QLT’s 4Q 08 revenue growth was supported by robust sales of Eligard. However, Visudyne continued to demonstrate weak performance during the quarter. We believe Visudyne sales will continue to be negatively impacted, going forward, due to approval of alternative therapies in major markets. Going forward, we expect Eligard to continue to support revenue growth, as it continues to gain traction in major markets. In terms of Research and Development (R&D); QLT is currently examining plug designs and is likely to report its final results by mid 2009. Although the company is currently developing punctal plugs; the development has prolonged due to the company facing difficulty in meeting the predefined retention rate of 90%. In addition, we expect results from the 12 months RADICAL trial involving Visudyne in 2H 09, while results from MONTBLANC and DENALI trials are expected in 1H 09 and 2H 09, respectively. We believe these results will not have a significant impact on revenue growth over the medium term and QLT will continue to experience low revenue growth, going forward. Hence, we hold a muted revenue growth outlook for the company. QLT has completed the divestment of its multiple assets during 2H 08 and is currently boasting a strong cash balance of US$165 mn, with debt-free status as of 31 December 2008. From 4Q 08 onwards, the company has included revenues from Eligard as continued operations, against the original plan of divesting the unit. Due to the ongoing economic weakness, QLT is unable to find suitable buyers and has, therefore, called off Eligard’s divestment plan. We expect a decline in Selling, General and Administrative (SG&A) expenses, as a percentage of revenues, due to the anticipated lower sales expenses for incremental sales of Eligard. Moreover, R&D expenses, as a percentage of revenues, are expected to remain flat, as the company does not expect any major R&D project over the medium term. We expect the above mentioned factors to have a positive impact on operating performance, going forward. In addition, the current Cash Per Share (CPS) is US$2.21, higher than the current share price of US$1.77. Consequently, considering the zero debt nature, coupled with CPS being higher than the current share price, we upgrade the NASDAQ common stock from a HOLD to a BUY.

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