Filed by sedaredgar.com - Medicure Inc.

Medicure Inc.
Management Discussion & Analysis for the period
ending August 31, 2008

CORPORATE OFFICE:
4-1200 Waverley Street
Winnipeg, Manitoba Canada R3T 0P4
Tel: 204 487 7412 Toll Free: 888 435 2220 Fax: 204 488 9823
www.medicure.com

Positive results are emerging from the strategic refocusing we have undertaken over the past eight months. Though challenges remain, a new foundation for the future is being built through the extraordinary efforts of our dedicated staff.

Our commercial organization has been able to produce the company’s third consecutive quarter of revenue growth. For the first time since we acquired AGGRASTAT we have revenue growth over the same quarter in the prior fiscal year. We can now say with confidence that we have reversed an 8 year long downward trend for this clinically proven, but long unpromoted, product. As our sales and marketing team leverages AGGRASTAT’s clinical and economic advantages into expanded sales, the potential for a profitable commercial business has returned.

Our R&D activities have been streamlined to allow us to move ahead with new clinical programs in a prudent and cost-effective manner.As the new fiscal year progresses, our shareholders can look forward to learning more about promising new initiatives in developing agents for lipid lowering and for use in neurological conditions.

I thank our dedicated shareholders and employees who have supported us during the past several months. While we continue to bear many effects and face challenges from the past years events, the Medicure team is optimistic about and committed to the Company's refocused commercial and clinical programs and its business plans. We ask you to join us in setting our sights forward.

Yours sincerely,

Albert D. Friesen, Ph.D
Chairman, President and Chief Executive Officer

Management’s Discussion & Analysis of Financial Condition and Results of Operations
For the Three Month Period ended August 31, 2008

The following discussion and analysis should be read in conjunction with Medicure Inc.’s (the "Company") unaudited interim consolidated financial statements and accompanying notes. The unaudited consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. This discussion and analysis provides an update to the Managements’ Discussion and Analysis and financial statements contained in our 2008 Annual Report and should be read in conjunction with these documents. All amounts are expressed in Canadian dollars unless otherwise noted. The Company’s fiscal year end is May 31. The Company’s independent auditors, KPMG LLP Chartered Accountants, have not reviewed the unaudited interim consolidated financial statements.

This "Management’s Discussion and Analysis of Financial Condition and Operations" 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-1in 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 and 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, the competitive landscape in the markets 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 affect the competitive positioning of AGGRASTAT and/or its competitors, the impact 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, 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 to our products and the

feasibility of additional 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 market the Company’s products and the ability to protect its intellectual property;

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 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. Additional risks and uncertainties relating to the Company and its business can be found in the "Risk Factors" section of its Annual Report on Form 20-F for the year ended May 31, 2008, which can be obtained on SEDAR (www.sedar.com).

Medicure is a pharmaceutical company engaged in the research, clinical development and commercialization of human therapeutics. The Company’s primary focus is on the sale of its acute care cardiovascular drug, AGGRASTAT (tirofiban hydrochloride) in the United States and its territories through its subsidiary, Medicure Pharma Inc. The Company’s research and development focus is on the clinical development of new chronic medical applications of MC-1.

The above described focus was adopted following the Company’s decision in February 2008 to put on hold its primary development program, MC-1 for acute treatment of cardioprotection in Coronary Artery Bypass Graft (CABG) procedures and Acute Coronary Syndromes (ACS). This strategic change, coupled with focused capital conservation efforts to reduce overhead, have strengthened the Company’s financial position. As a result, the Company announced during this quarter (on August 28, 2008) that it expects its existing working capital to be sufficient to fund its planned operations through the end of fiscal year 2009. Although these have been some very positive steps forward for the Company, its ability to continue in operation for the foreseeable future remains dependent upon the effective execution of its business development and strategic plans and on the securement of additional sources of financing. (See the Critical Accounting Estimates and Changes in Accounting Policies for further details).

AGGRASTAT is a glycoprotein GP IIb/IIIa receptor antagonist used for the treatment of acute coronary syndrome (ACS), including unstable angina and non-ST elevated myocardial infarction (NSTEMI). The Company’s subsidiary, Medicure Pharma, Inc. (Sommerset, NJ) sells the product through its targeted, hospital-based cardiovascular sales force with the support Medicure’s home office commercial operations based in Winnipeg, MB.

