005,2008, the Corporation had 66,826,660130,307,552, common shares issued and outstanding. A further 2,372,3334,614,383 common shares are issuable upon exercise of outstanding stock options and another 502,40316,065,381 common shares are issuable upon exercise of share purchase warrants, all of which may be exercised in

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the future resulting in dilution to the Corporation’s shareholders. The Corporation’s stock option plan allows for the issuance of stock options to purchase up to a maximum of 4,700,00010% of the outstanding common shares issued and outstanding as of May 31, 2005. Under the plan the Corporation is able to grant an additional 1,346,667 share options as at May 31, 2005. These common shares, including theany time. The common shares to be issued upon exercise of the outstanding options and warrants arewill be freely tradable.tradable and not subject to any hold period when issued.

Sales of substantial amounts of the Corporation’s common shares into the public market, or even the perception by the market that such sales may occur, may lower the market price of its common shares.

THE CORPORATION’S COMMON SHARES MAY EXPERIENCE EXTREME PRICE AND VOLUME VOLATILITY WHICH MAY RESULT IN LOSSES TO THE SHAREHOLDERS OF THE CORPORATION.The Corporation’s common shares may experience extreme price and volume volatility which may result in losses to its shareholders.

On May 31, 2005,2008, the Corporation’s common shares closed at a price of $1.03 (US$0.82CDN$0.07 on the Amex).TSX and US$0.06 on the AMEX. For the period from June 1, 20042007 to May 31, 2005,2008, the high and low trading prices of the Corporation’s common shares on the TSX were $1.87CDN$1.70 and $0.65,CDN$0.06, respectively, with a total trading volume of 56,599,000114,926,000 shares. For the period from June 1, 20042007 to May 31, 2005,2008, the high and low trading prices of the Corporation’s common shares on the AmexAMEX were US$1.371.65 and US$0.57,0.05, respectively, with a total trading volume of 5,996,400.61,259,600.

Daily trading volume on the TSX inof the Corporation’s common stockshares for the period from June 1, 20042007 to May 31, 20052008 has fluctuated, with a high of 5,660,30025,845,200 shares and a low of 2,400 shares,5,500shares, averaging approximately 224,599457,873 shares. Daily trading volume on the AmexAMEX in the Corporation’s common stockshares for the period from June 1, 20042007 to May 31, 20052008 has fluctuated with a high of 560,10010,301,400 and a low of nil,4,700, averaging approximately 23,795.243,094. Accordingly, the trading price of the Corporation’s common stockshares may be subject to wide fluctuations in response to a variety of factors including announcement of material events by the Corporation such as the status of required regulatory approvals for the Corporation’sits products, competition by new products or new innovations, fluctuations in theits operating results, of the Corporation, general and industry-specific economic conditions and developments pertaining to patent and proprietary rights. The trading price of the Corporation’s common shares may be subject to wide fluctuations in response to a variety of factors and/or announcements concerning such factors, including:

• Theactual or anticipated period-to-period fluctuations in financial results;

• litigation or threat of litigation;

• failure to achieve, or changes in, financial estimates by securities analysts;

• new or existing products or services or technological innovations by the Corporation or its competitors;

• comments or opinions by securities analysts or major shareholders;

• conditions or trends in the pharmaceutical, biotechnology and life science industries;

• significant acquisitions, strategic partnerships, joint ventures or capital commitments;

• results of, and developments in, the Corporation’s research and development efforts, including results and adequacy of, and developments in, its clinical trials and applications for regulatory approval;

• additions or departures of key personnel;

• sales of the Corporation’s common shares, including by holders of the notes on conversion or repayment by the Corporation in common shares;

• economic and other external factors or disasters or crises;

• limited daily trading volume; and

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• developments regarding the Corporation’s patents or other intellectual property or that of its competitors.

     In addition, the securities markets in the United States and Canada have recently experienced a high level of price and volume volatility, and the market price of securities of biotechnology companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. In addition, because of the limited public float, there may be limited liquidity for the Common Shares.Corporation’s common shares. It is expected that such fluctuations in price and limited liquidity will continue in the foreseeable future which may make it difficult for a shareholder to sell shares at a price equal to or above the price at which the shares were purchased.

THE CORPORATION’S COMMON SHARES ARE CONSIDERED “PENNY STOCK” WHICH MAY HAVE THE EFFECT OF REDUCING THE LEVEL OF TRADING ACTIVITY AND MAKE IT MORE DIFFICULT TO SELL SUCH SHARES.

14There may not be an active, liquid market for the Corporation’s common shares.

TheThere is no guarantee that an active trading market for the Corporation’s common shares are “penny stock” as defined bywill be maintained on AMEX or the TSX. Investors may not be able to sell their shares quickly or at the latest market price if trading in its common shares is not active. On June 18, 2008, the Corporation announced its intention to file a Form 25 with the Securities and Exchange Commission which mightin order to voluntarily delist its common shares from the Amex. The Corporation’s shares ceased trading on the Amex effective July 3, 2008.

If there are substantial sales of the Corporation’s common shares, the market price of its common shares could decline.

Sales of substantial numbers of the Corporation’s common shares could cause a decline in the market price of its common shares. Any sales by existing shareholders or holders of options or warrants may have an adverse effect on the Corporation’s ability to raise capital and may adversely affect the trading market for the shares. Penny stocks are generally equity securities with a price of less than U.S.$5.00 other than securities registered on certain national securities exchanges or quoted on the NASDAQ National Market. The Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and compensation information must be given to the customer orally or in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that is subject to the penny stock rules, such as the Corporation’s shares which are considered “penny stock”, and therefore make it more difficult to sell thosecommon shares.

The Corporation commenced trading onhas no history of paying dividends, does not intend to pay dividends in the Toronto Stock Exchange on March 15, 2002foreseeable future and on the American Stock Exchange on February 17, 2004.

THE CORPORATION HAS NO HISTORY OF PAYING DIVIDENDS, DOES NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE AND MAY NEVER PAY DIVIDENDS.may never pay dividends.

Since incorporation, the Corporation has not paid any cash or other dividends on its common stockshares and does not expect to pay such dividends in the foreseeable future as all available funds will be invested to finance the growth of its business. The Corporation will need to achieve profitability prior to any dividends being declared, which may never happen.

INVESTORS MAY NOT BE ABLE TO SECURE FOREIGN ENFORCEMENT OF CIVIL LIABILITIES AGAINST OUR MANAGEMENTIf the Corporation’s is classified as a “passive foreign investment company” for United States income tax purposes, it could have significant and adverse tax consequences to United States holders of its common shares.

The enforcement by investors of civil liabilities underCorporation does not believe that it was a “passive foreign investment company” for the federal securities laws oftaxable year ended May 31, 2008, and does not expect that it will be a “passive foreign investment company” (PFIC) for the United States maytaxable year ending May 31, 2009. (See more detailed discussion in Item 10 E – Taxation) However, there can be adversely affectedno assurance that the IRS will not challenge the determination made by the factCorporation concerning its “passive foreign investment company” status or that the Corporation is organized underwill not be a “passive foreign investment company” for the laws of Canada,current taxable year or any subsequent taxable year. Accordingly, although the Corporation expects that all of its officers and directors are residents of a foreign country and that all or a substantial portion of its assets and such person's assets are located outside of the United States. As a result, it may be a QFC for the taxable year ending May 31, 2009, there can be no assurances that the IRS will not challenge the determination made by the Corporation concerning its QFC status, that the Corporation will be a QFC for the taxable year ending May 31, 2009 or any subsequent taxable year, or that the Corporation will be able to certify that it is a QFC in accordance with the certification procedures issued by the Treasury and the IRS.

The Corporation’s classification as a PFIC could have significant and adverse tax consequences for United States holders of its common shares.

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The Corporation has adopted a shareholder rights plan.

The Corporation has adopted a shareholder rights plan. The provisions of such plan could make it more difficult for holdersa third party to acquire a majority of the Common SharesCorporation’s outstanding common shares, the effect of which may be to effect servicedeprive the Corporation’s shareholders of a control premium that might otherwise be realized in connection with an acquisition of its common shares.

Risks associated with Material weaknesses within the Company’s financial reporting and review process

In connection with its review of the Company’s internal control over financial Reporting, KPMG, the Company’s external auditors, identified a martial weakness with the Company’s financial reporting and review process, involving the preparation and review of the reconciliation form Canadian GAAP to United States GAAP. Based on such persons withindetermination, the United StatesCompany’s management concluded that the Company’s internal control over financial reporting was not effective. The company either plans to ensure adequate personnel are available with the necessary training and expertise or reliance on a external third party to realizeprovided this control, any failure to remediate the material weakness, to implement the required new or improved control, or difficulties encountered in the United States upon judgments rendered against them.implementation, could cause the Company to fail to meet its reporting obligations on a timely basis ore result in material misstatements in the annual or interim financial statements. Inadequate internal control over financial reporting could also cause investor to lose confidence in the Company’s reported financial information, which could cause the Company’s stock price to decline

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

On December 22, 1999, the Corporation was formed by the amalgamation of Medicure Inc. with Lariat Capital Inc. (“Lariat”) was incorporated by Certificate of Incorporation issued pursuant to the provisions of theBusiness Corporations Act (Alberta) on June 3, 1997. On February 11, 1999, by Certificate of Amendment and Registration of Restated Articles, the Articles of Lariat were amended to remove the private company restriction. Lariat was formed as a Junior Capital Pool company, as defined by, and under the rules of the Alberta Stock Exchange with the expressed intent of acquiring a project or company through a reverse take over. With the exception of this intent and the associated search for potential acquisitions, Lariat had no substantial prior business activities.

Medicure Inc. (“Medicure”) was incorporated by Certificate of Incorporation issued pursuant to the provisions ofThe Corporations Act (Manitoba) on September 15, 1997. Medicure was continued from Manitoba to Alberta by Certificate of Continuance issued pursuant to the provisions of theBusiness

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Corporations Act (Alberta) on December 3, 1999. On December 22, 1999, Medicure and Lariat were amalgamated by Certificate of Amalgamation issued pursuant to the provisions of theBusiness Corporations Act (Alberta) as Medicure Inc.. The Corporation was continued from Alberta to the federal jurisdiction by Certificate of Continuance issued pursuant to the provisions of theCanada Business Corporations Acton February 23, 2000.

Medicure was formed as a private Manitoba company to advance the discoveries of Dr. Naranjan Dhalla of the University of Manitoba. Dr. Dhalla and Dr. Albert Friesen were the principal owners of the corporation as first formed, together with certain other individuals who contributed to the project. The first order of business was the completion of a licensing agreement to acquire the technology rights from the University of Manitoba, which owned the technology by virtue of the fact that it was invented by employees of the University. From that date until the merger with Lariat, the Corporation's primary focus was on the preclinical testing and development of the lead product, identified as MC-1. In 1998 other research involving synthesis and testing of other potential therapeutics was commenced through a research contract with the University of Manitoba. Various business activities were conducted in support of these primary research projects including but not limited to; (1) the application for and approval of government sponsored research awards, (2) the search for alternative sources of investment capital to fund operations, and (3) the ongoing search for other potential therapeutics. Business and administrative functions were handled by Genesys Venture Inc., a consulting corporation, that at the time, was owned entirely by Dr. Friesen. Operations and research, until the merger, were primarily funded by Dr. Friesen, with assistance from government grants. On November 22, 1999 Medicure was acquired by Lariat by way of a reverse takeover as Lariat’s “Major Transaction” as a Junior Capital Pool company within the meaning of the Alberta Securities Commission Rule 46-501, the Alberta Securities Commission Companion Policy 46-501CP and The Alberta Stock Exchange Circular 7. Pursuant to the terms of the Major Transaction, Lariat acquired all of the issued and outstanding shares of Medicure in exchange for 9,500,000 shares of Lariat, at a deemed price for securities regulatory purposes only of $0.20 per share for aggregate deemed value of $1,900,000. The Major Transaction was negotiated entirely at arm’s length. As a result of the share exchange, control of Lariat passed to the former shareholders of Medicure. This type of transaction is commonly referred to as a “reverse takeover”. Under reverse takeover accounting, for financial reporting purposes, the Corporation is considered to be a continuation of the operations formerly carried on by Medicure.

The Corporation’s current legal and commercial name is Medicure Inc. and its current registered office is 30^th Floor, 360 Main Street, Winnipeg, Manitoba, Canada, R3C 4G1.4G1, Phone (204) 487-7412 The Corporation’s head office is located at 4-1200 Waverley Street, Winnipeg, Manitoba, Canada, R3T 0P4.

The MC-1 technology was originally licensedIn August 2006, the Corporation acquired the U.S. rights to Genesys Pharma Inc. by the University of Manitoba, on August 18, 1997. Genesys Pharma Inc., which had made a small investment on some preliminary research, transferred the technology without cost, except for costs designatedits first commercial product, AGGRASTAT® Injection (tirofiban hydrochloride) in the license, to Medicure Inc. onUnited States and its territories (Puerto Rico, Virgin Islands and Guam) for US$19,000,000.

In September 26, 1997. On August 30, 1999 Medicure Inc. completed2007, the Corporation monetized a new licensepercentage of its current and potential future commercial revenues by entering into a debt financing agreement with Birmingham Associates Ltd. (Birmingham), an affiliate of Elliott Associates, L.P. (Elliott) for proceeds of US$25 million. (See Item 5 B – Liquidity and Capital Resources)

In February 2008, the University of Manitoba in orderCompany announced that its pivotal Phase III MEND-CABG II clinical trials with MC-1 did not meet the primary endpoint and as a result was not sufficient to slightly modifysupport the termsfilings. As a result of the original license agreement transferred from Genesys Pharma Inc., and to havestudy results, the documentation properly preparedCompany announced a restructuring plan that resulted in the Corporation’s own name.

On June 1, 2000organization its head count by approximately 50 employees and full-time consultants. The restructuring and downsizing in March 2008 did conserve capital for ongoing operations. The Company continues to look for areas were it can reduce overhead and further conserve capital and will continue to do so into the Corporation licensed the world-wide development2009 fiscal year. The company is also exploring various alternatives for further strengthening its financial position and marketing rights (except for Canada) for MC-1, the Corporation’s lead product, to the Corporation’s wholly owned subsidiary, Medicure International. Medicure International then entered into a Development Agreement with CanAm to perform research and developmentwill provide additional guidance as appropriate. The Company’s near term focus will be on MC-1 and other compounds at cost, plus a reasonable mark-up not to exceed ten percent of any amount invoiced. The parties to the Development Agreement agreed that the aggregate amount of all invoiced expenditures shall not exceed $20,000,000 over the term of the agreement. CanAm is a private Canadian company owned by Marcus Enns, a former employee of the Corporation and Peter de Visser, a former director of the Corporation. Peter de Visser resigned as a director of the Corporation in December 2001.

Since its amalgamation, the Corporation, directly and through certain research contracts, has been engaged in the research and development of human therapeutic drugs for cardiovascular disease. In certain instances, therapeutics developed by the Corporation may also provide benefit for other diseases. The Corporation’s lead product, MC-1, is based upon scientific discoveries led by Dr. Naranjan S. Dhalla

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of The Institute of Cardiovascular Sciences andits commercial asset AGGRASTAT®, the Department of Physiology, of the Faculty of Medicine, the University of Manitoba in Winnipeg, Manitoba, Canada. The Corporation’s focus is on the clinical development and commercialization of MC-1 for treatment ofchronic cardiovascular and metabolic disease, and exploring further cost savings measures. The Company’s ability to continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business is dependent on the discoveryability of the Company to execute on these plans and developmentsecure additional sources of other cardiovascular therapeutics. There are currently 25 full time scientific researchers and support staff who are retained as consultants or employees by CanAm and who are performing the Corporation’s scientific research pursuant to the Development Agreement.financing. (See Item 3 D – Risk factors)

B. Business Overview

Plan of Operation

ItThe Corporation is the Corporation’s intention to focusa pharmaceutical company focused on the discovery, development and development of pharmaceuticals. The Corporation intends to license the sale and distribution of commercialized products to larger, international companies. As such, the Corporation intends to derive its revenue primarily through milestone payments and product royalties. As of the date hereof, other than the Medicure International Licensing Agreement and the University of Manitoba License Agreement, the Corporation has not entered into any license agreements or other arrangements regarding the sale or distribution of any of its products.

The Corporation’s focus is on the discovery and developmentcommercialization of therapeutics for various large-market,large-markets, and in particular for unmet cardiovascular and cerebral vascular needs.

In fiscal 2008, the Company was focused on two major objectives; first and foremost on the 3000 patient Phase III trial of MC-1 for protection of ischemic reperfusion injury during Coronary Artery By-pass Graft surgery (CABG), entitled MEND-CABG II and secondly on increasing the sales of AGGRASTAT®. In February 2008 the Company announced that the pivotal Phase III trial, MEND-CABG II, did not meet the primary end point and therefore would not file an application for regulatory approval of the use of MC-1, for this indication. It further announced that the MC-1 development for the acute indication of CABG, ACS and Stroke would be put on hold and the primary focus would shift to growing the AGGRASTAT® sales through itsCommercial business and that the Company’sResearch and Development activity would focus on exploring other clinical applications of MC-1.

As a result of the above, the Company announced a restructuring plan that resulted in the organization reducing its head count by approximately 50 employees and full-time consultants. The restructuring and downsizing in March enabled the Company to significantly conserve capital for ongoing operations. The Company continues to look for areas were it can reduce overhead and further conserve capital and will continue to do so into the 2009 fiscal year. The company is also exploring various alternatives for further strengthening its financial position and will provide additional guidance as appropriate. The Company’s near term focus will be on its commercial asset AGGRASTAT®, the development of MC-1 for chronic cardiovascular and metabolic disease, and exploring further cost savings measures. The Company’s ability to continue in operation for the foreseeable future and to realize its assets and discharge its liabilities and commitments in the normal course of business is dependent on the ability of the Company to execute on these plans and secure additional sources of financing.

Commercial:

In fiscal 2007, the Company acquired the U.S. rights to its first commercial product, AGGRASTAT® Injection (tirofiban hydrochloride), in the United States and its territories (Puerto Rico, Virgin Islands, and Guam). AGGRASTAT®, a glycoprotein GP IIb/IIIa receptor antagonist, is used for the treatment of acute coronary syndrome (ACS) including unstable angina, which is characterized by chest pain when one is at rest, and non-Q-wave myocardial infarction (MI). The Company launched product sales and marketing efforts, with a targeted, dedicated cardiovascular sales force and medical science liaison organization during the second quarter of fiscal 2007. The acquisition of AGGRASTAT® initiated the commercial (sales and marketing) part of the business forming a base for revenue, the acquisition of other drugs that fit the commercial team and the potential to launch and market internally developed drugs.