Net revenue from the sale of AGGRASTAT for the first quarter of fiscal 2009 increased 58% over the net revenue for the previous quarter and by 144% compared to the same period in fiscal 2008. This is the third consecutive quarter of growth in net revenue for the product and is the first time that Medicure has announced growth over same quarter of the previous year since it acquired AGGRASTAT in August 2006. The growth in revenue can be attributed to a variety of factors including, but not limited to, the impact of strategic changes made to the commercial organization early in fiscal 2008, redirection of the Company’s focus from MC-1 development to AGGRASTAT, tangible results from field based sales efforts and modest expansions to the sales force over the past two quarters.

The recent progress in rebuilding AGGRASTAT’s place in the market leads Management to anticipate additional progress through the remainder of fiscal 2009. This growth is expected to be further aided by realization of tangible returns from sales efforts carried out over the past several months, modest expansion of the sales force and the continued implementation of new strategic initiatives.

At present AGGRASTAT sales represent approximately 1% of the total US GP IIb/IIIa receptor antagonist market, which totaled over $500 million in 2007.

Going forward, the Company intends to explore opportunities to further expand revenue through the acquisition of other niche products that fit the commercial organization.

The Company’s primary Research and Development focus is the exploration and advancement of clinical applications of MC-1, a naturally occurring small molecule, in chronic medical conditions. The Company is also looking to generate shareholder value from its library of small-molecule antithrombotics and acute applications of MC-1.

Ongoing Research and Development activity is carefully managed and this continued investment has been reduced substantially as part of capital conservation efforts and to reflect the Company’s strategic focus on AGGRASTAT.

The following table summarizes the Company’s research and development programs, their therapeutic focus and their stage of development.

The lead clinical programs related to the chronic applications of MC-1 for lipid lowering and the treatment of neurological conditions, benefit from over 10 years of work that Medicure put into the advancement of this compound through Phase III human clinical testing to reduce tissue injury and improve outcomes in settings such as CABG, ACS, and stroke and improving metabolic parameters in patients with hypertension and diabetes. Over this time the Company invested substantially in numerous animal and human safety and pharmacokinetic studies, product manufacturing and formulation development, efficacy studies in chronic and acute conditions, and other laboratory and non-lab based work. The information and physical assets resulting from this are a valuable asset that will reduce costs and speed development of this same molecule for other conditions.

The development of MC-1 for use in ACS, CABG, stroke and other related acute conditions is not listed in the table above as these initiatives have been placed on hold. The Company plans to undertake a further review of MC-1's use in protecting against ischemic reperfusion injury as resources permit, and will in due course determine what if any further investigation is warranted. Information gained from the MEND CABG II study will also be used to support the investigation of alternative applications of MC-1. As a further adjustment in R&D focus, the chronic programs for development of MC-1 in fixed dose combinations with other therapeutics for metabolic syndrome (candidate referred to as MC-4262) and diabetes/hypertension (referred to as MC-4232) have been placed on hold while the Company focuses its efforts on clinical evaluation of this small molecule as a stand alone therapy for cardiovascular and non-cardiovascular conditions.

Medicure possesses a library of novel therapeutics designed and developed by its Drug Discovery program for treatment of cardiovascular and cerebrovascular diseases. This library includes a series of small molecule dual acting anticoagulant/antiplatelet compounds (including the preclinical lead, MC-45308) which may be useful in treating venous and arterial thrombosis. A number of these compounds are active at nanomolar concentrations and selectively inhibit thrombin. In addition these compounds also inhibit platelet aggregation. These compounds provide a basis for further chemical modification and optimization to the desired ratio of anticoagulant/antiplatelet activity. The dual acting anticoagulant/antiplatelet molecules have shown activity in venous and arterial models of thrombosis. Acute toxicity studies in rats also demonstrate a favorable safety profile.

The Company’s consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). These accounting principles require us to make certain estimates and assumptions. Management believes that the estimates and assumptions upon which the Company 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 intangible assets, income taxes, stock-based compensation and accounting for warrants.

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with Canadian GAAP and on a basis consistent with the Company’s annual audited consolidated financial statements for the year ended May 31, 2008, except as disclosed in note 2. These unaudited interim financial statements should be read in conjunction with the May 31, 2008 audited financial statements.