Net product revenue from the sale of AGGRASTAT® for fiscal 2008 declined over the net product revenue for fiscal 2007. Many factors contributed to this including, but not limited to, the lingering effects in the market of previous sales efforts, or the lack thereof, the challenge of reversing a long term decline in sales, and the diversion of the commercial group’s effort by activities associated with the development and planned launch of MC-1 for CABG. It also took time for Medicure to change its initial sales execution strategy from a third party contract sales force to an internal sales force managed directly in house. Management believes the company has made significant strides in developing AGGRASTAT®’s place in the market and believes benefits will be seen in fiscal 2009. The Company

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also notes the successful quarter over quarter growth in revenues in each of the last three quarters of fiscal 2008.

Research and Development:

The following table summarizes the Corporation’s clinical product candidates, their therapeutic focus and their stage of development.

* Completed MEND-1 angioplasty study, but intend to develop for related indication of ACS.

The Company’s research and development program is designed to address these market needs withcurrently focused on the clinical development of the Corporation’sCompany’s lead clinical product, MC-1, for new indications and with the potential discovery and development of other drug candidates. MC-1 is a natural compoundnaturally occurring small molecule that in both preclinical and clinical studies has demonstrated effectiveness in safelyshown potential for treating various forms of cardiovascular disease in initial research.disease.

MC-1, isthe Corporation’s lead product, was being developed as a treatment to reduce injury from blockages of blood to the heart (i.e. myocardial ischemia, associated with heart attacks, angina and arrhythmia) and the brain (i.e. ischemic stroke) and to prevent injury from ischemic reperfusion injury. Ischemic reperfusion injury occurs when blood flow to an organ is suddenly resumed following a stoppage, as occurs during medical procedures such as angioplasty and heart surgery. The Corporation's lead product, MC-1, is a purinergic receptor antagonist that has a broad range of potential applications from treatment of acute cardiovascular events (such as Acute Coronary Syndrome, Coronary Artery Bypass Graft surgery, heart attacks and stroke), to chronic conditions (such as hypertension and metabolic syndrome).

A Phase I human clinical trial for MC-1, the Corporation’s lead product, was commenced by the Corporation on October 20, 2000 after receiving approval of its Investigational New Drug (IND) application by the TPD. On April 19, 2001, the Phase I trial was completed.

In March, 2002 the Corporation commenced a Phase II multi-centre “Proof of Principle” clinical trial called MEND-1 of 60 high-risk cardiovascular patients undergoing elective angioplasty with our lead product, MC-1 after obtaining approval from the TPD and the FDA. In January 2003, the Corporation announced positive results from the MEND-1 clinical study, which was managed by the Duke Clinical Research Institute (DCRI) in Durham, North Carolina. The primary endpoint and certain important secondary endpoints of the Phase II MEND-1 study were met. The primary endpoint of the trial was infarct size (area of the heart that is damaged) during the procedure as determined by the release of the amount of the cardiac marker enzyme, CK-MB, over 24 hours following percutaneous coronary intervention (PCI). Improvement was also shown in certain secondary endpoints, including myocardial ischemia measured by continuous ST-segment electrocardiographic monitoring, peak periprocedural CK-MB through 24 hours and clinical tolerability and safety.

In April 2004, the Corporation commenced enrollment in a larger Phase II/III clinical trial, MEND-CABG. The study is evaluatingMEND-CABG studies demonstrated the cardioprotective effects and neuroprotective effectssafety of MC-1 in high-risk patients undergoing high-risk Coronary Artery Bypass Graft (CABG)angioplasty and bypass surgery, and to provide further safety data on its use in cardiac surgery.

Montréal Heart Institute, in collaboration with Duke Clinical Research Institute (DCRI) in Durham, North Carolina, will undertake the North American, multi-centre, double-blindrespectively. The Phase III pivotal study at approximately 40 clinical sites. The Corporation enrolled 900 patients undergoing CABG procedure in the Phase II portion of the dose response study, which is being carried out under the direction of Dr. Jean-Claude Tardif, MD,

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FRCP, Director of Clinical Research and Associate Professor of Medicine at the Montreal Heart Institute, and Dr. Robert Harrington, Professor of Medicine and Director of Cardiovascular Clinical Trials, Duke University Medical Centre. CABG is a medical procedure that reroutes blood around clogged arteries to improve the blood and oxygen supply to the heart. Surgeons take a blood vessel from another part of the body (i.e. leg) and make a detour around the blocked part of the coronary artery. Over 500,000 CABG procedures are performed on an annual basis in the US. Approximately 8-12% of such grafts are less than optimal, leading to a 10% mortality rate for CABGs that are re-performed. The CABG procedure is also associated with ischemic repurfusion injury and clinical events subsequent to the procedure. The objective of the MEND-CABG trial is to demonstrate that treatment with MC-1 reduces the ischemic reperfusion injury and associated clinical events. Enrollment in the MEND-CABG study was completed in July 2005 and results are expected in the fall of 2005.

In June 2003, the Corporation announced it was initiating the development of a second clinical candidate, MC-4232, for use in treatment of patients with co-existing diabetes and hypertension. MC-4232 is a combination of MC-1, and an existing FDA approved angiotensin converting enzyme (ACE) inhibitor. The co-existing conditions of diabetes and hypertension present a major increase in risk of cardiovascular complications, including coronary artery disease, peripheral artery disease, retinopathy, nephropathy and stroke. In addition to cardioprotection, this product has also demonstrated potential to provide further blood pressure lowering effects and reduction in glycated hemoglobin (HbA1c), the primary measure of blood glucose control.

The initial 15-patient Phase II trial relating to MC-4232 tested MC-1 alone in diabetic hypertensive patients and is designed to establish complementary therapeutic effects of MC-1 and dosing regimens. In April 2004, the Corporation announced preliminary results from this trial for the initial 11 patients which indicates that there is a positive trend towards the reduction in glycated hemoglobin (HbA1c), the primary measure of blood glucose control used by the FDA to determine the efficacy of drug candidates in diabetics. HbA1c is a commonly used clinical measure that reflects glycemic control (average blood glucose fluctuations) over a 60- to 90-day period.

In August 2004, the Corporation announced the enrollment of3,023 patients in support of registration filings with major regulatory agencies, MEND-CABG II, did not meet its primary end points. Therefore, it will not be sufficient to support the filings and as a larger Phase II trial to evaluateresult of limited resources the effects of MC-4232 in the treatment of diabetic patients with hypertension. The MATCHED study (MC-1 andACETherapeuticCombination forHypertensiveDiabetics), part of the expanded clinical development program for MC-4232, will evaluate MC-1 alone and in combination with an ACE inhibitor. The study is a randomized, double-blinded, placebo controlled, double-crossover trial encompassing 120 patients with co-existing diabetes and hypertension. MC-1 at total doses of 100, 300 or 1000 mg or placebo will be given alone and in combination with an ACE Inhibitor, at a dose of 20 mg. This study will assess the effectwas put on a variety of important parameters in this patient population including blood pressure and metabolic functions. The MATCHED study reached full enrollment in March 2005 and results are expected in late summer 2005.hold.

In parallel to the development of MC-1 and MC-4232, the Corporation has a drug discovery program the objective of which is to discover and in-license new drug candidates for advancement into clinical development and commercialization for unmet cardiovascular market needs. One element of the program involves the synthesis and evaluation of compounds that are structurally related to MC-1. The Corporation has already produced several groups of candidate compounds using this approach and plans to build a pipeline of additional preclinical products over the next several years. Certain of the Corporation’s new compounds have shown positive effects in in vitro andin vivo efficacy studies and are currently being studied further to evaluate their commercial potential. Because of limited financial resources, the studies to further to evaluate their commercial potential have been put on hold. Some patents have been issued for these compounds and additional patent applications have been, and are expected to be filed for all novel candidate compounds, to the extent commercially and reasonably possible, protecting their composition of matter and use in a treatment of targeted cardiovascular and related diseases.

The Corporation is also evaluating other cardiovascular drug candidates for potential license with the objective of further broadening its product and patent portfolio.

The Corporation anticipates that no substantial material acquisition of equipment or facilities will take place in the coming year.

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In summary, itIt is the Corporation’s intention over the next year to continue its focus on being a drug discovery and development company and to begin to actively search for a partnership with a large pharmaceutical company. Such a partnership would conceivablymay provide funding for Phase II and Phase III clinical trials, add experience to the product development process, and bring in overall marketing expertise. While the Corporation has had informal discussions with potential partners, no formal agreement, or letter of intent, has been entered into by the Corporation as of the date hereof.

The Corporation anticipates that no substantial material acquisition of equipment or facilities will take place in the coming year.

Potential Products in Development Stage

As previously stated, oneOne of the Corporation’s primary focuses is the clinical development and commercialization of its lead products, MC-1 and MC-4232.

The Corporation's lead product, MC-1, is a small molecule therapeutic that has a broad range of potential applications from treatment of acute cardiovascular events (such as ACS, CABG and heart attacks), to chronic conditions (such as hypertension and metabolic syndrome). as well as several other non-cardiovascular indications. MC-1 ishas been shown to be a cardioprotective drug that in both preclinical and clinical studies has shownwhich suggest the potential for treating various forms of CV diseases and stroke.

The Corporation announced positive results from a MEND-1 Phase II clinical study in January 2003. The MEND-1 trial was a proof of principle study that suggested that MC-1 standswas safe and the potential as a cardioprotective treatment to bereduce damage to the heart associated with acute ischemic and reperfusion injury. The trial enrolled a major first-to-market producttotal of 60 high-risk patients undergoing percutaneous coronary intervention (PCI), and was conducted at four medical centres in a new classCanada and the USA.

The primary endpoint, peri-procedural infarct size (as determined by area under the curve (AUC) of drug.CK-MB within 24 hours following initiation of elective PCI) was significantly reduced by approximately 33% in the MC-1 treatment group. The results from the MEND-1 study provided the Corporation with the necessary positive data to proceed with larger, Phase II trial in Coronary Artery Bypass Graft (CABG) procedures.

Additional preclinicalPreclinical studies with MC-1 also suggest its potential value in treatment of stroke. During 2002, preclinical studies were carried out under the direction of Dr. Ashfaq Shuaib, Director of the Division of Neurology at the WC Mackenzie Health Sciences Centre of the University of Alberta. MC-1 reduced infarct size (damaged region) in the brain and preserved neurological function in an animal model. Preliminary studies also indicate that beneficial effects may even be obtained with treatment several hours after the onset of ischemia. A combination of MC-1 and TPA was also shown to be an effective treatment. There was no indication that MC-1 alone increased the incidence of hemorrhage, suggesting it would be a safe treatment for stroke patients. Medicure plans further research on stroke, hypertension and other potential uses.

The MEND-CABG study was a Phase II placebo controlled, double-blinded study of MC-1, designed to evaluate the potential of the Corporation's lead drug in reducing ischemic damage resulting from coronary artery bypass graft (CABG) procedures. The trial was conducted at 42 cardiac centres throughout Canada and the US and is managed by Montreal Heart Institute and Duke Clinical Research Institute (DCRI) and enrolled 901 patients. The Corporation reported positive top-line results up to post-operative day (POD) 30 in December 2005. The results showed that the 250 mg dose of MC-1 had a statistically significant reduction in the composite of events driven by a 46.9% reduction in non-fatal heart attacks (peak CK-MB ≥100ng/ml). Patients were also followed up to POD 90, which was 60 days after their last drug treatment. The treatment effect at POD 30 with MC-1 was maintained throughout the follow up period. The safety analysis from MEND-CABG also demonstrated MC-1 was safe and well tolerated. In the first half of fiscal 2007, the Corporation initiated a follow on Phase III study, MEND-CABG II to form the basis of registration applications to the major market regulatory agencies.

The Company conducted the Phase III MEND-CABG II trial at over 120 cardiac centres throughout North America and Europe. It was managed by Duke Clinical Research Institute (DCRI) and Montreal

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Heart Institute and enrolled 3,023 patients. Enrolment was completed in October 2007 and results were announced on February 23^rd, 2008. The Phase III, MEND-CABG II trial did not meet it’s primary end point and therefore is not sufficient for registration filings for market approval. Because of lack of resources, the Company has put the further development of MC-1 for acute cardiovascular indications on hold.

Preclinical and clinical studies have shown that MC-1 has the potential to provide other clinical benefits to provide cardiovascular and non-cardiovascular indications.

With respect to other cardiovascular indications, MC-1 has been shown to have the potential to improve various metabolic parameters. The Company has been pursuing these potential opportunities with a plan to develop fixed dose combination pills with drugs already in use for improving aspects of metabolic parameters.

Medicure's first combination product is MC-4232, a drug that combines the cardio-protective benefit of MC-1 with anthe ACE Inhibitor, lisinopril, for the treatment of diabetic patients with co-existing diabetes and hypertension and related cardiovascular problems. The co-existing conditions of diabetes and hypertension present a major increase in risk of cardiovascular complications, including coronary artery disease, peripheral artery disease, retinopathy, nephropathy and stroke. In addition to cardioprotection, this product has also demonstrated potential to provide further blood pressure lowering effects, reduction in glycated hemoglobin (HbA1c), the primary measure of blood glucose control and reduction in triglyceride levels.

In fiscalSeptember 2005, the Corporation initiatedannounced positive results from the development programPhase II MATCHED study. The MATCHED (MC-1 and ACE Therapeutic Combination for its secondHypertensive Diabetics) study evaluated MC-1 alone and in combination product,with lisinopril encompassing 120 patients with co-existing diabetes and hypertension. MATCHED was a randomized, parallel group, cross-over, double-blind, placebo-controlled comparison of 100, 300 or 1000 mg of MC-1 alone and in combination with 20 mg of lisinopril. The results demonstrated the positive clinical effects of MC-4232 on important primary and secondary blood pressure and metabolic endpoints. The Corporation is planning further clinical studies as a result of these positive results.

The Company is also considering other combination products, such as MC-4262, a drug combining MC-1 and an Angiotensin Receptor Blocker (ARB), one of the world's ten largest pharmaceutical drug classes by revenue.. The patented new product, is beingcould be developed for use in the treatment of hypertension in patients whose condition is complicated with metabolic syndrome resulting in increased cardiovascular risk. A third combination product is MC-4252, a drug combining MC-1 and a lipid lowering statin, The patented new product could be developed for use in the treatment of patients with elevated lipids and other complicating metabolic syndromes.

The Company is also considering the use of MC-1 as monotherapy for the various metabolic syndrome indications. MC-1 has been shown to have potential to lower blood pressure, reduce HbA1c, lower LDL, lower triglycerides and CRP. With sufficient resources, the Company is considering follow-up clinical studies to support and strengthen previous data for these applications. With additional supportive data, MC-1 could have the potential for adjunctive therapy to drugs already in use for these indications.

The Company is also considering the use of MC-1 as monotherapy for non-cardiovascular chronic applications in neuroprotection.

While MC-1 and MC-4232for chronic development proceeds, the Corporation is seeking to develop or acquire additional cardiovascular therapeutics with commercial potential to meet a market need. The Corporation’s objective is to establish a pipeline of novel cardiovascular therapeutics to ensure the Corporation’s long-term growth and security. The Corporation is taking a two-pronged approach to this effort, combining the efforts of a drug discovery program with strategic licensing of promising new compounds from other research groups.

The Corporation’s drug discovery program has produced several families of new compounds that have shown promising effects inin vitro and/orin vivo studies. From these compounds, the Corporation has

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thus far identified certain candidates as having potential for further development. These compounds, the chemical identities of which are being held confidential while patents are pending, will undergo furtherin vitro analysis andin vivo animal testing on disease models and for bioavailability.

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According to theAmerican Heart Association, cardiovascular disease is the most prevalent serious disease in the United States, affecting approximately 58.879.4 million people.¹According to theAmerican Heart Association, approximately one in fivethree Americans havehas some form of cardiovascular disease. In 1996,2002, cardiovascular disease was a primarythe underlying or contributing cause in 58% of mortality on 60% of death certificatesall deaths in the United States. The rates in Canada are similar, with the subset of ischemic heart disease accounting for the greatest percentage of deaths at 21%.²¹

The Corporation is focusing its initial drug discovery and development efforts on meeting unmet needs in the cardiovascular and stroke market. The Corporation is advancing its lead product, MC-1, through further clinical testing for a few chronic applications including cardiovascular and neurologic applications with the intention of commercializing itattracting partnerships for treatment of (1) ischemic reperfusion injury (associated with common procedures such as angioplasty and coronary bypass surgery and stroke); and (2) myocardial ischemia, including heart attacks, angina and other related disorders.further commercializing.

The Corporation has various compounds currently in early stage research screening. Compounds developed by the chemistry group will be advanced through the following steps based on their successful advancement through early stage screening; (1) in vitro (cell based) screening, (2) in vivo screening in appropriate disease model, (3) in vivo toxicity screening, (4) dose response confirmation of efficacy testing in vivo, (5) preclinical, GLP toxicity and pharmacokinetics testing, (6) Phase I human testing, (7) Phase II human, (8) Phase III human, and (9) Filing of NDA in United States and NDS in Canada to request the right to commercialize. At the present time the most advanced product is in stage 4 of this testing continuum, but no estimate can be made as to when a certain product may advance to the human clinical testing stage.development.

The Corporation has developed a novel series of small molecule dual acting anticoagulant/antiplatelet compounds which may be useful in treating venous and arterial thrombosis. These novel compounds are^{patented and based on a vitamin B}6(pyridoxine) scaffold. A number of these compounds are active at nanomolar concentrations and selectively inhibit thrombin. In addition these compounds also inhibit platelet aggregation. These compounds are relatively simple to synthesize and can easily be chemically modified to obtain the desired ratio of anticoagulant/antiplatelet activity.

The dual acting anticoagulant/antiplatelet molecules have shown definite activity in venous and arterial models of thrombosis. Preclinical studies show these compounds to have lesser bleeding tendencies as compared to currently has 15used agents such as heparin. These compounds do not give rise to HIT antibodies, and a few analogs inhibit HIT-induced platelet aggregation. The HERG studies demonstrate a favourable safety profile in the CanAm compounds. Acute toxicity studies in rats also demonstrate a favourable safety profile.

The company seeks to establish a licensing arrangement or R&D collaboration to advance these compounds to the clinic.

As at May 31, 2007, the Corporation had 39 issued patents. United States Patent No. 6,051,587, United States Patent No. 6,043,259, United States Patent No. 6,339,085, United States Patent No. 6,417,204, United States Patent No. 6,489,345, United States Patent No. 6,548,519, United States Patent No. 6,586,414, United States Patent No. 6,605,612, United States Patent No. 6,677,356, United States Patent No. 6,667,315, United States Patent No. 6,780,997, United States Patent No. 6,861,439, United States Patent No. 6,867,215, United States Patent No. 6,890,943patents (see Item 5 – Operating and United States Patent No. 6,897,228.Financial Review and Prospects – C. Research and Development, Patents and Licenses, Etc. below).

Competitors’ Current Products

The only commercial product the corporation currently has is sold in the United States of America.

There are numerous products on the market for treatment of cardiovascular disorders, most of which are marketed by large pharmaceutical companies.

It is recognized that cardiovascular treatments have been of great benefit in reducing mortality and morbidity from a range of conditions. The existing cardiovascular drugs can be categorized into several main drug classes, as distinguished by their mechanism of action. Some of the primary drug classes include: ACE Inhibitors (2003(2005 US sales estimated at US$2.82.2 billion), Angiotensin II Inhibitors (2003(2005 US sales estimated US$2.12.9 billion), oral anti-platelets (2003(2005 US sales estimated US$6.33.8 billion), Beta-Blockers (2003(2005 US sales estimated at US$1.62.1 billion), and Calcium Channel Blockers (2003(2005 US sales estimated at US$4.44.6 billion), each class has particular benefits as well as an array of alternative products.³

Cross-use of drugs between different types of cardiovascular disease categories makes it difficult to differentiate sales by the more specific market segment (such as for myocardial infarction, ischemic reperfusion injury, etc.).

^{4_________________________________________________
1}American Heart Association,Heart Disease and Stroke Statistics - 2007 Update.

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Despite the development of various effective products, pharmaceutical companies carefully monitor developments in the field and continually attempt to bring in new major products. This is in part driven by the rise of generic products that substantially reduce profit margins for products as they come off

^{___________________________________________
1}American Heart Association,1999 Heart and Stroke Statistical Update.

²Health Canada,Heart Disease and Stroke in Canada, 1997, Chapter 2.1.

³Sales estimates provided byIMS Health Data, 2003.

⁴Supra, note 9.

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patent. Competition is most intense in cardiovascular markets like hypertension where there are many treatment options. Large pharmaceutical companies are most interested in finding new treatment options for inadequately treated conditions such as those targeted by the Corporation.

Despite the number of cardiovascular products, the Corporation has identified certain remaining unmet therapy needs for certain forms of cardiovascular disease. For example, physicians recognize the current lack of effective products for reducing ischemic reperfusion injury. This is a very real clinical problem and a significant market is available for a product that would effectively protect against this injury that results from a variety of surgical procedures. Similarly, although current treatments are in many cases able to restore blood flow to the heart muscle following a heart attack (myocardial ischemia), there remains a need for products that reduce the amount of damage and scarring that results from the blockage. Other large cardiovascular markets targeted by the Corporation that require improved therapeutics are stroke and certain forms of hypertension.

Ischemic stroke is damage to the brain caused by a sudden reduction in blood supply, most often due to blood clots lodging in major arteries of the brain. Stroke ranks as the third leading cause of death in North America, behind diseases of the heart and cancer. It is also a leading cause, of long term disability in the U.S.

To date, the only FDA approved stroke therapeutic is tissue plasminogen activator (TPA), a treatment that helps dissolve arterial obstructions. Unfortunately, TPA is typically available to less than 10% of stroke patients due to the increased risk of hemorrhage and the narrow therapeutic time frame during which the drug can be applied.

Competitors’ Products in Development

As there remains unmet needs for treatmentMany companies, including large pharmaceutical and biotechnology companies, are conducting development of certain formsproducts that are intended to address a same or similar medical need. Many of cardiovascular diseasethese companies have much larger financial and stroke, management ofother resources than the Corporation believes there is room for an increased number of noveldoes, including those related to research products.

ThePharmaceutical Researchers and Manufacturers of America have identified 146 separate productsdevelopment, manufacturing, and sales and marketing. The Corporation also faces competition in development for heart diseaserecruiting scientific personnel from colleges, universities, agencies, and stroke in their 2005 Survey: Medicines in Development for Heart Diseaseresearch organizations who seek patent protection and Stroke. A large proportion of products in development are modifications of existing therapeutic classes.

The Corporation’s clinical trials for MC-1 focus on ischemia and ischemic reperfusion injury for cardiovascular diseases and will also focus on stroke. The following tables provide an overview of competitors’ products in development pertaining to Percutaneous Coronary Intervention (PCI) or angioplasty, CABG, Acute Coronary Syndrome (ACS) and stroke:

PCI: Competitors in Development⁷

CABG: Competitors in Development⁸

^{___________________________________________
7}Pharmaceutical Researchers and Manufacturers of America,Survey: New Medicines in Development for Heart Disease andStroke 2005.

⁸Pharmaceutical Researchers and Manufacturers of America,Survey: New Medicines in Development for Heart Disease andStroke 2005.

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ACS: Competitors in Development⁹

Stroke: Competitors in Development¹⁰

Some of the products set forth above have the advantage of being further along in development than the Corporation’s products. However, market share for new products depends primarily upon the relative strengths of a product in areas such as safety, effectiveness, cost, and dose form.

It is noted that cardiovascular drugs are often prescribed together and therefore products do not necessarily compete for use on an individual patient. MC-1’s use in many indications is expected to be as adjunct therapy, that is, it will be given together with other therapeutics. Historically, the challenge of competing with earlier products has not acted as a significant barrier to entry for new products, provided that the new product has some advantage relative to earlier products.

^{___________________________________________
9}Pharmaceutical Researchers and Manufacturers of America,Survey: New Medicines in Development for Heart Disease andStroke 2005.

¹⁰Pharmaceutical Researchers and Manufacturers of America,Survey: New Medicines in Development for Heart Disease andStroke 2005.

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The Corporation’s second clinical candidate, MC-4232, is being developedlicensing agreements for the treatment of diabetic patients with hypertension. The co-existing conditions of diabetes and hypertension present a major increase in risk of cardiovascular complications, including coronary artery disease, peripheral artery disease, retinopathy, nephropathy and stroke. To date, only one combination product has been developed to address both hypertension and a metabolic function. This product is Caduet, a combination of the CCB Norvasc and the statin Lipitor. Caduet was approved in 2004. The Pharmaceutical Research and Manufacturers of America Survey of New Medicines in Development for Heart Disease and Stroke 2005 does not identify any other products in development that are taking this approach. While Caduet targets hypertension and lipid lowering (primarily LDL cholesterol lowering), it does not address specific metabolic dysfunctions (such as elevated HbA1C) faced by the diabetic population.technologies they develop.

The market for management of high blood pressure is one of the largest in the pharmaceutical industry but is also one of the most competitive. Approximately 50 million Americans are affected by hypertension (American Heart Association).Decision Resources expects hypertension drug global sales to reach US $22 billion by 2008. The following table presents a list of competitors’ products on the market pertaining to hypertension.

HYPERTENSION

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The market for oral diabetic drugs was $5 billion in the US for 2002 (IMS Health Data, Diabetes Therapy Report, 2004). This is the largest drug class within the diabetic market, and had the highest compound annual growth rate between 1998 and 2002.

STANDARD OF CARE PHARMACOLOGICAL TREATMENTS FOR TYPE 2 DIABETES¹¹

The market for drugs to manage hypertriglyceridemia includes fibric acid derivatives (total US sales of $0.7 billion in 2003), statins (total US sales of $13.7 billion in 2003), and niacin (total US sales of $0.3 billion in 2003) (IMS Health Data).

STANDARD OF CARE PHARMACOLOGICAL TREATMENTS FOR HYPERTRIGLYCERIDEMIA¹²

Competitive Strategy and Position

As stated, theThe Corporation is primarily focusing on developingon:

1.Growing AGGRASTAT® sales in the United States. The present market for the class of drug GP IIb/IIIa, of which AGGRASTAT® is one of three in the USA market, is over $500 million per year. At present AGGRASTAT® has 1% to 2% of this market. AGGRASTAT® is recommended by the AHA and ACC Guidelines as one of the three GP IIb/IIIa drugs to be used for the treatment of ACS. AGGRASTAT® has been shown, in several clinical trials, to reduce mortality and morbidity post ACS by as much as 40%.

2.The development of MC-1 for myocardial ischemiachronic cardiovascular and reperfusion injury.other indications, such as neurological needs. The Corporation is focusing initially on these markets because of preclinical and clinical evidence supporting the product’s efficacy in these applications and, therefore, these applications have high potential for showing MC-1’s clinical benefit. The clinical need for a product with this activity will also be considered by regulatory authorities (principally the FDA and also the TPD). Although MC-1 shows potential for treatment of other cardiovascular diseases, these uses are not being addressed as a

^{___________________________________________
11}American Diabetes Association,Position Statement: Standards of Medical Care in Diabetes, 2005.

¹²American Association of Clinical Endocrinologists,Medical Guidelines for Clinical Practice for the Diagnosis and Treatmentof Dyslipidemia and Prevention of Atherogenesis, 2000.

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first priority due to factors including the cost of clinical trials and the more intense competitive nature of these markets.

It is the Corporation’s intention to secure a partnership with a large pharmaceutical company. Such a partnership would provide funding for clinical development, add experience to the product development process and provide market positioning expertise. While the Corporation has had informal discussions with potential partners in this regard, no formal agreement or letter of intent has been entered into by the Corporation as of the date hereof.

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C. Organizational Structure

Medicure International the Corporation’sInc., a wholly owned subsidiary of the Corporation, was incorporated pursuant to the laws of Barbados, West Indies, on May 23, 2000. Medicure International’sInternational Inc.’s registered office is located at Whitepark House, White Park Road, Bridgetown, Barbados. Medicure International’sInternational Inc.’s head office is located at 2nd Street, Holetown, St. James, Barbados.

Medicure Pharma Inc., a wholly owned subsidiary of the Corporation, was incorporated pursuant to the laws of the State of Delaware, United States of America, on September 30, 2005. Medicure Pharma Inc.’s registered office is 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808. Medicure Pharma Inc.’s head office is located at 200 Cottontail Lane, Somerset, NJ, 08873.

American Cardio Therapeutics Inc., a company that is 49% owned by Medicure Pharma Inc., was incorporated pursuant to the laws of the State of Delaware, United States of America, on September 30, 2005. American Cardio Therapeutics Inc.’s registered office is 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808.

Medicure Europe Limited, a wholly owned subsidiary of the Corporation, was incorporated pursuant to the laws of the United Kingdom, on May 19, 2006. Medicure Europe Limited’s registered office is located at City House, 126-130 Hills Road, Cambridge, CB2 1RY.

As at May 31, 2008, American Cardio Therapeutics Inc. was involved in no material transactions.

The following diagram illustrates the relationship between the Corporation and Medicure International:its subsidiaries:

D. Property, Plants and Equipment

Office Space

The Corporation has use of aboutapproximately 4,000 square feet of office space provided by Waverley Business and Science Centre Inc. as part of its business services contract. The office is located in Winnipeg, Manitoba.Manitoba, Canada.

Research FacilitiesITEM 4A. UNRESOLVED STAFF COMMENTS

CanAm, on behalfThe Corporation is an accelerated filer as defined in Rule 12b-2 under theSecurities Exchange Act of 1934. There are no written comments which have been provided by the staff of the Corporation, leases 9,200 square feetSecurities and Exchange Commission regarding the Corporation's periodic reports under that Act during the fiscal year ended May 31, 2008 and there are no unresolved comments as of office and laboratory space at a facility in Winnipeg, Manitoba. Biological, chemistry, and analytical research take place under one roof.the date of the filing of this Annual Report with the Commission.

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

This section contains forward-looking statements involving risks and uncertainties. The Corporation's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under part Item 3 - Key Information - D. Risk Factors. The following discussion of the financial condition, changes in financial conditions and results of operations of the Corporation for the years ended May 31, 2005,2008, May 31, 20042007 and May 31, 20032006 should be read in conjunction with the consolidated financial statements of the Corporation. The Corporation’s consolidated financial statements are presented in Canadian dollars and have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”) included under Item 17 to this annual report. Material measurement differences between Canadian and U.S. GAAP, as applicable to the Corporation, are set forth in Note 9note 14 to the consolidated financial statements of the Corporation included herein.

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Critical Accounting Estimates

The Corporation’s consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”). A reconciliation of amounts to present in accordance with United States generally accepted accounting principles (“US GAAP”) is described in note 914 to the audited consolidated financial statements for the year ended May 31, 2005.2008. These accounting principles require management to make certain estimates and assumptions. Management believes that the estimates and assumptions upon which the Corporation relies are reasonable based upon information available at the time these estimates and assumptions are made. Actual results could differ from these estimates. Future estimates and assumptions may lead to different judgments than those applied in the preparation of these consolidated financial statements. Areas of significant estimates include revenue recognition, research and development costs, clinical trial expenses, the assessment of net recoverable value of patents,intangible assets, income taxes, stock-based compensation and stock-based compensation.accounting for warrants.

Revenue recognition
The Company recognizes product revenue when substantially all of the risks and rewards of ownership have transferred to the customer and collection is reasonably assured. Revenue is recognized upon product delivery and when no significant contractual obligations remain. As is common practice in the pharmaceutical industry, the Company’s sales are made to pharmaceutical wholesalers for further distribution to end consumers.

Net sales reflect reduction of gross sales at the time of initial sales recognition for estimated wholesaler chargebacks, discounts, allowances for product returns, and other rebates. In determining the amounts of certain of these allowances and accruals, the Company uses estimates. The Company estimates chargebacks, discounts, and other rebates using the following factors: contract prices and terms with customers, estimated customer and wholesaler inventory levels, and average contractual chargeback rates.

Research and development costs

All costs of research activities are expensed in the period in which they are incurred. Development costs are charged as an expense in the period incurred unless a development project meets stringent criteria for cost deferral and amortization. The Corporation assesses whether these costs have met the relevant criteria for deferral and amortization at each reporting date. No development costs have been deferred to date.

PatentsClinical trial expenses
Clinical trial expenses are a component of the Company’s research and development costs. These expenses include fees paid to contract research organizations, clinical sites, and other organizations who conduct development activities on the Company’s behalf. The amount of clinical trial expenses recognized in a period related to clinical agreements are based on estimates of the work performed using an accrual basis of accounting. These estimates incorporate factors such as patient enrolment, services provided, contractual terms, and prior experience with similar contracts.

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Intangible assets
Costs incurred in obtaining patents are capitalized and amortized upon issuance on a straight-line basis over the remaining legal life of the respective patents, being approximately twenty years, or their economic life, if shorter. The cost of servicing the Company’s patents is expensed as incurred. Intangible assets are recorded at acquisition cost and are amortized on a straight-line basis based on the following estimated useful lives:

The Company determines the estimated useful lives of intangible assets based on a number of factors, including: legal, regulatory or contractual limitations; known technological advances; anticipated demand; and the existence or absence of competition. A significant change in any of these factors could require a revision of the expected useful life of the intangible asset, which could have a material impact on the Company’s results of operations through an increase to amortization.

On a regular basis, management reviews the valuation of patentsintangible assets taking into consideration any events and circumstances which may impair their recoverable value. The new Section 3063 ofvalue including expected cash flows, the CICA Handbook,Impairment of Long Lived Assets, calls forpotential benefit the recognition, measurement and disclosure of the impairment of long-lived assets for fiscal years beginning on or after April 1, 2003. With consideration givenCompany expects to this new section management reviewed the carrying value of its patents and no adjustment was made to the capitalized patent costs.

Refundable investment tax credits

The Corporation incurs research and development expenditures, which are eligible for refundable investment tax credits. The investment tax credits are based on management's estimates of amounts to be recovered. As the investment tax credits are subject to audit by the taxation authorities, the actual amounts received may vary materiallyderive from the estimate recognized.costs incurred to date and the Company’s ongoing development plans. A change in any of these assumptions could produce a different fair value, which could have a material impact on the Company’s results of operations.

Stock-based compensationIncome Taxes

The Corporation adoptedCompany follows the fair valueasset and liability method of accounting for all employee stock-based compensationincome taxes. Under this method, future income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future income tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the fourth quarteryears in which those temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of fiscal 2004 pursuant toa change in tax rates is recognized in income in the amended recommendationsperiod that includes the date of substantive enactment. Given the Company’s history of net losses and expected future losses, the Company is of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870,opinion that it is more likely than not that these tax assets will not be realized in the foreseeable future and therefore, a full valuation allowance has been recorded against these income tax assets. As a result, no future income tax assets or liabilities are recorded on the Company’s balance sheets.

Stock-based Compensation and Other Stock-based Payments.compensation
The Corporation had previously adopted the recommendations, as required, for awards granted under itshas a stock option plan to non-employees effective June 1, 2002. The stock-based compensation recorded by the Corporation is a critical accounting estimate because of the value of compensation recorded, the volume of the Corporation’s stock option activity,for its directors, management, consultants, and the many assumptions that are required to be made to calculate the fair value of the compensation expense. The amended recommendations of CICA Handbook Section 3870 provide that a company may apply the rules on a prospective basis or a retroactive basis and that a company may choose to voluntarily adopt the amended recommendations in fiscal 2004 rather than on the required adoption date for the Corporation of June 1, 2004.

As permitted, the Corporation has applied a fair value based method to expense employee, management or directors stock options awarded since June 1, 2003. The Corporation accounts for stock options granted to non-employees on or after June 1, 2002 using the fair value method.

employees. Compensation expense is recorded for stock options issued to employees and non-employeesnon employees using the fair value method. The Corporation must calculate the fair value of stock options issued and amortize the fair value to stock compensation expense over the vesting period, and adjust the amortization for stock option forfeitures and cancellations. The Corporation uses the Black-Scholes model to calculate the fair value of stock options issued which requires that certain assumptions including the expected life of the option and expected volatility of the stock be estimated at the time that the options are issued. The Corporation amortizes the fair value using the accelerated method over the vesting period of the options, generally a period of three years. This accounting estimate isThe factors included in the Black-Scholes model are reasonably likely to change from period to period due to changes in the Corporation’s stock price and external factors, as further stock options are issued and as adjustments are made to previous calculations for unvested stock option forfeitures and cancellations.