The current period’s financial statements include the operations of the Company for the three month period ended August 31, 2008. The financial information included herein reflects all adjustments, consisting only of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the three months ended August 31, 2008 are not necessarily indicative of the results to be expected for the full year.

The accompanying consolidated financial statements have been prepared on a going concern basis in accordance with Canadian generally accepted accounting principles. The going concern basis of presentation assumes that the Company will 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. There is significant doubt about the appropriateness of the use of the going concern assumption because the company has experienced operating losses and cash outflows from operations since incorporation.

The Company has sustained losses since its formation and has accumulated a deficit of $138,242,074 as at August 31, 2008. In March 2008, the Company announced a corporate restructuring which included a significant reduction in number of staff and in resources allocated to certain programs. Although the company has been successful in reducing it’s on going cash requirements, 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 and commitments beyond the end of the 2009 fiscal year without additional sources of cash and/or deferral, or a further reduction or elimination of significant planned expenditures. The Company’s plan to address the expected shortfall of working capital is to secure additional funding, increase operating revenue and further reduce operating expenses. The company is also exploring additional strategic alternatives as they present themselves. 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.

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

The financial statements do not reflect adjustments that would be necessary if the "going concern" assumption were not appropriate. If the "going concern" basis was not appropriate for these financial

statements, then adjustments would be necessary in the carrying value of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

Section 1535, Capital Disclosures (Section 1535), requires disclosure of an entity's objectives, policies and processes for managing capital, quantitative data about what the entity regards as capital, whether the entity has complied with any capital requirements and, if it has not complied, the consequences of such non-compliance. Disclosure requirements pertaining to these sections are contained in note 11 to the unaudited interim consolidated financial statements.

Section 3862, Financial Instruments - Disclosure (Section 3862) and Section 3863, Financial Statements - Presentation (Section 3863) replace Section 3861, Financial Statements - Disclosure and Presentation, revising and enhancing disclosure requirements. Section 3863 carries forward presentation related requirements of Section 3861. Disclosure requirements pertaining to these sections are contained in note 10 to the unaudited interim consolidated financial statements.

Section 3031, Inventories (Section 3031), supersedes existing guidance on inventories in Section 3030, Inventories. This standard introduces significant changes to the measurement and disclosure of inventories, including the requirement to measure inventories at the lower of cost and net realizable value, the allocation of fixed production overheads based on normal capacity, and the reversal of previous write-downs to net realizable value when there is a subsequent increase in the value of inventories. Inventory policies, carrying amounts, amounts recognized as an expense, write-downs and the reversals of write-downs are required to be disclosed. The adoption of this section did not have a material impact on the Company’s financial statements.

Section 1400, General Standards of Financial Statement Presentation (Section 1400) was amended to change the guidance related to management’s responsibility to assess the ability of the entity to continue as a going concern. When preparing financial statements, management is required to make an assessment of an entity’s ability to continue as a going concern and should take into account all available information about the future, which is at least, but is not limited to, 12 months from the balance sheet date. Disclosure is required of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern. Disclosure requirements pertaining to this section is contained in note 1 to the unaudited interim consolidated financial statements.

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 a 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 for these allowances and accruals, the Company uses estimates. The Company estimates chargebacks, discounts, product returns, 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 Company 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.

Clinical 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 enrollment, services provided, contractual terms, and prior experience with similar contracts.

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 intangible assets taking into consideration any events and circumstances which may impair their recoverable value including expected cash flows, the potential benefit the Company expects to derive from the 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.

Income Taxes
The Company follows the asset and liability method of accounting for income 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 years in which those temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of substantive enactment. Given the Company’s history of net losses and expected future losses, the Company is of the 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
The Company has a stock option plan for its directors, management, consultants, and employees. Compensation expense is recorded for stock options issued to employees and non employees using the fair value method. The Company 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 Company 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 Company amortizes the fair value using the accelerated method over the vesting period of the options,

generally a period of three years. The factors included in the Black-Scholes model are reasonably likely to change from period to period due to changes in the Company’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.