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The stock-based compensation recorded by the Corporation is a critical accounting estimate because of the value of compensation recorded, the volume of the Corporation’s stock option activity, and the many assumptions that are required to be made to calculate the compensation expense. The Black-Scholes model is not the only permitted model to calculate the fair value of stock options issued pursuant to Handbook Section 3870.options. A different model, such as the binomial model, as well as any changes to the assumptions made may result in a different stock

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compensation expense calculation. The Corporation recorded stock compensation expense in fiscal 20052008 of $504,878 (2004$563,272 (2007 - $386,048; 2003$1,025,310; 2006 - $105,375)$745,570).

A. Operating Results

General

The Corporation has concentrated primarily on research and development and has yet to and may never derive any revenues from its general operations.clinical products. The Corporation has a limited operating history and its prospects must be considered in light of the risks, expenses and difficulties frequently encountered with the establishment of a development stage companybusiness in a highly competitive industry, characterized by frequent new product introductions. The Corporation has historically incurred net losses and anticipates that such losses will increase as it continues its development and clinical trials and eventually seeks regulatory approval for the sale of its products.

The Corporation believes it has sufficient funds on hand to complete several Phase II clinical trials involving MC-1, its lead product and MC-4232, its second clinical candidate. As discussed in Note 1 of the consolidated financial statements of the Corporation, however, the Corporation’s ability to continue as afinancial statements do not reflect adjustments that would be necessary if the going concern is dependent on its ability to obtain sufficient funds to conductassumption were not appropriate. If the remaindergoing concern basis was not appropriate for these financial statements then adjustments would be necessary in the carrying value of its clinical trialsassets and to successfully commercialize its products. Failure to obtain further financing may requireliabilities, the Corporation to reduce substantially or eliminate expenditures for researchreported revenues and development, testing including further clinical trials,expenses, and production and marketing of its proposed products.the balance sheet classifications used. Based on the Corporation’s current plans, the Corporation’s availableCompany’s operating plan, its existing working capital is not sufficient to meet the cash requirements to fund the Company’s currently planned operating expenses, capital requirements, working capital requirements, long-term debt obligations and commitments beyond the 2009 fiscal year without additional sources of cash and/or deferral, reduction or elimination of significant planned expenditures. The Company’s plan to address the expected shortfall of working capital is to secure additional funding within the next six months and to increase operating revenue and reduce operating expenses. There is no certainty that the Company will be sufficient into fiscal 2007.able to obtain any sources of financing on acceptable terms, or at all, or that it will increase product revenue or reduce operating expenses to the extent necessary.

Year Ended May 31, 20052008 Compared to the Year Ended May 31, 20042007

Net product sales for fiscal 2008 were $2,247,000, compared to $5,945,000 in fiscal 2007. Net product sales reflect reduction of gross sales at the time of initial sales recognition for estimated wholesaler chargebacks, returns and discounts. The Company currently sells AGGRASTAT® to drug wholesalers. These wholesalers subsequently sell AGGRASTAT® to the hospitals where health care providers administer the drug to patients. Wholesaler management decisions to increase or decrease their inventory of AGGRASTAT® may result in sales of AGGRASTAT® to wholesalers that do not track directly with demand for the product at hospitals. Net product sales are lower for the year ended May 31, 2008 as compared to fiscal 2007 for several reasons including a decline in purchases by hospitals, impacted in part by the reconfiguring of the Company’s commercial operations during the first quarter of fiscal 2008 which resulted in a transition from a contracted third-party direct sales force to a directly managed in-house sales force.

Cost of goods sold for fiscal 2008 were $606,000, compared to $388,000 in fiscal 2007. Cost of goods sold represents direct product costs associated with AGGRASTAT® and royalties due to Merck & Co., Inc. based on net sales of AGGRASTAT®. Amortization of the related acquired AGGRASTAT® intangible assets is separately discussed below. The calculation of royalties due was based on a sliding scale dependent on reaching certain net sales milestones. In January 2008, Merck & Co., agreed to terminate any future royalty payments on net sales of AGGRASTAT® as a result of its decision to divest its non-US commercial rights to AGGRASTAT®. The increase in cost of goods sold was due to a write-down of obsolete inventory of $ 428,822 which was offset by lower product sales during the year.

Selling, general, and administrative expenditures for fiscal 2008 were $12,073,000, compared to $11,048,000 in fiscal 2007. Selling, general, and administrative expenditures related to AGGRASTAT® were $6,782,000 in fiscal 2008, compared to $6,716,000 in fiscal 2007, despite the fact that expenses in 2007 only relate to the nine-month period following the acquisition of AGGRASTAT® in August 2006. Selling, general, and administrative expenditures for AGGRASTAT® are primarily related to field selling expenses, product promotion costs and administrative expenses. Other selling, general, and administrative expenditures in fiscal 2008 increased to $5,291,000 from $4,332,000 in fiscal 2007 mainly

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due to costs associated with the structuring of the financing agreements entered into during the year and the activities resulting from the Company’s restructuring efforts along with increases in some regulatory and capital tax costs.

Research and development expenditures for fiscal 2008 were $28,660,000, compared to $23,336,000 in fiscal 2007, which is an increase of $5,324,000. Research and development expenditures were higher as compared to fiscal 2007 due to the advancement and completion of the Phase 3 MEND-CABG II study during fiscal 2008.

The MEND-CABG II Study: The Company initiated a single confirmatory Phase 3 study in patients undergoing CABG procedures during the second quarter of fiscal 2007. The Company completed enrolment of the 3,000 patients in September 2007 for the MEND-CABG II trial. Over 130 cardiac centres throughout North America and Europe participated in the study, which is managed by Duke Clinical Research Institute (DCRI) and Montreal Heart Institute. In February 2008, the Company announced that the study did not meet the primary endpoint. The key findings from the study were presented at the American College of Cardiology 57th Annual Scientific Session in April 2008. Based on the results, the Company does not plan on submitting an application for MC-1 marketing approval to the U.S. Food and Drug Administration for the CABG indication.

MEND-CABG II study costs incurred during the fiscal year related to regulatory activity, patient costs, monitoring costs, laboratory tests, manufacturing costs and administration costs. For the year ended May 31, 2008, total expenditures for the MC-1 CABG program were $26,262,000 as compared to $20,258,000 in fiscal 2007.

The MATCHED Study: The Phase 2 study evaluated MC-1 alone and in combination with an ACE inhibitor encompassing 120 patients with co-existing diabetes and hypertension. MATCHED was a randomized, parallel group, cross-over, double-blind, placebo-controlled comparison of 100, 300 or 1000 mg of MC-1 alone and in combination with 20 mg of lisinopril. The results demonstrated the positive clinical effects of MC-1 on important primary and secondary blood pressure and metabolic endpoints.

MATCHED study costs incurred during the current year related to data analysis and planning for future clinical development. For the year ended May 31, 2008, total expenditures for the MC-4232 program were $29,000 as compared to $113,000 in fiscal 2007.

During the year ended May 31, 2008, the Company determined that conditions had arisen which triggered the need to review certain of the Company’s long lived assets for impairment. In particular, during the quarter ending February 29, 2008, the Company announced that the results from the Phase 3 MEND-CABG II clinical trial did not meet its primary endpoint. Based on the results, the Company does not plan on submitting an application for MC-1 marketing approval to the U.S. Food and Drug Administration for the CABG indication. The Company has decided to discontinue at this time the development of MC-1 as a monotherapy for acute indications such as CABG and announced a corporate restructuring in March 2008. These factors, along with a lower than originally projected AGGRASTAT® product market share has triggered the need to review the Company’s intangible assets for impairment under CICA Handbook Section 3063 (“Section 3063”).

Section 3063,Impairment of Long-Lived Assets, requires that a long-lived asset is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. An impairment loss is recognized as the difference between fair value and carrying amount when the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. As a result of unfavourable results of the MEND-CABG II Study and the resulting changes to the Company’s commercial plans as well as the continued decline in AGGRASTAT® product revenues, the Company has determined that the carrying value of patents, trademark, technology license, and customer list exceed their fair value based on discounted future cash flows and market prices for similar assets. Accordingly, the Company recorded a write-down of $884,000 relating to MC-1 and $12,173,000 relating to Aggrastat during the year.

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Amortization for the year ended May 31, 2008 was $2,653,000, consistent with $2,289,000 in fiscal 2007. The majority of amortization expense in both periods relates the amortization of AGGRASTAT® intangibles.

Interest and other income for fiscal 2005 totaled $459,000 asthe year ended May 31, 2008 was $1,150,000, compared to $445,000 for$1,591,000 in fiscal 2004. Interest2007. The decrease in interest and other income in fiscal 20052008 is slightly higher thanthe result of lower cash and cash equivalents balance and lower interest rates as compared to the prior fiscal 2004,year.

Interest expense for fiscal 2008 was $3,831,000, compared to $1,958,000 in fiscal 2007. The increase in interest expense in the year ended May 31, 2008 as compared to fiscal 2007 is primarily due to a foreign exchange gaininterest on the US$25 million in long-term debt that the Company secured in the second quarter of $64,000 in fiscal 2005 as compared to nil in fiscal 2004. 2008.

The increase in the foreign exchange gain for the year ended May 31, 20052008 was $79,000, compared to a $392,000 loss in fiscal 2007. The foreign exchange gain in fiscal 2008 is primarilydue to a result ofdecrease in the strengtheningstrength of the U.S. dollar relative to the Canadian dollar during thisin the period. While the functional currency of the CorporationCompany is the Canadian dollar, the CorporationCompany is holding U.S. dollars in anticipation ofto finance the significant U.S. dollar denominated clinical trial costs incurred as a result of the MEND-CABG study. This gain was partially offset by lower interest incomeII study, AGGRASTAT® expenses incurred in the U.S. and U.S. denominated long-term debt. To date the Corporation has not entered into any future or forward contracts, or other derivative instruments, for either hedging or speculative purposes to mitigate the impact of foreign exchange fluctuations on these costs.

For the year ended May 31, 2007, the Corporation recorded a consolidated net loss of $57,403,000 or $0.46 per share compared to a consolidated net loss of $31,703,000 or $0.30 per share for the year ended May 31, 2007. As discussed above, the consolidated net loss resulted mainly from the reduction in net product sales of AGGRASTAT, increased costs of the Company’s clinical development programs, primarily being the Phase 3 MEND-CABG II study, the write-down of MC-1 CABG and AGGRASTAT® intangible assets, rising selling, general and administrative expenses due to lowercostsassociated with the structuring of the financing agreements entered into during the year and the activities resulting from the Company’s restructuring efforts along with increases in some regulatory and capital tax costs and increased net interest costs.

The weighted average cashnumber of common shares outstanding used to calculate basic and cash equivalents balancediluted loss per share increased to 125,476,086 for the year ended May 31, 2008 from 104,879,404 for the year ended May 31, 2007.

Year Ended May 31, 2007 Compared to the Year Ended May 31, 2006

Net product sales for fiscal 2007 were $5,945,000, compared to nil in fiscal 2005 as2006. Net product sales reflect reduction of gross sales at the time of initial sales recognition for estimated wholesaler chargebacks, returns and discounts. The Company began recognizing revenue for AGGRASTAT® effective August 9, 2006, the date following its acquisition. The Company currently sells AGGRASTAT® to drug wholesalers. These wholesalers subsequently sell AGGRASTAT® to the hospitals where health care providers administer the drug to patients. Wholesaler management decisions to increase or decrease their inventory of AGGRASTAT® may result in sales of AGGRASTAT® to wholesalers that do not track directly with demand for the product at hospitals. The Corporation only began selling AGGRASTAT® in August 2006, and wholesaler buying patterns have sometimes been unpredictable.

Cost of goods sold for fiscal 2007 were $388,000, compared to nil in fiscal 2006. Cost of goods sold represents direct product costs associated with AGGRASTAT® and royalties due to Merck & Co., Inc. based on net sales of AGGRASTAT®. Amortization of the priorrelated acquired AGGRASTAT® intangible assets is separately discussed below. Royalties are payable to Merck & Co., Inc., based on net sales of AGGRASTAT® and commenced in January. The calculation of royalties due is based on a sliding scale dependant on reaching certain net sales milestones. Cost of goods sold will vary from quarter to quarter, depending on the product mix, production costs, and sales levels.

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Selling, general, and administrative expenditures for fiscal 2007 were $11,048,000, compared to $2,858,000 in fiscal 2006. Selling, general, and administrative expenditures increased during the 2007 fiscal year primarily as a result of the Company’s acquisition and launch of AGGRASTAT® during the first half of the year. The Corporation anticipates that investment income will continueSelling, general, and administrative expenditures related to fluctuateAGGRASTAT® were $6,716,000 in relationfiscal 2007, compared to cashnil in fiscal 2006. Selling, general, and short term investment balancesadministrative expenditures for AGGRASTAT® are primarily related to field selling expenses, product promotion costs and interest yields.administrative expenses. Other selling, general, and administrative expenditures in fiscal 2007 were $4,332,000, compared to $2,858,000 in fiscal 2006. Other selling, general, and administrative expenditures are higher in the current fiscal year due to increased business development activities, employee payroll, and stock-based compensation expense.

Research and development expenditures increasedfor fiscal 2007 were $23,336,000, compared to $13,564,000$10,219,000 in fiscal 2005 as compared to $4,435,000 for fiscal 2004 and represent 89%2006, which is an increase of the Corporation’s total expenditures in fiscal 2005.128%. As expected, research and development expenditures were significantly higher as compared to the same periods in fiscal 20042006 due to the ongoing Phase II/III Coronary Artery Bypass Graft (CABG) trial attributed to MC-1, called MEND-CABGinitiation and commencement of enrolment of the Phase 3 MEND-CABG II MATCHED study with MC-4232.clinical trial in November 2006.

The Corporation’s 900 patient, MEND-CABG trial reached full enrollment in July 2005. The MEND-CABG II Study: The Company initiated a single confirmatory Phase 3 study is a Phase II/III placebo controlled, double-blinded studyin patients undergoing CABG procedures during the second quarter of MC-1, designed to evaluatefiscal 2007. The Company conducted the potential of the Corporation's lead drug in reducing ischemic damage resulting from CABG procedures. The PhaseMEND-CABG II portion of the trial is being conducted at approximately 40over 120 cardiac centres throughout CanadaNorth America and the USEurope and iswas managed by Duke Clinical Research Institute (DCRI) and Montreal Heart Institute and Duke Clinical Research Institute (DCRI). The study's primary efficacy parameter is the reduction in combined incidence of cardiovascular and cerebrovascular death, non-fatal myocardial infarction (heart attack) and non-fatal cerebral infarction (stroke),enrolled up to 3,000 patients. The Company announced results in the second half of fiscal 2008.

Costs incurred during fiscal 2007 related to coordinating the MEND-CABG II study including costs associated with contract negotiating, IRB fees, regulatory activity, patient costs, monitoring costs, laboratory tests, manufacturing costs and including 30 days following CABG surgery.administration costs. For the year ended May 31, 2005,2007, total

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expenditures for the MEND-CABG trialMC-1 CABG program were $8,788,000$20,258,000 as compared to $1,352,000$6,116,000 in fiscal 2004. The costs increased in direct relation to the increase in the number of clinical sites initiated in the study and the associated increase in the number of patients enrolled.2006.

The Corporation will compile and analyze all efficacy and safety endpoints up to postoperative day 30 (“POD 30”), and plans on reporting these results in the fall of 2005. The secondary endpoint of postoperative day 90 (POD 90) will follow shortly thereafter.

The initiation of the MEND-CABG trial was based on the Phase II, MEND-1 trial, managed by Duke Clinical Research Institute, which showed that the Corporation's lead product, MC-1, reduces ischemic heart damage following angioplasty as determined by the release of the amount of the marker cardiac enzyme, CK-MB. The trial enrolled a total of 60 high-risk patients undergoing percutaneous coronary intervention (PCI), and was conducted at four medical centres in Canada and the USA.

The increase in research and development expenditures was also due to the clinical development program of MC-4232, a combination of MC-1 and an ACE Inhibitor. As part of the Phase II/III clinical development program of MC-4232, the Corporation is conducting the Phase II MATCHED study. The MATCHED Study: The study will evaluateevaluated MC-1 alone and in combination with an ACE inhibitor encompassing up to 120 patients with co-existing diabetes and hypertension. ThisThe study will assesswas designed as a Phase 2 trial to determine the optimal dose and endpoint for Phase 3 development of MC-4232. MATCHED was a randomized, parallel group, cross-over, double-blind, placebo-controlled comparison of 100, 300 or 1000 mg of MC-1 alone and in combination with 20 mg of lisinopril. The results demonstrated the positive clinical effects of MC-4232 on a variety of important parameters in diabetic hypertensive patients, includingprimary and secondary blood pressure and metabolic function.endpoints.

Cost incurred during the current year related to data analysis and planning for future clinical development. For the year ended May 31, 2005,2007, total expenditures for the MATCHED trialMC-4232 program were $1,731,000$113,000 as compared to $12,000$1,768,000 in fiscal 2004.

Research and development expenses are expected to decrease in fiscal 2006 as compared to fiscal 2005. This decrease in expenditures is expected to result from reduced clinical activity in the first half of fiscal 2006, as the Corporation anticipates that the majority of the remaining costs for the MEND-CABG and MATCHED studies will be incurred in the first quarter of fiscal 2006. Should either of these studies be successful, the Corporation plans on initiating one or more Phase III trials in the second half of fiscal 2006. These are large-scale studies of patients with the targeted diseases, and could cost substantially more than the Phase II trials.

General and administrative expenses include salaries and related costs for those employees not directly involved in research and development, but are required to support ongoing business development and corporate stewardship activities. The balance also includes professional fees such as legal, audit, investor and public relations and business development activities. General and administration expenses totaled $2,256,000 for the year ended May 31, 2005, as compared to $1,958,000 for the year ended May 31, 2004. The overall increase in costs during the fiscal year ended May 31, 2005 as compared to the same period in fiscal 2004 is primarily driven by increased business development and investor relations activities, professional fees and stock-based compensation expense. The Corporation expects similar levels of general and administrative expenditures in the fiscal year ending May 31, 2006 as compared to the same period in fiscal 2005.

Refundable investment tax credits for fiscal 2005 totaled $553,000 as2007 were $172,000, compared to nil for$478,000 in fiscal 2004. As Medicure is a public company, the federal investment tax credits (“ITCs”) for qualified Scientific Research and Experimental Development (“SR&ED”) expenditures are not refundable and are calculated at a rate of 20%. These ITCs can be applied to reduce future income taxes payable with a ten-year carry forward period. Certain eligible SR&ED expenditures incurred in Quebec qualify for Quebec refundable tax credits and are earned on payments made in Quebec for SR&ED labour, SR&ED contracts and to prescribed research centres.

2006. The recording of refundable ITCs is a result ofsolely related to research and development spending in Quebec, which are eligible for refundable tax credits. The majority of the qualifying expenditures related to the MEND-CABG study.

Amortization for the year ended May 31, 2007 was $2,289,000, compared to $107,000 in fiscal 2006. The refundable ITCs recorded are based on management’s estimateincrease in amortization in fiscal 2007 compared to fiscal 2006 is the result of amounts expectedincreased amortization of intangible assets associated with the Company’s acquisition of AGGRASTAT® during the first quarter of fiscal 2007.

Interest and other income for the year ended May 31, 2007 was $1,591,000, compared to be recovered$300,000 in fiscal 2006. Interest and are subjectother income in fiscal 2007 is higher than fiscal 2006 due to audithigher average cash and cash equivalents balance, largely due to the equity financings that the Company completed during the fourth quarter of fiscal 2006 and the third quarter of fiscal 2007.

Interest expense for fiscal 2007 was $1,958,000, compared to nil in fiscal 2006. The increase in interest expense in fiscal 2007 is the result of the Company securing a US$15,840,000 term loan facility related to the acquisition of AGGRASTAT® during the first quarter of fiscal 2007.

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Foreign exchange loss for the year ended May 31, 2007 was $392,000, compared to $200,000 in fiscal 2006. The foreign exchange loss for fiscal 2007 is primarily a result of the weakening of the U.S. dollar relative to the Canadian dollar during this period, particularly in the fiscal fourth quarter. While the functional currency of the Company is the Canadian dollar, the Company has significant holdings of U.S. dollars in anticipation of the U.S. dollar denominated clinical trial costs for the Phase 3 MEND-CABG II study. This foreign exchange loss was partially offset by taxation authorities. These amounts have been recordedan unrealized foreign exchange gain incurred as a reductionresult of research and development expenditures.the Company’s U.S. denominated term loan facility of US$15,840,000.

For the year ended May 31, 2005,2007, the Corporation recorded a consolidated net loss of $14,866,000$31,703,000 or $0.22$0.30 per share compared to a consolidated net loss of $5,989,000$12,607,000 or $0.11$0.17 per share for the year ended

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May 31, 2004.2006. As stateddiscussed above, these results of operations werethe consolidated net loss resulted mainly attributable tofrom the Corporation’sCompany’s clinical development program, andincluding the increased business development activity required to support the program.Phase 3 MEND-CABG II study. The CorporationCompany expects to incur a loss next year as it continues to invest in product research and development.

The weighted average number of common shares outstanding used to calculate basic and diluted loss per share increased to 66,717,715104,879,404 for the year ended May 31, 20052007 from 55,738,71675,144,764 for the year ended May 31, 2004.

Year Ended May 31, 2004 Compared to the Year Ended May 31, 2003

Interest and other income for fiscal 2004 totaled $445,000 as compared to $241,000 for fiscal 2003. Interest income was higher in fiscal 2004 primarily due to a larger average cash and cash equivalents balance, which resulted primarily from an equity offering and warrant conversion in fiscal 2004 that raised net proceeds of $21,617,000. Throughout fiscal 2004 and fiscal 2003, management invested excess funds in short-term investments.

Research and Development expenditures increased to $4,435,000 as compared to $3,118,000 for fiscal 2003 and represent 69% of the Corporation’s total expenditures in fiscal 2004. Research and development expenditures for fiscal 2004 were higher due to the ongoing Phase II/III Coronary Artery Bypass Graft (CABG) trial attributed to MC-1, called MEND-CABG and the clinical development program of MC-4232. The Corporation initiated patient enrollment of the MEND-CABG study in April 2004. The Phase II portion of the study will enroll up to 900 patients. The study will evaluate the ischemic reperfusion and neuro-protective effects of MC-1 in patients undergoing high-risk CABG surgery. The trial is being conducted at approximately 40 cardiac centres throughout Canada and the US and is managed by Montreal Heart Institute and Duke Clinical Research Institute (DCRI).

The initiation of the MEND-CABG trial was based on our Phase II trial, MEND-1, managed by DCRI, which showed that the Corporation's lead product, MC-1, reduces ischemic heart damage following angioplasty as determined by the release of the amount of the marker cardiac enzyme, CK-MB. The trial enrolled a total of 60 high-risk patients undergoing percutaneous coronary intervention (PCI), and was conducted at four medical centres in Canada and the USA.

The increase in expenditures was also due to the clinical development program of MC-4232, which commenced in early fiscal 2004. In a pre-IND meeting to consider the Corporation’s proposed development of MC-4232, the United States Food and Drug Administration (FDA) advised the Corporation its proposed Phase II/III clinical development program was adequate. Based on the plan presented to the FDA, the Corporation initiated an exploratory Phase II study in early fiscal 2004. The initial Phase II trial tested MC-1 alone to establish complementary therapeutic effects of MC-1 and dosing regimens. In the fourth quarter of fiscal 2004, the Corporation announced preliminary results from the Phase II trial. These results support the Corporation proceeding with the expansion of its MC-4232 clinical development program.

The Corporation expects the research and development expenditures for fiscal 2005 to be significantly higher than fiscal 2004. A significant portion of the increase in expenditures during fiscal 2005 will be incurred in the Phase II/III MEND-CABG trial attributed to MC-1 and the clinical development program of MC-4232.

General and administrative expenses include salaries and related costs for those employees not directly involved in research and development, but are required to support ongoing business development and corporate stewardship activities. The balance also includes professional fees such as legal, audit, investor and public relations and business development activities. General and administration expenses totaled $1,958,000 for the year ended May 31, 2004, as compared to $1,284,000 for the year ended May 31, 2003. The increased spending in fiscal 2004 as compared to fiscal 2003 was primarily attributable to the internal growth that is required to support the Corporation's increasing business development and investor relations activities, regulatory costs and professional fees. This includes costs associated with listing on the American Stock Exchange during the third quarter of fiscal 2004. The Corporation expects slightly higher levels of general and administrative activities for fiscal 2005 to support increased business development activities.

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For the year ended May 31, 2004, the Corporation recorded a net loss of $5,989,000 or $0.11 per share compared to a net loss of $4,194,000 or $0.11 per share for the year ended May 31, 2003. As stated above, these results of operations were mainly attributable to the Corporation’s clinical development program and the increased business development activity required to support the program. The Corporation expects to incur a loss next year as it continues to invest in product research and development.

The weighted average number of common shares outstanding used to calculate basic and diluted loss per share increased to 55,738,716 for the year ended May 31, 2004 from 37,118,889 for the year ended May 31, 2003.2006.

B. Liquidity and Capital Resources

Since the Company’s inception, the Corporationit has financed its operations primarily from public and private sales of equity, debt financing, the exerciseissue of warrants and exercise of stock options, and interest income on excess funds availableheld.

Cash used in operating activities for investmentfiscal 2008 increased $16.7 million to $41.9 million compared to $25.2 million for fiscal 2007 as a result of a $3.7 million reduction in sales, and government grantsincrease in general and tax credits.administrative expenses of $1.0 million, an increase in research and development expenses of $5.3 million, increased net financing costs of $2.3 million and a $4.0 million decline in cash provided by working capital compared to the prior year.

Cash provided by financing activities in fiscal 2008 was $22,586,000, compared to $45,021,000 in fiscal 2007. The cash inflow during the current period resulted from two financings in September 2007. First, the Company entered into a debt financing agreement with Birmingham Associates Ltd. (Birmingham), an affiliate of Elliott Associates, L.P. for proceeds of US$25 million. Under the terms of the agreement, Birmingham will receive a return based on a percentage of AGGRASTAT® net sales. Birmingham is entitled to a return of 20 percent on the first US$15 million in AGGRASTAT® revenues, 17.5 percent on the next US$10 million, 15 percent on the next $5 million and 5 percent thereafter, subject to an escalating minimum annual return, until May 31, 2020. The minimum annual returns start at US$2.5 million in 2008 and escalate to US$6.9 million in 2017, with minimum payments over the life of the agreement aggregating US$49.7 million. The annual minimum payments have been reflected in the effective interest rate calculation of the debt. Second, the Company closed a private placement with investors raising gross proceeds of US$16 Million. Under the terms of the securities purchase agreements, the Company issued approximately 13.9 million common shares together with warrants to purchase approximately 4.37 million additional common shares (the common shares and warrants comprise the Units), at a price of US$1.15 per Unit. The warrants have a five year term and have an exercise price of US$1.50 each. These inflows were offset by $11,916,000 that was placed under restriction during the period as collateral for the Merrill Lynch Business Financial Services Inc. (formerly Merrill Lynch Capital Canada Inc.) term loan facility.

Cash used in investing activities in fiscal 2008 was $587,000, compared to $22,925,000 in fiscal 2007. The large decrease in cash used in investing activities in fiscal 2008 from fiscal 2007 reflects the Company’s acquisition of AGGRASTAT® in the first quarter of fiscal 2007.

As at May 31, 2005,2008, the Corporation had cash and cash equivalents totaling $7,591,000totalling $11,905,000 as well as $11,916,000 of restricted cash to secure the Merrill Credit Facility, as compared with $19,954,000 at the previous year-end. Subsequent to May 31, 2005, the Corporation strengthened its cash position by raising gross proceeds$31,770,000 of $4,684,950 (before share issuance costs of approximately $440,000) through a private placement to investors of 5,205,500 common shares and warrants to purchase an additional 2,602,750 shares of common stock. The purchase price of the common shares is $0.90 per share, and the warrants are exercisable for a period of five years at an exercise price of $1.18 per share. The financing increased the Corporation’s cash and cash equivalents as of May 31, 2007. These funds are committed to approximately $8,450,000 at August 19, 2005.short-term investments and as a

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result management does not believe that the fair value of these investments would be adversely impacted to any significant degree by a fluctuation in market interest rates.

The total number of common shares issued and outstanding at May 31, 20052008 was 66,826,660130,307,552 as compared to 66,646,660116,314,509 at May 31, 2004. As2007.

At May 31, 2008, the Corporation had net working capital of $5,242,262, compared to net working capital of $21,129,422 at May 31, 2007. During the period ended May 31, 2008, a resulttotal of 80,000 stock options were exercised for proceeds of $60,000. At May 31, 2007, the financing subsequentCorporation had net working capital of $21,129,422 compared to year end,net working capital of $34,197,234 at May 31, 2006. During the period ended May 31, 2007, a total number of common shares issued and outstanding was 72,032,160 at August 19, 2005.345,000 stock options were exercised for proceeds of $286,500.

The Corporation expectshad long-term debt at May 31, 2008 of US$12 million with a syndicate of lenders, led by Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., and including Silicon Valley Bank and Oxford Finance Corporation. Interest is payable monthly at one-month LIBOR plus 6.5 percent per annum. The Corporation will not be required to continue to incur operating losses as it proceeds with its clinical and drug discovery programs. Research and development expenses are expected to decrease in fiscal 2006 as compared to fiscal 2005. This decrease in expenditures is expected to result from reduced clinical activity inmake any principal repayments on the first half of fiscal 2006, asterm loan before the Corporation anticipates that the majorityexpiration of the remaining coststerm loan on February 1, 2010, except that Merrill, at its option, can require the Company to immediately repay US$2.0 million after September 17, 2008.. The Company has deposited US$12 million in a cash collateral account to be held by Merrill, for the MEND-CABGbenefit of Merrill and MATCHED Phase II studies will be incurred in the first quarter of fiscal 2006. Should either of these studies be successful, the Corporation plans on initiating one or more Phase III trials in the second half of fiscal 2006. These are large-scale studies of patients with the targeted diseases, and could cost substantially more than the Phase II trials.

It continues to be the Corporation’s plan to secure a partnership with a large pharmaceutical company for MC-1. Such a partnership would provide funding for clinical development (most specifically Phase III) and a license agreement for the sale and distribution of the Corporation’s lead product in return for milestone payments and product royalties.lenders.

The Corporation believes italso had long-term debt at May 31, 2008 of US$24.2 million recorded in on its financial statements relating to the Birmingham debt described in more detail above. The Company has sufficient resourcesimputed an effective interest rate of 13.3% .

As at May 31, 2008 the Corporation had US$19.5 million in cash, cash equivalents and restricted cash to fund operations into fiscal 2007. However, funding requirements may vary depending on a number of factors includingfinance the progress of the Corporation’sU.S. denominated long-term debt as well U.S. denominated selling, general and administrative expenses and research and development programs,costs. The Corporation currently has no derivatives, such as foreign currency forward contracts and futures contracts, hedging the securing of a partnership, the results of preclincal studies and clinical trials and changes in the focus and directionbalance of the Corporation’s product development projects.U.S. denominated debt.

Depending uponIn March 2008, the Company announced a significant corporate restructuring stemming from the unfavourable results of the Corporation’s researchPhase 3 MEND-CABG II trial. This restructuring included the significant reduction in numbers of staff and development programs andin resources allocated to certain programs. Based on the availability of financial resources, the Corporation could decideCompany’s operating plan, its existing working capital is not sufficient to accelerate, terminate, or cut back on certain areas of research and development, or commence new areas of research and development. These are complex decisions with the goal of optimizing investment returns and managingmeet the cash burn rate.requirements to fund the Company’s currently planned operating expenses, capital requirements, working capital requirements, long-term debt obligations and commitments beyond the end of the 2009 fiscal year without additional sources of cash and/or deferral, reduction or elimination of significant planned expenditures. The Corporation does not presently knowCompany’s plan to address the expected shortfall of any factors that would indicate that a change in strategyworking capital is needed into secure additional funding within the next year.

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The Corporation’s strategic focussix months and to increase operating revenue and reduce operating expenses. There is no certainty that the Company will be to move closer to regulatory approval for its lead product, MC-1 and its second product MC-4232, and identify and develop several new drug candidates from the drug discovery group. In order to achieve these objectives, the Corporation may pursue alliances with healthcare companies that will provide research and development funding. The Corporation may consider raising additional capital during fiscal 2006 to fund operations over the long term.

The main purpose of Phase III trials isable to obtain definitive statistical evidenceany sources of the efficacy and safety of MC-1 and MC-4232 in order to support an applicationfinancing on acceptable terms, or at all, or that it will increase product revenue or reduce operating expenses to the TPD and FDA for commercial approval.extent necessary.

If either MC-1 or MC-4232 is approved for marketing by the TPD and FDA, there will then potentially be follow-up studies (called Phase IV trials) that may need to be completed while the drug is being marketed, in order to adjust or extend product claims. It is not possible to estimate the scope and size of any such studies that may be required.

While MC-1 and MC-4232 progresses through clinical trials, the Corporation will continue the drug development process. This process begins with initial product screening which should produce preliminary candidates for preclinical research. MC-5422 and MC-45308 are such candidates that have moved into the preclinical research stage. Once a drug candidate reaches this stage, it can cost in excess of $1,000,000 to advance it to the clinical trial stage. Ongoing research and development to find preliminary candidates currently costs the Corporation in excess of $1,000,000 per year.

Besides public or private financings, the other major financings are planned to be through up front and milestone payments from a large pharmaceutical company that has partnered with the Corporation for clinical development and or marketing of the lead compound.

When additional funds are required, potentialPotential sources of financing include strategic relationships and public or private sales of the Corporation’s common shares. The Corporation does not have any committed sources of financing at this time and it is uncertain whether additional funding will be available when the need arises on terms that will be acceptable to the Corporation. If funds are raised by selling additional common shares, or other securities convertible into common shares, the ownership interests of the Corporation’s existing shareholders will be diluted. If the Corporation is unable to obtain financing when required, the Corporation wouldmay not be able to carry out its business plan, including further clinical trialscontinue as a going concern. There is significant doubt about the appropriateness of MC-1the use of the going concern assumption because the company has experienced operating losses and MC-4232. The Corporation would have to significantly limit itscash outflows from operations and business, and its financial condition and results of operations would be materially harmed.

At May 31, 2005, the Corporation had net working capital of $5,926,134 compared to net working capital of $20,525,245 at May 31, 2003. During the period ended August 19, 2005, no additional stock options were exercised.

At May 31, 2004, the Corporation had net working capital of $20,525,245 compared to net working capital of $4,111,440 at May 31, 2003. During the three months ended August 31, 2004, no additional stock options were exercised.

The Corporation had no long-term debt as of May 31, 2005.since incorporation.

C. Research and Development, Patents and Licenses, Etc.

Research and Development

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Drug development and design begins with an idea, or theoretical concept for treating a given disorder. The idea is advanced through the drug design process, resulting in preliminary candidates that have theoretical potential. Candidates are improved to achieve the optimal effectiveness with limited toxicity. Following preclinical testing, products with the greatest potential become lead candidates and are advanced into clinical trials (human testing) with the intent of having them receive regulatory approval for marketing.

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The Corporation has demonstrated the effectiveness of MC-1 in preclinicalin vivo models of cardiovascular disease and a Phase I and Phase II clinical trial. Additional preclinical studies may also be performed in order to evaluate other potential uses of MC-1 and to gather other data as may be necessary to support future clinical objectives.

In vitro andin vivo laboratory experiments to date have been used to study MC-1 therapeutic activity in myocardial ischemia, ischemic reperfusion injury, and hypertension. These experiments involved internationally recognized models (including coronary artery ligation, Langendorff, reperfusion and hypertensive rat models), and analysis techniques (such as electrocardiogram and hemodynamic measurements, and electron microscopy).In vivo studies involve oral and/or intravenous administration of the drug dose.

While MC-1’s development proceeds, novel chemical compounds will be synthesized or in-licensed and entered into further testing to evaluate their commercial potential. As previously set forth, the Corporation’s drug discovery program is pursuing medicinal chemistry strategies with the objective of maximizing the probability of commercial potential. Novel chemical compounds are screened for commercial viability prior to advancement into preclinical testing. These studies are to determine bioavailability/distribution, safety and efficacy (on bothin vitro andin vivo models).

For the period from inception on September 15, 1997 to May 31, 2005, the Corporation has expended approximately $26,838,000 net of government assistance and investment tax credits, which aggregate approximately $1,003,000, on theCompany’s research and development program is currently focused on the clinical development of the Company’s lead clinical product, MC-1, and the discovery and development of other compounds.drug candidates. MC-1 is a naturally occurring small molecule that in both preclinical and clinical studies has shown potential for treating various forms of cardiovascular disease.