The stock-based compensation recorded by the Company is a critical accounting estimate because of the value of compensation recorded, the volume of the Company’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. A different model, such as the binomial model, as well as any changes to the assumptions made may result in a different stock compensation expense calculation. For the three month period ended August 31, 2008, the Company recorded stock compensation expense of $11,000 (three month period ended August 31, 2007 $136,000).

The following accounting standards were issued recently by the CICA. The Company is currently evaluating the impact of these new standards on its consolidated financial statements.

In February 2008, the Accounting Standards Board confirmed that the use of International Financial Reporting Standards ("IRFS") will be required, for fiscal years beginning on or after January 1, 2011, for publicly accountable profit-oriented enterprises. After that date, IFRS will replace Canadian GAAP for those enterprises. The Company has not yet assessed the future impact of these new accounting standards on its consolidated financial statements.

In November 2007, the CICA issued Section 3064, Goodwill and Intangible Assets ("Section 3064"). Section 3064, which replaces Section 3062, Goodwill and Other Intangible Assets and Section 3450, Research and Development Costs, establishes standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. This standard is effective for the Company for interim and annual financial statements beginning on June 1, 2009.

It is important to note that historical patterns of expenditures cannot be taken as an indication of future expenditures. The amount and timing of expenditures and therefore liquidity and capital resources vary substantially from period to period depending on the results of commercial operations, the preclinical and clinical studies being undertaken at any one time and the availability of funding from investors and prospective commercial partners.

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

(in thousands of CDN$, except per share data)	August 31, 2008	May 31, 2008	February 28, 2008	November 30, 2007
Product sales, net	1,171	741	703	324
Other income	104	312	235	297
Selling, general and administrative	1,911	2,353	2,624	3,872
Research and Development	(511)	(60)	6,251	11,231
Interest expense	1,122	1,072	1,096	1,125
Foreign Exchange loss(gain)	1,457	88	(253)	57
Loss for the period	(3,009)	(2,705)	(22,675)	(16,940)
Basic and diluted loss per share	(0.02)	(0.02)	(0.17)	(0.14)
	August 31, 2007	May 31, 2007	February 28, 2007	November 30, 2006
Product sales, net	479	1,724	2,522	1,419

Other income	306	448	467	287
Selling, general and administrative	3,224	3,805	3,425	2,658
Research and Development	11,238	10,217	6,518	3,816
Interest expense	538	599	614	597
Foreign Exchange loss(gain)	29	779	(152)	90
Loss for the period	(15,083)	(13,999)	(8,365)	(6,093)
/Basic and diluted loss per share	(0.13)	(0.12)	(0.08)	(0.06)

The overall quarterly loss for the three month period ended August 31, 2008 is fairly consistent with the quarterly loss for the three month period ended May 31, 2008 however the result for the period ended August 31, 2008 included a foreign exchange loss of $1.5 million. The impact of this foreign exchange loss was partly offset by the company’s efforts to conserve capital and reduce costs where possible. With the support of our clinical partners and service providers we were able to secure a recovery on certain research and development costs. The Company’s increasing quarterly losses during the first three quarters of fiscal 2008 were the result of the Phase 3 MEND-CABG II clinical trial which was completed in February 2008. In addition, the Company recorded an impairment charge of $13.1 million during the third quarter of 2008 as more fully described under "Impairment of Intangible Assets" below. The significant decline in the quarterly loss during the first quarter of 2009 and fourth quarter of fiscal 2008 was the result of the completion of this trial and the corporate restructuring announced in March 2008. The Company’s increasing quarterly losses in fiscal 2007 relates primarily to the initiation and enrollment of patients in the Phase 3 MEND-CABG II clinical trial in the second quarter of fiscal 2007. The operations of the Company are not subject to any material seasonality or cyclicality factors.

Revenue
The change in revenue for the three months ended August 31, 2008 and August 31, 2007 is reflected in the following table:

Net product sales reflect gross sales less estimated wholesaler chargebacks, returns and discounts at the time of initial sale. 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 higher for the three month period ended August 31, 2008 as compared to the same period in fiscal 2008. The Company started reconfiguring its commercial operations during the first quarter of fiscal 2008 and continued the transition throughout fiscal 2008. The Company had recognized that the initial commercial structure, which consisted of a contract sales organization (CSO) was not optimal as the Company was not able to maintain sufficient control and direction of the sales organization and has since transitioned to an internally managed and more cost effective operation. The company believes it has started realizing the benefits of this strategy. Product sales are driven by hospital demand and in turn by the level of orders from pharmaceutical wholesalers. Part of the company’s reconfiguring has been an effort to increase hospital demand and working with our wholesalers with the hopes of driving up demand even further.