In February 2008, the Company announced that its pivotal Phase 3 MEND-CABG II clinical trial with MC-1 did not meet the primary endpoint and as a result were not sufficient to support the filings. This program has been put on hold due to the company’s limited resources at this time. At such time as the Company’s resources warrant a further review of this program the Company will do so and then make a determination as to what if any further investigation is warranted. The key findings from the study were presented at the American College of Cardiology 57th Annual Scientific Session in April 2008. The trial was designed to evaluate the effect of Medicure’s lead product MC-1, versus placebo, on the incidence of cardiovascular death or nonfatal myocardial infarction up to and including 30 days following coronary artery bypass graft (CABG) surgery. Based on the results, the Company does not plan, in the foreseeable future, on submitting an application for MC-1 marketing approval to the U.S. Food and Drug Administration for the CABG indication. However, the information and findings from the program could possibly assist and speed up the investigation of alternative applications of MC -1.

As outlined in Item 17, company-sponsored research and development expenditures for fiscal 2008 were $28,660,250 (2007 - $23,335,752; 2006 - $10,219,205).

Patents and Licenses

The Corporation has been issued 1539 patents from the United States Patent Office providing protection for certain uses of MC-1 and related compounds in treatment of cardiovascular diseases and other compounds for the use in cardiovascular disease. The Corporation has also filed 15 additional31 regular applications in the United States plus corresponding patent applications in other jurisdictions. The Corporation will continue to file patents to extend protection of MC-1 and for new compounds in development. The 1539 patents issued to the Corporation are as follows:

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Patents 5,504,090, 5,733,916 and 6,001,842 are sublicensed by the Corporation from ENDACEA, Inc. ENDACEA, Inc. has the right to sublicense the Sublicensed Patents to the Corporation in accordance with an agreement with the Trustees at the University of Pennsylvania. Pursuant to a Sublicense Agreement dated April 11, 2006, ENDACEA sublicensed the exclusive worldwide use of the patents to the Corporation. Pursuant to the Sublicense Agreement, the Corporation has agreed to pay ENDACEA, Inc. a royalty payment on Net Sales of Sublicensed Products sold worldwide. The first three patentsSublicense Agreement commenced on April 11, 2006.

Patents 6,043,259, 6,051,587, 6,339,085, 6,890,943 and 7,230,009 are jointly owned by the Corporation and the University of Manitoba. Pursuant to a Licence Agreement dated August 18, 1997, an Assignment Agreement dated September 26, 1997, and an ensuing newupdated License Agreement dated August 30, 1999 and a newly revised version executed November 24, 2006, which supersedes all previous versions, (the ’’Licence‘‘Licence Agreement’’) the University of Manitoba licensed the exclusive worldwide use of the patents and the MC-1 technology to the Corporation. Pursuant to the License Agreement, the Corporation has agreed to

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pay the University of

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Manitoba a royalty payment of up to 3% of net sales from any cardiovascular product derived from the MC-1 technology. The License Agreement commencedwas originally signed on August 30, 1999 and subsequently amended on November 24, 2006 and shall terminate:terminate if a patent or patents, domestic or foreign, are obtained prior to commercialization of a Licensed Product, the expiration date of the last to expire of any patents covered by the Patent Rights.

The MC-1 technology is derived from work done by employees of the Corporation and by two employees of the University of Manitoba, Dr. Naranjan Dhalla and Dr. Krishnamurti Dakshinamurti, Professor Emeritus, Department of Biochemistry.

Patents 5,292,756, 5,658,929, 5,733,919, 5,814,643, 5,880,136, 5,965,581, 5,972,967, 5,978,698, 6,040,317, 6,136,794, 6,538,112 and 6,770,660 were purchased by the Corporation from MGI GP, INC. (a Delaware corporation doing business as MGI PHARMA and its Affiliate, Artery, LLC). Pursuant to an Asset Purchase Agreement dated August 8, 2006, MGI GP, INC. sold the exclusive use of the patents to the Corporation in the specified territory (the United States of America including the Commonwealth of Puerto Rico; Guam; and the United States Virgin Islands). Pursuant to the Asset Purchase Agreement the Corporation agreed to pay MGI GP, INC. a one time fee for the procurement of the acquired assets. The 15Asset Purchase Agreement was executed August 8, 2006.

The Corporation entered into a second license with the University of Manitoba. This technology is unrelated to MC-1. The University of Manitoba has the right to license the technology to the Corporation in accordance with an Inter-institutional Agreement with The University and Ottawa Heart Institute Research Corporation. Pursuant to a license agreement dated December 8, 2006, the University of Manitoba licensed the exclusive worldwide use of the application to the Corporation. Pursuant to the License Agreement, the Corporation has agreed to pay on Net Sales of Licensed Products sold worldwide. The License Agreement commenced on December 8, 2006. No patents related to this technology have issued yet.

There are 46 pending regular and provisional United States patent applications, including those44 filed with the United States Patent Office as either regular or provisional applications, which are owned by the Corporation by virtue of their inventorship by employees of the Corporation and, subsequent to June 1, 2000, by CanAm Bioresearch Inc. The 2 remaining applications, 10/588,288 and 10/909,608 are from the University of Manitoba License Agreement of December 8, 2006 and the MGI Pharma Asset Purchase Agreement, respectively.

Much of the work, including some of the research methods, that is important to the success of the Corporation’s business is germane to the industry and may not be patentable. For this reason all employees, contracted researchers and consultants are bound by non-disclosure agreements.

Given that the patent applications for these technologies involve complex legal, scientific and factual questions, there can be no assurance that patent applications relating to the technology used by the Corporation will result in patents being issued, or that, if issued, the patents will provide a competitive advantage or will afford protection against competitors with similar technology, or will not be challenged successfully or circumvented by competitors.

The Corporation has filed patents in accordance with the Patent Cooperation Treaty (the ’’PCT’‘‘PCT’’). The PCT is a multilateral treaty that was concluded in Washington in 1970 and entered into force in 1978. It is administered by the International Bureau of the World Intellectual Property Organization (the ’’WIPO’‘‘WIPO’’), headquartered in Geneva, Switzerland. The PCT facilitates the obtaining of protection for inventions where such protection is sought in any or all of the PCT contracting states (total of 104 at July 1999). It provides for the filing of one patent application (the ’’international‘‘international application’’), with effect in several contracting states, instead of filing several separate national and/or regional patent applications. At the present time, an international application may include designation for regional patents in respect of contracting states party to any of the following regional patent treaties: The Protocol on Patents and Industrial Designs within the framework of the African Regional Industrial Property Organization, the Eurasian Patent Convention, the European Patent Convention, and the Agreement Establishing the African Intellectual Property Organization. The PCT does not eliminate the necessity of prosecuting the

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international application in the national phase of processing before the national or regional offices, but it does facilitate such prosecution in several important respects by virtue of the procedures carried out first on all international applications during the international phase of processing under the PCT. The formalities check, the international search and (optionally) the international preliminary examination carried out during the international phase, as well as the automatic deferral of national processing which is entailed, give the applicant more time and a better basis for deciding whether and in what countries to further pursue the application. Further information may be obtained from the official WIPO internet website (http://www.wipo.int).

On June 1, 2000 the Corporation entered into the Medicure International Licensing Agreement whereby it licensed the world-wide development and marketing rights for MC-1, except for Canada, to its wholly owned subsidiary, Medicure International.International Inc. As consideration for the grant of the license, Medicure International Inc. agreed to pay the Corporation a fee of $1.00 upon the completion of specified milestones in the development process, together with a variable royalty of 7% to 9% of net sales of MC-1 (if any sales are ever in fact made). The term of the Medicure International Licensing Agreement will expire on the date of expiration of the last to expire patent on MC-1, or in the absence of any such patent, on the 10th anniversary of the date of the first commercial sale of MC-1 in the country where it was last introduced (if

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it is ever so introduced). The Medicure International Licensing Agreement may be terminated under a number of circumstances and, in any event, by either party at any time by providing the other with at least 90 days prior written notice of its intention to terminate the Medicure International Licensing Agreement.

Medicure International Inc. subsequently entered into the Development Agreementa development agreement with CanAm on June 1, 2000 and Clinical Development Research Institute (CDRI) on July 2, 2004 to perform research and development of MC-1 and other compounds at cost, plus a reasonable mark-up not to exceed ten percent of any amount invoiced. The parties to the Development Agreementdevelopment agreements have agreed that the aggregate amount of all invoiced expenditures shall not exceed $20,000,000$30,000,000 over the term of theeach agreement. The term of the Development Agreementdevelopment agreements is to expire on the completion of all research and development activities by CanAm and CDRI, and the written acknowledgment by CanAm, CDRI and Medicure International Inc. that no further research projects will be undertaken (see Item 6 - Directors, Senior Management and Employees - A. Directors and Senior Management)

The Development Agreementdevelopment agreements may be terminated under a number of circumstances and, in any event, by Medicure International Inc. at any time by providing CanAm or CDRI with at least 30 days prior written notice of its intention to terminate, or by CanAm or CDRI at any time by providing Medicure International Inc, with at least 90 days prior written notice of its intention to terminate the Development Agreement.development agreement.

The agreements provide that all confidential information developed or made known during the course of the relationship with the Corporation is to be kept confidential except in specific circumstances.

D. Trend Information

Factors which contributed to the decline in AGGRASTAT® sales in 2008 included, but were not limited to, the lingering effects in the market of sales efforts, or lack thereof, prior to the Company’s acquisition of AGGRASTAT® in August 2006, the dilution of the commercial group’s energy by activities associated with the development and planned launch of MC-1 for CABG, which have since been suspended, and the impact of restructuring in 2008 of the Corporation’s sales execution strategy from a third party contract sales force to an internal sales force managed directly in-house. Management believes the Company has made significant strides in developing AGGRASTAT®’s place in the market and believes the benefits will be demonstrated in fiscal 2009 as indicated by the successful quarter over quarter growth in revenues in each of the last three quarters of fiscal 2008.

The Corporation is not aware of any other trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon the Corporation’s net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

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E. Off-balance Sheet Arrangements

As part of May 31, 2008 the Corporation’s ongoing business, itcompany does not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities or SPE, which would have been established for the purpose of facilitatingany off-balance sheet arrangements, or other contractually narrow or limited purposes. As of May 31, 2005, the Corporation was not involved in any unconsolidated SPE transactions.than those disclosed below.

F. Contractual Obligations

The following tables set forth the Corporation’s contractual obligations as of May 31, 2005:2008:

* TheIn addition to the contractual obligations disclosed above, balance excludes the commitments involving development agreements as these include a 30-day termination clause. The development agreements are described in more detail below.

The CorporationCompany and it’sits wholly-owned subsidiary, Medicure International Inc. hassubsidiaries, have ongoing research and development agreements with third parties in the ordinary course of business. The agreements include the research and development of MC-1 and its related compounds. During the year ended May 31, 2005, the Corporation incurred an aggregate of $8,984,509 (2004 - $3,953,118) in expenditures under these agreements which is included in research and development expenses in the statement of operations. Expenditures incurred from inception of the agreements to May 31, 2005 total $21,382,128. As at May 31, 2005, the Corporation is committed to fund a further $2,047,682 related to clinical research agreements with clinical research organizations (“CROs”) and clinical sites.

The contracts with the CROs

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clinical research organizations (CROs) are payable over the terms of the trials and the timing of payments is largely dependent on various milestones being met, such as the number of patients recruited, number of monitoring visits conducted, the completion of certain data management activities, trial completion, and other trial-related activities. We are also liable forAs at May 31, 2008, the payment of certain pass through costs. As part of these trials, the Corporation also entered intoCompany has no further commitments related to clinical research agreements with the clinical sites participating in the trials. These agreements require payments over the course of the study based on various activities being completed by the site, such as patient visits and various testing and measurement activities required per the study protocol. A significant portion of the amounts due to the sites for these activities is not payable until after the completion of the trial. This “holdback” results in a significant accrual of trial-related expenses during the course of the study, as the expense is recognized for accounting purposes but the cash payment is not made until after the trial is completed. CROs.

In addition, the CorporationCompany has committed to fund a further $3,805,366$26,255,000 in research and development activities under two development agreements with contract research organizations. The timing of expenditures and payments is largely at the discretion of the CorporationCompany and the agreements may be terminated at any time provided thirty (30) days notice is provided. Subsequent to May 31, 2005, the Corporation amended a development agreement with a third party such that a further $5,000,000 was committed in maximum direct research and development expenditures.

The Corporation periodically enters into research agreements with third parties that include indemnification provisions customary in the industry. These guarantees generally require the Corporation to compensate the other party for certain damages and costs incurred as a result of claims arising from

^{______________________________________________
2} In September 2007, the Company entered into a debt financing agreement with Birmingham Associates Ltd. (Birmingham), an affiliate of Elliott Associates, L.P. (Elliott) for a US$25 million up-front cash payment. Under the terms of the agreement, Birmingham will receive a payment based on a percentage of AGGRASTAT® net sales. Birmingham is entitled to a return of 20 percent on the first US$15 million in AGGRASTAT® revenues, 17.5 percent on the next US$10 million, 15 percent on the next $5 million and 5 percent thereafter, subject to an escalating minimum annual return, until May 31, 2020. The minimum annual returns start at US$2.5 million in 2008 and escalate to US$6.9 million in 2017. The total minimum payments over the life of the agreement aggregate US$49.7 million.

Birmingham will also receive the option to convert its rights based on AGGRASTAT® to MC-1 within six months after MC-1’s commercialization, if achieved. The exact percentage of AGGRASTAT® or MC-1 revenue that Birmingham will receive is tiered and declines as certain revenue levels are achieved. Upon conversion to MC-1, Birmingham is entitled to a return of 10 percent on the first US$35 million in MC-1 revenues, 5 percent on the next US$40 million in MC-1 revenues and 3 percent thereafter. Birmingham shall also receive a minimum annual return of US$2.6 Million on MC-1 net sales, if approved until May 31, 2020. Birmingham will receive payments based on MC-1 revenues until December 31, 2024, unless a novel patent is obtained for MC-1, which could extend the period of payments.

During the 30 day period following the date on which the U.S. Food and Drug Administration shall have first approved MC-1 for sale to the public, the Company may elect to terminate AGGRASTAT® or MC-1 Debt Payment rights with the payment, prior to the end of such 30 day period of US$70 Million to Birmingham. In addition, upon the approval of MC-1 for a second indication, the Company may once again elect to terminate AGGRASTAT® or MC-1 Debt Payment rights with the payment, prior to the end of such 30 day period of US$120 Million to Birmingham.

³ In conjunction with the acquisition of AGGRASTAT®, the Company entered into manufacturing and supply agreements to purchase a minimum quantity of AGGRASTAT® from third parties.

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research and development activities undertaken on behalf of the Corporation. In some cases, the maximum potential amount of future payments that could be required under these indemnification provisions could be unlimited. These indemnification provisions generally survive termination of the underlying agreement. The nature of the indemnification obligations prevents the Corporation from making a reasonable estimate of the maximum potential amount it could be required to pay. Historically, the Corporation has not made any indemnification payments under such agreements and no amount has been accrued in the accompanying financial statements with respect to these indemnification obligations.

PursuantThe Company has granted royalties to a License Agreement, the Corporation hasthird parties based on future commercial sales of MC-1, aggregating up to 3.9% on net sales. To date, no royalties are due and/or payable.

Royalties were payable to Merck & Co., Inc., based on net sales of AGGRASTAT® beginning in January 2007. In January 2008, Merck & Co., agreed to pay the University of Manitoba aterminate any future royalty payment of 3% ofpayments on net sales from any cardiovascular product derived from the MC-1 technology.

No dividends have been declared or paid on any shares of the Corporation since its incorporation. There can be no assurance that the Corporation will ever declare any dividends on anyAGGRASTAT® as a result of its shares, or if declared, what the dividend amounts will be or whether such dividends, once declared, will continue for any future period.decision to divest its non-US commercial rights to AGGRASTAT®.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Directors and Senior Management

The members of the board of directors and senior officers of the Corporation including a brief biography of each are as follows:

Dr. Albert D. Friesen, Winnipeg, Manitoba, Canada - Director, President, Chairman and Chief Executive Officer

The founder of Medicure Inc., Dr. Friesen holds a Ph.D. in protein chemistry from the University of Manitoba. Dr. Friesen played a key role in founding several health industry companies including Rh Pharmaceuticals (acquired by Cangene Inc.), ABI Biotechnology (acquired by Apotex Inc.), Viventia Biotech Inc., Genesys Pharma Inc. and KAM Scientific Inc. Dr. Friesen has experience in the establishment of pharmaceutical production facilities and has also managed and initiated the research and clinical development of several pharmaceutical candidates. Dr. Friesen is a founder of the Industrial Biotechnology Association of Canada (IBAC) and past Chairman of its board of directors and former member of the Industrial Advisory Committee to the Biotechnology Research Institute in Montreal. Dr. Friesen previously served as a senior executive of other publicly-traded companies, including a position as President of Viventia Biotech Inc. (formerly Novopharm Biotech Inc.) In addition to his role with the Corporation, Dr. Friesen is currently the President and Chairman of Genesys Venture Inc., a biotech incubator, based in Winnipeg. Dr. Friesen provides his services to the Corporation through A.D. Friesen Enterprises Ltd., his private consulting corporation. Dr. Friesen devotes substantially all of his time to the Corporation.

35 Date of birth is May 19, 1947

Dr. Arnold Naimark, Winnipeg, Manitoba, Canada - Director

Arnold Naimark, O.C., O.M., M.D., L.L.D., F.R.C.P.(C), F.R.S.C.F.R.S.C, FCAHS,. has had a distinguished career withinin biomedical research, medicine and higher education. Dr. Naimark served as Head of the Department of PhysiologyHe is President Emeritus and later as Dean of the FacultyMedicine Emeritus of Medicine at the University of Manitoba, following which he served as the University’s President and Vice-Chancellor (15 years). Dr. Naimark is currently Director of the University of ManitobaUniversity’s Centre for the Advancement of Medicine,Medicine. He also serves as Chair of the Health Canada Science Advisory Board, Chair of Genome Prairie; as a director of CancerCare Manitoba and member of the Research Council of the Canadian Institute for Advanced Research and of the Alberta Cancer Board International Committee on Research. Dr. Naimark was the founding Chair of the Canadian Health Services Research Foundation and of the Canadian Biotechnology Advisory Committee a Director of Inspiraplex and of the Robarts Research Institute and is a member of the Research Council of the Canadian Institute for Advanced Research. Dr. Naimark has served on many other committees and boards, in such positions as a Director of the Canadian Imperial Bank of Commerce, Chair of the International Review Panel for the Medical Research Council of Canada and President of the Association of Universities and Colleges of Canada. Dr. Naimark has also received several honouraryhonorary degrees and awards, including the Order of Canada.

Dr. William A. Cochrane, Calgary, Alberta, Canada- Director

Dr. CochraneCanada and the Order of Manitoba. Date of birth is an internationally recognized biotechnology executive and entrepreneur. In addition to other distinctions and senior appointments, Dr. Cochrane has previously served as Chairman and CEO of Connaught Laboratories Inc. and as President and Vice-Chancellor of the University of Calgary. Dr. Cochrane currently works as a health product investment consultant and serves on the board of Oncolytics. Dr. Cochrane has also been the President, CEO, and a Director of Nucleus BioScience Inc. since January 2000.August24, 1933.

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Gerald P. McDole, Mississuaga, Ontario, Canada, MBA – Director

Mr. McDole is currently a director of several Canadian healthcare companies. Mr. McDole is Past President of AstraZeneca Canada Inc. He was named President and CEO of AstraZeneca Canada Inc.'s pharmaceutical operations in 1999 and immediately led the merger of Astra Pharma and Zeneca Pharma Inc. Prior to this, Mr. McDole was president and CEO of Astra Pharma Inc., a position he assumed in 1985 after having served as Executive Vice-President. Mr. McDole is a member of the Canadian Healthcare Marketing Hall of Fame, and has been recognized by Canadian Healthcare Manager Magazine with the Who's Who in Healthcare Award in the pharmaceutical category. In recognition of Mr. McDole's outstanding contributions to the biotech and pharmaceutical industries, the University of Manitoba recently established The Gerry McDole Fellowship in Health Policy and Economic Growth. Date of birth is January 25, 1940.

Moray W. Merchant, MBAPeter Quick, Mill Neck, New York, USA - Vice-President, Market DevelopmentDirector

Moray MerchantMr. Quick currently serves on the Board of Directors for Fund For The Poor, the Board of Governors of St. Francis Hospital on Long Island, and the National Selection Committee for the Jefferson Scholars Program of the University of Virginia. Mr. Quick is past President and CEO of Quick & Reilly, Inc. and a former President of the American Stock Exchange. Mr. Quick has also served on the Board of Governors of the Chicago Stock Exchange and as Chairman of the Midwest Securities Trust Company. Mr. Quick received his MBAa bachelor's degree in Pharmaceutical Marketing from Saint Joseph’s University in Philadelphia and holds a Bachelor’s Degree in Business Administrationengineering from the University of New Brunswick. Virginia and attended Stanford University's Graduate School of Petroleum Engineering. He was a lieutenant in the United States Navy, and served four years active duty. Date of birth is February 11, 1956.

Kishore Kapoor, Winnipeg, Manitoba, Canada, CA – Director

Mr. MerchantKapoor is the President of Wellington West Holdings Inc., a specialized financial services company. Mr. Kapoor is also presently a director of Manitoba Telecom Services Inc., a public company listed on the Toronto Stock Exchange. From November 2003 to June 2005, Mr. Kapoor was Executive Vice-President Corporate Development of Loring Ward International Ltd., which was formed to hold the U.S. operations of Assante Corporation. As one of the founders of Assante Corporation, Mr. Kapoor was its Executive Vice-President Corporate Development from March 1994 to November 2003. Prior to founding Assante Corporation, Mr. Kapoor was a tax partner with KPMG LLP. In his 14 years with KPMG LLP, he specialized in offering clients advice on tax, corporate finance, mergers and acquisitions, and development of corporate strategy in a wide range of industries, including those in the biotechnology sector. Date of birth February 7, 1957.

David Banks, J.D. Toronto, Ontario, Canada – Director

Mr. Banks is presently a Principal of Carlyle Banks & Company Inc, a Toronto-based investment banking firm. Mr. Banks has overnearly 20 years of industry experience at The Chase Manhattan Bank (now known as JPMorgan Chase), a leading the strategic planning, sales and marketing of pharmaceutical products. For 18 yearsglobal financial services firm, where he held several positionsvarious roles including Senior Vice President. Additionally, Mr. Banks has served as AT&T Capital Corporation’s Chief Executive Officer. AT&T Capital was the fifth largest leasing company in the world, operating in 26 countries. Prior to his current role at Carlyle Banks & Company, Mr. Banks held the position of Vice Chairman of Lawrence & Company Inc., a Toronto-based global asset management firm with DuPont Pharmainterests and investments in various sectors in Canada managingand throughout the sales and marketingworld. Date of their cardiovascular products, directing business development activities and establishing and leading their generics business. Beginning in 2001, he held the positions of Vice President, Sales and Vice President of Marketing for aaiPharma Inc., a U.S. based specialty pharmaceutical company. In these roles he was responsible for building the sales and marketing organizations and leading the promotion of their acquired portfolio of pharmaceutical products. Mr. Merchant holds the responsibility for identifying partnering opportunities, leading the strategic planning process and overseeing the commercialization of the Corporation’s cardiovascular products.birth is January 25, 1943.

Dawson Reimer, MAES - Vice-President, Operations

Dawson Reimer proceeded from a Master's Degree in Economic Development, University of Waterloo to be employed as a full-time consultant to the Federal Department of Western Diversification. In this capacity, he conducted entrepreneurship training and developed a business start-up training program. Beginning in 1996, he served as Business Development/Investor Relations with Genesys Pharma Inc. He

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was also project coordinator for the establishment of the Corporation's new research and pharmaceutical

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production facility. In 1997, he began conducting business activities for Genesys Venture Inc., a biotech business incubator, where he has assisted numerous biotechnology ventures in developing business plans, obtaining financing, and developing intellectual property protection. In this capacity, Mr. Reimer became actively involved in the Corporation at its inception and has been directly employed by the Corporation since 2001. Mr. Reimer is a son-in-law of Dr. Albert D. Friesen, Director, President, Chairman and Chief Executive Officer. Date of birth is May 7, 1971.

Dwayne Henley, CA – Chief Financial Officer

Mr. Henley joined Medicure in June 2008 from a private investment and management company where he held the position of Vice President of Finance. Prior to that Mr. Henley's was Vice-President Finance at Big Freight Systems Inc., a privately owned transportation company operating throughout North America. Other notable experience includes Assante Corporation where he held the position of Corporate Controller and Biovail Laboratories Inc. where he held the position of Manager, Finance and Administration. Date of birth is November 20, 1964

Mr. Henley replaced Derek G. Reimer, C.A. -CA as Chief Financial Officer and Secretary

Derek Reimer came to the Corporation from Deloitte & Touche LLP where he most recently served as a Senior Manager in the Assurance and Advisory Services group. In this role,June 2008 after Mr. Reimer dealt mainly with major corporate clients, including several TSX 100 companies, providing advice regarding complex accounting, regulatory, and compliance issues. His previous experience includes several years providing international accounting services to clients exclusively in the financial services industry. Mr. Reimer is a Chartered Accountant who also holds a Bachelor of Commerce (Hons.) degree in accountingresigned from the University of Manitoba. Mr. Reimer is responsible for managing financial systems, programs and processes to ensure the successful accomplishment of the Corporation’s business objectives.corporation.

Business Management

Dr. Albert D. Friesen - Chairman, President, Chief Executive Officer and Director: Dr. Friesen directs the overall business management of the Corporation (see Directors“Directors and Senior Management under this item).

Moray W. Merchant, MBA - Vice-President, Market Development: Mr. Merchant holds the responsibility for identifying partnering opportunities, leading the strategic planning process and overseeing the commercialization of the Corporation’s cardiovascular products. (see Directors and Senior ManagementManagement” under this item).

Dawson Reimer - Vice-President, Operations: Mr. Reimer holds the responsibility of commercial operations and managing the internal operations andas well as certain other functional areas which include project management and strategic planning.areas. (See Directors“Directors and Senior ManagementManagement” under this item)

Derek G. Reimer,Dwayne Henley, CA - Chief Financial Officer and Secretary: Mr. Reimer participates inHenley is responsible for the Corporation’s financial management and accounting practices (see Directors“Directors and Senior ManagementManagement” under this item).

Scientific ManagementBonnie Zell, Senior Advisor, Sales

Dr. Naranjan S. Dhalla - Chief Scientific Officer

Dr. Dhalla participatesMs. Zell, who provides her services through a consulting agreement with the Corporation, is responsible for sales execution by Medicure’s hospital based sales team. She has over 30 years of experience in the scientific managementpharmaceutical and biotech industry where she recently held the position as Vice President of Sales for Millennium Pharmaceuticals, Inc. Prior to Millennium, Ms. Zell was Vice President of Sales for COR Therapeutics, Inc., which was acquired by Millennium. Ms. Zell was instrumental in the launch and growth of INTEGRILIN®, the market leading GP IIb/IIIa inhibitor.

Hogan Mullally, Investor Relations

Mr. Mullally, who provides services through a consulting agreement with the Corporation, leads Medicure’s investor relations activities and also contributes extensively to Business Development initiatives of the corporation. Until May 2008, Mr. Mullally served as full time employee of the Corporation, undermost recently in the title Chief Scientific Officer. The principal inventorcapacity of MC-1, Director of Business Development and Investor Relations.

Dr. Dhalla presently serves as Distinguished ProfessorGeorge Thomas - Director of Pharmacology

Dr. George R. Thomas received his Master in Pharmacy degree (1996) and Director,PhD (2002) from the Birla Institute of CardiovascularTechnology and Sciences, St. Boniface General Hospital Research Centre,Pilani, India. He received his post-doctoral training at the Faculty of Medicine, University of Manitoba. Dr. Dhalla is an internationally recognized cardiovascular researcher whoToronto. He has received 59 honours and awards including the Research Achievement Awardover 13 years of the Canadian Cardiovascular Society, The Upjohn Award of the Pharmacological Society of Canada, Honorary Professorship at several universities, the Order of the Buffalo Hunt from the Province of Manitoba, and the Order of Canada. Professionally, Dr. Dhalla has been actively promoting the scientific basis of cardiology for over 25 years.

Dr. Dhalla has served in senior positions such as Secretary General (17 years) and President (3 years) of the International Society for Heart Research, Editor-in-Chief (11 years) of the international journal ’’Molecular and Cellular Biochemistry’’ and is currently serving on the editorial boards of 11 other international journals. Since 1996, Dr. Dhalla has served as Executive Director of the International Academy of Cardiovascular Sciences. Dr. Dhalla has published 500 papers and 350 abstracts as well as edited or authored 31 books in the area of heart research. Dr. Dhalla has provided his services to the Corporation's research and development activities through a consulting contract with CanAm Bioresearch Inc.

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Dr. Karl-Gunnar Hidinger - Vice-President, Clinical Development

Dr. Karl-Gunnar Hidinger received his Ph.D. in Clinical Pharmacology from University of Gothenburg, Sweden. Dr. Hidinger’s drug development experience spans 30 years and includes basic pharmacology research and preclinical research through clinical Phase I, II, III and market approval of new chemical entities. Dr. Hidinger’s career has included clinical research positions in Europe and North America with recognized companies such as Astra Pharma Inc., Glaxo Inc. and Ortho-McNeil Inc. Dr. Hidinger’s experience in clinicalnew drug development complying with international regulatory standards covers a wide variety of therapeutic areas. Most recently, Dr. Hidinger established the corporate infrastructure for the Scientific Affairs Department of the newly established Byk Canada Inc., a subsidiary of Byk Gulden AG, Germany. Dr. Hidinger will be responsible for the design and management of clinical studies for Medicure’s lead compound, MC-1, and for the clinical aspects of other business development and research projects. Since February 1, 2001, Dr. Hidinger has provided his services to the Corporation's research and development activities through a consulting contract with CanAm Bioresearch Inc.

Dr. Ahmad Khalil – Medical Director

Dr. Khalil received his MD from the Medical Academy IP in Plovdiv, Bulgaria in 1986, and his M.Sc degree (1993) and PhD (1997) from The University of Montreal. He has excellent basic research experiencediscovery particularly in the areas of in vivo antithrombotic treatmentcardiovascular and ischemia reperfusion, as well as therapeutic approaches to coronary artery bypass graft surgery, much of whichmetabolic disorders. Dr. Thomas held senior executive positions at Torrent Pharmaceuticals Research Centre, where he was done during his tenure as researcherresponsible for setting up and lecturer at the renowned Montreal Heart Institute. In addition, Dr. Khalil has experience as a practicing surgeon in Europe

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managing several pharmacological, pharmacokinetic and toxicological studies. He has presented at numerous cardiovascular conventionsresearch competitions, conferences and published extensively.

Dr. Wasimul Haque – Senior Director of Chemistry

Dr. Haque received a Ph.D. in Chemistry from the University of Manitoba. Dr. Haque has over fifteen years of experience in industrial biotechnology research and development where he has managed a variety of drug discovery projects. Senior positions held prior to joining Medicure include Project Manager at Alberta Research Council and Senior Scientist at Biomira Inc. Dr. Haque has been issued four patents and is author of several peer-reviewed publications. Dr. Haque began employment with Medicure in July 1998. Since June 1, 2000 Dr. Haque has been employed by CanAm Bioresearch Inc. and works on the Corporation’s research and development pursuant to the Development Agreement.

Dr. Jim Diakur - Director of Chemistry

Dr. Diakur is an experienced medicinal chemist who was previously employed as Research Assistant Professor at the Noujaim Institute for Pharmaceutical Research in the Faculty of Pharmacy, University of Alberta. At the institute, Dr. Diakur’s group was focused on the development of carbohydrate-based pharmaceuticals for diabetes, cancer and inflammation and on carbohydrate-based drug carriers for targeted drug delivery. He also has over ten years of industrial research and management experience in the field of chemistry with Chembiomed Inc. and Biomira Inc. Among other achievements, Dr. Diakur managed a team of scientists responsible for the preclinical development of injectable carbohydrate-based immunotherapeutic agents. Dr. Diakur is employed by CanAm Bioresearch Inc. and works on the Corporation’s research and development pursuant to the Development Agreement.

Dr. Deborah Douglas, Ph.D. – Director of Physiology

Dr. Douglas received her Ph.D. in Animal Science from McGill University, focusing on molecular biology related research. Her post-doctoral experience involved cell biology research at the Institute of Cell Biology, University of Manitoba, and the Jack Bell Research Centre, Vancouver General Hospital, University of British Columbia. Dr. Douglas developedin vitroandin vivo models to screen for human diseases as Chief of Compound Screening for Alviva Biopharmaceutical Inc. Dr. Douglas provides her services to Medicure through an employment agreement with CanAm Bioresearch Inc.

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Dr. Paul Armstrong - Clinical Consultant

Dr. Armstrong, Chair of the Advisory Board, is Professor in the Department of Medicine, University of Alberta in Edmonton. Dr. Armstrong is an internationally recognized cardiologist and clinical investigator with extensive expertise in the design and conduct of clinical trials focused on acute ischemic syndromes and congestive heart failure. Dr. Armstrong has published widely and served as a senior advisor to major organizations and industry. Since June 1, 2000, Dr. Armstrong provides services to the Corporation’s research and development activities through a consulting contract with CanAm Bioresearch Inc.

Dr. Stephen Hanessian - Chemistry Consultant

Dr. Hanessian received his Ph.D. from Ohio State University in 1960 and has served at the University of Montreal since 1968. He is internationally recognized for his contributions in the field of medicinal chemistry and has been named as principal inventor on over 25 patents. Dr. Hanessian has published 400 papers, trained 250 scientists, and received the 1996 Canada Gold Medal for Science and Engineering, Canada’s highest award for scientific achievement. He has also been made an Officer of the Order of Canada. His special interest in cardiovascular medicinal chemistry is directly aligned with Medicure’s objective of establishing a pipeline of products to address cardiovascular diseases that remain inadequately treated by existing therapeutics. Dr. Hanessian provides services to the Corporation’s research and development activities through a consulting contract with CanAm Bioresearch Inc.peer reviewed journals.

Scientific Advisory Board

The Corporation has established a Scientific Advisory Board to ensure continued and proper review of research activities and work plans. Although due to changes in the Company’s R&D activities there are at present no formal meetings planned, the Board has been kept in place and continues to provide input to the Corporation. The members of the Scientific Advisory Board and a brief biography of each are as follows:

Dr. Paul Armstrong - Chairperson

Dr. Armstrong, Chair of the Scientific Advisory Board, is Professor in the Department of Medicine, University of Alberta in Edmonton. Dr. Armstrong is an internationally recognized cardiologist and clinical investigator with extensive expertise in the design and conduct of clinical trials focused on acute ischemic syndromes and congestive heart failure. Dr. Armstrong has published widely and served as a senior advisor to major organizations and industry.

Dr. Stephen Hanessian

Dr. Hanessian is Professor, Department of Chemistry, University of Montreal. Dr. Hanessian is one of North America’s most renowned medicinal chemists with considerable experience in industry collaboration for the discovery of new pharmaceuticals.

Dr. Morris Karmazyn

Dr. Karmazyn is a Professor in the Department of Pharmacology and Toxicology at the University of Western Ontario in London, Ontario. Dr. Karmazyn is internationally recognized and has received numerous distinctions for his research in the field of myocardial ischemia and ischemic reperfusion injury.

Dr. John McNeill

Dr. McNeill is Professor and Dean Emeritus, Division of Pharmacology and Toxicology, Faculty of Pharmaceutical Sciences at the University of British Columbia in Vancouver. The recipient of numerous awards and distinctions, Dr. McNeill’s research is centered on the biochemical mechanism action of drugs on the heart.

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Dr. Eldon Smith

Dr. Smith is a Professor at the University of Calgary Medical School in Alberta, where his past positions include Dean of the Faculty of Medicine, Head of the Department of Medicine and Head of the Division of Cardiology. A distinguished clinician and research scientist, Dr. Smith has considerable industry experience having served on the boards of several well-recognized companies.

Dr. Pierre Theroux

Dr. Theroux is Professor of Medicine at the University of Montreal and Chief of the Coronary Care Unit at the Montreal Heart Institute. Dr. Theroux’s innovative work is widely recognized and he has contributed extensively to the development of new treatments for acute ischemic heart disease.

Dr. Jeffrey Weitz

Dr. Weitz is Professor of Medicine and Haematology at McMaster University in Hamilton where he has contributed extensively to understanding the role of thrombosis and its treatment in cardiovascular disease. Dr. Weitz also brings a wealth of expertise in academic-industrial collaboration and development of new products.

Dr. Trevor Hassell

Dr. Hassell is Adjunct Professor of Medicine at the University of the West Indies, Barbados, and Consultant Physician and Cardiologist at the Queen Elizabeth Hospital, also in Barbados. He is President-Elect of the Inter-American Heart Foundation, former President of the Caribbean Cardiac Society and founder, President and member of the Board of Directors of the Heart Foundation of Barbados.

Dr. A. Michael Lincoff

Dr. Lincoff is an interventional cardiologist in the Cleveland Clinic Department of Cardiovascular Medicine and a staff cardiologist in the Joseph J. Jacobs Center for Thrombosis and Vascular Biology, Department of Molecular Cardiology at the Cleveland Clinic Research Institute. Dr. Lincoff’s specialty

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interests focus on high-risk and complex coronary angioplasty, preventing restenosis, treating acute coronary syndromes and acute myocardial infarction, and developing antithrombotic therapy during coronary intervention.

B. Compensation

No compensation of any kind was paid to the directors and executive officers of the Corporation during the year ended May 31, 2005,2008, except for stock-based compensation described in Item 6(E) below and as follows:

On October 1, 2001, a compensation agreement was entered into between the Corporation and A.D. Friesen Enterprises Ltd., a corporation owned by Dr. Friesen.Friesen and subsequently amended on October 1, 2003, October 1, 2005, October 1, 2006, and October 1, 2007. For the year ended June 1, 2002 to May 31, 2003,2008, the Corporation paid A.D. Friesen Enterprises Ltd., $150,000$307,531 in consulting compensation. As of October 1, 2003 the compensation, agreement was amended and increased to $175,000. For the year ended May 31, 2005, the Corporation paid A.D. Friesen Enterprises Ltd., $175,000 in consulting compensation.including bonuses. Dr. Friesen is also eligible for an annual bonus, if certain objectives of the Corporation are met, as determined by the Board of Directors.

Moray Merchant serves the Corporation as Vice President, Market and Business Development in consideration for an annual salary of $150,000 payable in equal semi-monthly instalments.

Dawson Reimer serves the Corporation as Vice President, Operations in consideration for an annualand received a salary of $80,000$120,417 payable in equal semi-monthly instalments.instalments in fiscal 2008.

Derek G. Reimer serves the Corporation as Chief Financial Officer and Secretary in consideration for an annualand received a salary of $100,000of $148,333 payable in equal semi-monthly installments.installments in fiscal 2008.

During the year ended May 31, 2004,2008, the Corporation paid directors a total of Nil (Year ended May 31, 2003:2007: Nil; Year ended May 31, 2002:2006: Nil; Year ended May 31, 2001: $35,000; Nine months2005: Nil; Year ended May 31, 2000: $22,500)2004: Nil) for consulting fees.

Additionally, the Corporation provides its directors $1,500 for each quarterly board meeting they personally attend ($750 via telephone), and $750 for each quarterly executive compensation, nominating and corporate governance committee meeting or audit and finance committee meeting they attend. The Corporation does not provide any cash compensation for its directors who are also officers of the Corporation for their services as directors.

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No pension, retirement fund and other similar benefits have been set aside for the officers and directors of the Corporation.

C. Board Practices

The Board of Directors presently consists of four directors. Each director wassix directors who were elected at the Corporation’s annual general meeting of the shareholders held on October 15, 2004.2, 2007. Each director holds office until the next annual general meeting of the Corporation or until his successor is elected or appointed, unless his office is earlier vacated in accordance with the Articles of the Corporation, or with the provisions of theCanada Business Corporations Act. Dr. Albert D. Friesen has served as a director of the Corporation since September 1997. Dr. Arnold Naimark has served as a director of the Corporation since March 2000, Dr. William A. Cochrane2000. Gerald McDole has served as a director of the Corporation since October 2000 and Gerald McDoleJanuary 2004. Peter Quick has served as a director of the Corporation since November 2005. Kishore Kapoor has served as a director of the Corporation since June 2006. David Banks was appointed on January 16, 2004. On June 29, 2005, James G. Umlah resigned as a memberdirector of its board of directors due to increasing business commitments. Mr. Umlah recently assumed the role of President & CEO of Canadian Tool & Die Ltd.Corporation on December 3, 2007.

Audit and Finance Committee

Pursuant to Section 171 of theCanada Business Corporations Act (the Act)“Act”), the Corporation is required to have an Audit Committee. As at the date hereof, the members of the Audit and Finance Committee is comprised of threefive independent directors: Dr. William CochraneKishore Kapoor (Chair), Dr. Arnold Naimark, Gerald McDole, Peter Quick, and Gerald McDole.David Banks. The relevant experience of each member is described above. (See ITEM“Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES)Directors, Senior Management and Employees”) Section 171(1) of the Act requires the directors of a reporting corporation to elect from among their number a committee composed of not fewer than three directors, of

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whom a majority must not be officers or employees of the corporation or an affiliate of the corporation. Section 171(3) of the Act provides that, before financial statements are approved by the directors, they must be submitted to the audit committee for review. Section 171(4) of the Act provides that the auditor must be given notice of, and has the right to appear before and to be heard at, every meeting of the audit committee, and must appear before the audit committee when requested to do so by the committee. Finally, section 171(5) of the Act provides that on the request of the auditor, the audit committee must convene a meeting of the audit committee to consider any matters the auditor believes should be brought to the attention of the directors or members.

Under the Sarbanes-Oxley Act of 2002, the independent auditor of a public company is prohibited from performing certain non-audit services. The Audit and Finance Committee has adopted procedures and policies for the pre-approval of non-audit services, as described in the audit committee charter.

The charter of the Audit and Finance Committee is reproduced below and can be found on ourthe Corporation’s website atwww.medicure.com.

AUDIT AND FINANCE COMMITTEE CHARTER

GENERAL FUNCTIONS, AUTHORITY, AND ROLE

The purpose of the Audit and Finance Committee is to oversee the accounting and financial reporting processes of the CompanyCorporation and the audits of its financial statements, and thereby assist the Board in monitoring (1) the integrity of the financial statements of the Company,Corporation, (2) compliance by the CompanyCorporation with ethical policies and legal and regulatory requirements related to financial reporting, (3) the appointment, compensation, qualifications, independence and performance of the Company’sCorporation’s internal and external auditors,(4) the performance of the Company'sCorporation's independent auditors, and (5) performance of the Company'sCorporation's internal controls and financial reporting process.

The Audit and Finance Committee has the power to conduct or authorize investigations into any matters within its scope of responsibilities, with full access to all books, records, facilities and personnel of the Company,Corporation, its auditors and its legal advisors. In connection with such investigations or otherwise in the course of fulfilling its responsibilities under this charter, the Audit and Finance Committee has the authority to independently retain special legal, accounting, or other consultants to advise it, and may request any officer or employee of the Company,Corporation, its independent legal counsel or independent auditor to attend a meeting of the Audit and Finance Committee or to meet with any members of, or consultants to, the Audit and Finance Committee. The Audit and Finance Committee has the power to create specific

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sub-committees with all of the power to conduct or authorize investigations into any matters within the scope of the mandate of the sub-committee, with full access to all books, records, facilities and personnel of the Company,Corporation, its auditors and its legal advisors.

The Company'sCorporation's independent auditor is ultimately accountable to the Board of Directors and to the Audit and Finance Committee, who, as representatives of the Company'sCorporation's shareholders, have the authority and responsibility to evaluate the independent auditor, appoint and replace the independent auditor, and to determine appropriate compensation for the independent auditor. In the course of fulfilling its specific responsibilities hereunder, the Audit and Finance Committee must maintain free and open communication between the Company'sCorporation's independent auditors, Board of Directors and CompanyCorporation management. The responsibilities of a member of the Audit and Finance Committee are in addition to such member's duties as a member of the Board of Directors.

While the Audit and Finance Committee has the responsibilities and powers set forth in this charter, it is not the duty of the Audit and Finance Committee to plan or conduct audits or to determine that the Company'sCorporation's financial statements are complete, accurate, and in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditor. Nor is it the duty of the Audit and Finance Committee to conduct investigations, to resolve disagreements, if any, between management and the independent auditor or to assure compliance with laws and regulations and the Company’sCorporation’s Code of Ethics. Any responsibilities that the Audit and Finance Committee has the power to act upon, may be recommended to the Board to act upon.

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MEMBERSHIP

The membership of the Audit and Finance Committee will be as follows:

The Committee shall consist of a minimum of three members of the Board of Directors, appointed from time to time, each of whom is affirmatively confirmed as independent by the Board of Directors, with such affirmation disclosed in the Company'sCorporation's annual Information Circular.

The Board will elect, by a majority vote, one member as chairperson.

The members of the Audit and Finance Committee will meet all independence and financial literacy requirements of The American Stock Exchange, The Toronto Stock Exchange, Rule 10A-3 of the Securities Exchange Act of 1934, as amended, Multilateral Instrument 52-110 and the requirements of such other securities exchange or quotations system or regulatory agency as may from time to time apply to the Company.Corporation.

A member of the Audit and Finance Committee may not, other than in his or her capacity as a member of the Audit and Finance Committee, the Board of Directors, or any other Board committee, accept any consulting, advisory, or other compensatory fee from the Company,Corporation, and may not be an affiliated person of the CompanyCorporation or any subsidiary thereof.

RESPONSIBILITIES

The responsibilities of the Audit and Finance Committee shall be as follows:

Frequency of Meetings

Meet quarterly or more often as may be deemed necessary or appropriate in its judgment, either in person or telephonically.

The Audit and Finance Committee will meet with the independent auditor at least quarterly, either in person or telephonically.

Reporting Responsibilities

Provide to the Board of Directors proper Committee minutes.

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Report Committee actions to the Board of Directors with such recommendations as the Committee may deem appropriate.

Charter Evaluation

Annually review and reassess the adequacy of this Charter and recommend any proposed changes to the Board of Directors for approval.

Whistleblower Mechanism

Adopt and review annually a procedure through which employees and others can anonymously inform the Audit and Finance Committee regarding any concerns about the Company'sCorporation's accounting, internal accounting controls or auditing matters. The procedure shall include responding to and the retention of, any such complaints.

Legal Responsibilities

Perform such functions as may be assigned by law, by the Company'sCorporation's certificate of incorporation, memorandum, articles or similar documents, or by the Board of Directors.

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INDEPENDENT AUDITOR

Nominations

NominateNominates annually the independent auditor to be proposed for shareholder approval.

Compensation and Evaluation

Approve the compensation of the independent auditor, evaluate the performance of the independent auditor and, if so determined by the Committee, replace the independent auditor.

Approval in Advance of Related Party Transactions

Pre-approval of all “related party transactions,” which are transactions or loans between the Corporation and a related party involving goods, services, or tangible or intangible assets that are (1) material to the Corporation or the related party, or (2) unusual in their nature or conditions. A related party includes an affiliate, major shareholder, officer, other key management personnel or director of the Corporation, a company controlled by any of those parties or a family member of any of those parties.

Engagement Procedures for Audit and Non-audit Services

Approve in advance all audit services to be provided by the independent auditor. Establish policies and procedures that establish a requirement for approval in advance of the engagement of the independent auditor to provide permitted non-audit services and to prohibit the engagement of the independent auditor for any activities or services not permitted by any of the Canadian provincial securities commissions, the SEC or any securities exchange on which the Company'sCorporation's shares are traded including any of the following ten types of non-audit services:

Bookkeeping or other services related to accounting records or financial statements of the Company;

Corporation; Financial information systems design and implementation consulting services;

Appraisal or valuation services, fairness opinions, or contributions-in-kind reports;

Actuarial services;

Internal audit outsourcing services;

Any management or human resources function;

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Broker, dealer, investment advisor, or investment banking services;

Legal services;

Expert services related to the auditing service;and

Any other service the Board of Directors determines is not permitted.

Hiring Practices

Ensure that no individual who is, or in the past 3 years has been, affiliated with or employed by a present or former auditor of the CompanyCorporation or an affiliate, is hired by the CompanyCorporation as a senior officer until at least 3 years after the end of either the affiliation or the auditing relationship.

Independence Test

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Take reasonable steps to confirm the independence of the independent auditor, which shall annually include:

Ensuring receipt from the independent auditor of a formal written statement delineating all relationships between the independent auditor and the Company,Corporation, consistent with the Independence Standards Board Standard No. 1 and related Canadian regulatory body standards;

Considering and discussing with the independent auditor any relationships or services provided to the Company,Corporation, including non-audit services, that may impact the objectivity and independence of the independent auditor; and

As necessary, taking, or recommending that the Board of Directors take, appropriate action to oversee the independence of the independent auditor and evaluate whether it is appropriate to rotate the independent auditor on a regular basis.

Audit and Finance Committee Meetings

Notify the independent auditor of every Audit and Finance Committee meeting and permit the independent auditor to appear and speak at those meetings.

At the request of the independent auditor, convene a meeting of the Audit and Finance Committee to consider matters the auditor believes should be brought to the attention of the directors or shareholders.

Keep minutes of its meetings and report to the Board for approval of any actions taken or recommendations made.

Restrictions

Confirm with management and the independent auditor that no restrictions are placed on the scope of the auditors' review and examination of the Company'sCorporation's accounts.

OTHER PROFESSIONAL CONSULTING SERVICES

Engagement Review

As necessary, consider with management the rationale and selection criteria for engaging professional consulting services firms.

Ultimate authority and responsibility to select, evaluate and approve professional consulting services engagements.

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AUDIT AND REVIEW PROCESS AND RESULTS

Scope

Consider, in consultation with the independent auditor, the audit scope, staffing and planning of the independent auditor.

Review Process and Results

Consider and review with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61, as the same may be modified or supplemented from time to time.

Review and discuss with management and the independent auditor at the completion of annual and quarterly examinations:

The Company'sCorporation's audited and unaudited financial statements and related notes;

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The Company'sCorporation's MD&A and news releases related to financial results;

The independent auditor's audit of the financial statements and its report thereon;

Any significant changes required in the independent auditor's audit plan;

The appropriateness of the presentation of any non-GAAP related financial information;

Any serious difficulties or disputes with management encountered during the course of the audit; and

Other matters related to the conduct of the audit, which are to be communicated to the Audit and Finance Committee under generally accepted auditing standards.

Review the management letter delivered by the independent auditor in connection with the audit.

Following such review and discussion, if so determined by the Committee, recommend to the Board that the annual financial statements be included in the Company'sCorporation's annual report.

Review, discuss with management and approve annual and interim quarterly financial statements prior to public disclosure. The chairperson of the Audit and Finance Committee may represent the entire Audit and Finance Committee for purposes of this review.

Review and discuss with management and the independent auditor the adequacy of the Company'sCorporation's internal accounting and financial controls that management and the Board of Directors have established and the effectiveness of those systems, and inquire of management and the independent auditor about significant financial risks or exposures and the steps management has taken to minimize such risks to the Company.Corporation.

Meet separately with the independent auditor and management, as necessary or appropriate, to discuss any matters that the Audit and Finance Committee or any of these groups believe should be discussed privately with the Audit and Finance Committee.

Review and discuss with management and the independent auditor the accounting policies which may be viewed as critical, including all alternative treatments for financial information within generally accepted accounting principles that have been discussed with management, and review and discuss any significant changes in the accounting policies of the CompanyCorporation and industry accounting and regulatory financial reporting proposals that may have a significant impact on the Company'sCorporation's financial reports.

Review with management and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures, if any, on the Company'sCorporation's financial statements.

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Review with management and the independent auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports which raise material issues regarding the Company'sCorporation's financial statements or accounting policies.

Review with the Company'sCorporation's General Counsel legal matters that may have a material impact on the financial statements, the Company'sCorporation's financial compliance policies and any material reports or inquiries received from regulators or governmental agencies related to financial matters.

SECURITIES REGULATORY FILINGS

Review filings with the Canadian provincial securities commissions and the SEC and other published documents containing the Company'sCorporation's financial statements.

Review, with management and the independent auditor, prior to filing with regulatory bodies, the interim quarterly financial reports (including related notes and MD&A) at the completion of any review

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engagement or other examination. The chairperson of the Audit and Finance Committee may represent the entire Audit and Finance Committee for purposes of this review.

RISK ASSESSMENT

Meet periodically with management to review the Company'sCorporation's major financial risk exposures and the steps management has taken to monitor and control such exposures.

Assess risk areas and policies to manage risk including, without limitation, environmental risk, insurance coverage and other areas as determined by the Board of Directors from time to time.

Review and discuss with management, and approve changes to, the Company'sCorporation's Corporate Treasury Policy.

ADOPTION OF AUDIT AND FINANCE COMMITTEE CHARTER

This charter was originally adopted by the Board of Directors on August 23, 2004 and is reviewed and amended as necessary on an annual basis.

Executive Compensation, Nominating and Corporate Governance Committee

The Executive Compensation, Nominating and Corporate Governance Committee is responsible for determining the compensation of executive officers of the Corporation. The current members of the Committee are Dr. Arnold Naimark (Chair), Dr. William CochraneGerald McDole, Peter Quick, Kishore Kapoor, and Gerald McDoleDavid Banks, none of whom is a current or former executive officer of the Corporation. The Committee meets at least once a year.

The Committee has developed a policy to govern the Corporation's approach to corporate governance issues and provides a forum for concerns of individual directors about matters not easily or readily discussed in a full board meeting, e.g., the performance of management. The Committee ensures there is a clear definition and separation of the responsibilities of the Board, the Committees of the Board, the Chief Executive Officer and other management employees. It also ensures there is a process in place for the orientation and education of new directors and for continuing education of the Board. The Committee also assesses the effectiveness of the Board and its committees on an ongoing ad hoc basis. It also reviews at least annually the Corporation's responsiveness to environmental impact, health and safety and other regulatory standards.

The Committee reviews the objectives, performance and compensation of the Chief Executive Officer at least annually and makes recommendations to the Board for change. The Committee makes recommendations based upon the Chief Executive Officers'Officer’s suggestions regarding the salaries and incentive compensation for senior officers of the Corporation. The Committee also reviews significant changes to compensation, benefits and human resources policies and compliance with current human resource management practices, such as pay equity, performance review and staff development. The Committee is responsible for reviewing and recommending changes to the compensation of directors as necessary.

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The charter of the Executive Compensation, Nominating and Corporate Governance Committee can be found on ourthe Corporation’s website at www.medicure.com.

D. Employees

In addition to the individuals disclosed in Section A. Directors and Senior Management of this item, CanAmthe Corporation has a staff29 employees, of twenty five research scientists, technicians and staffwhich 7 employees are dedicated solely to the Corporation’s research and development activities.

E. Share Ownership

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With respect to the persons referred to above in Section B.B, Compensation, the following table discloses the number of shares (each share possessing identical voting rights), stock options held and percent of the shares outstanding held by those persons at May 31, 2005.2007.

Incentive Stock Options

The following table discloses the stock options beneficially held by the aforementioned persons, as of May 31, 2005.2008. The stock options are for shares of Common Stock of the Corporation.