Cost of goods sold
The change in cost of goods sold for the three months ended August 31, 2008 and August 31, 2007 is reflected in the following table:

Cost of goods sold represents direct product costs associated with AGGRASTAT. Amortization of the related acquired AGGRASTAT intangible assets is separately discussed below.

Selling, general and administrative
Selling, general and administrative expenses include salaries and related costs for those employees not directly involved in research and development. The expenditures are required to support sales and marketing efforts of AGGRASTAT and ongoing business development and corporate stewardship activities. The balance also includes professional fees such as legal, audit, investor and public relations.

The change in selling, general and administrative expenditures for the three months ended August 31, 2008 and August 31, 2007 are reflected in the following table:

	Three Months Ended
(in thousands of CDN$)	FY 2009	FY 2008	Increase (Decrease)

Selling, general, and administrative expenditures – AGGRASTAT	1,118	2,121	(1,003)
Selling, general, and administrative expenditures – Other	793	1,103	(310)
Total selling, general, and administrative expenditures	1,911	3,224	(1,313)

Selling, general and administrative expenditures - AGGRASTAT decreased during the three month period ended August 31, 2008 as compared to the same period in fiscal 2008 due to the restructuring of the commercial operations as discussed above which resulted in selling and logistics expenses being reduced by $980. Selling, general and administrative expenditures - other decreased during the three month period ended August 31, 2008 as compared to the same period in fiscal 2008 due to a reduced level of staff which resulted as part of the restructuring in the fourth quarter of fiscal year 2008.

Research and Development
Research and development expenditures include costs associated with the Company’s clinical development and preclinical programs including salaries, research centre costs and monitoring costs. The Company expenses all research and development costs. Prepaid research and development costs are deferred, and represent advance payments under contractual arrangements for clinical activity outsourced to research centres.

The change in research and development expenditures for the three months ended August 31, 2008 and August 31, 2007 are reflected in the following table:

	Three Months Ended
(in thousands of CDN$)	FY 2009	FY 2008	Increase (Decrease)

Clinical trial programs	(616)	10,657	(11,273)
Pre-clinical programs	46	459	(413)
Other research and development costs	59	122	(63)
Total Research and Development expenditures	(511)	11,238	(11,749)

Research and development expenditures decreased significantly during the three month period ending August 31, 2008 as compared to the same period in fiscal 2008 as expected. The Phase 3 MEND-CABG II study was completed in the third quarter of fiscal 2008 and there are no other Phase 3 studies planned for this fiscal year. Pre-clinical and other research and development costs are also planned to be lower during Fiscal 2009 as the company focuses on its commercial product and only on selected research and development programs. During the quarter the company, and with the support of our clinical partners and service providers, was able to secure a recovery on some of the research and development costs.

As clinical products move towards commercialization, the investment in clinical development increases significantly. The investment associated with phase 3 clinical trials is generally substantially greater than that for phase 2 trials. This results from the increased numbers of clinical sites and patients that are required for phase 3 trials. The investment in the clinical products is expensed for accounting purposes and was the key driver of the Company’s losses in Fiscal 2008.

MC-1 CABG Program
In February 2008 the Company completed the MEND-CABG II study and announced that the study did not meet the primary endpoint.

During the first quarter of fiscal 2009 we continued our efforts to secure our financial future by addressing costs associated with the MEND CABG II clinical program. With the support of our clinical partners and service providers, this effort has made a material impact on improving our financial position.

Cost incurred during the fiscal 2008 year related to regulatory activity, patient costs, monitoring costs, laboratory tests, manufacturing costs and administration cost. The company did not incur any of these costs during the first quarter of 2009 and in fact was able to secure a recovery of some of these costs with the support of our clinical partners and service providers.

For the three month period ended August 31, 2008, total expenditures for the MEND-CABG program were ($640,000) as compared to $10,649,000 for the same period in fiscal 2008.

MC-1 Chronic Program
Medicure’s lead development programs involve new chronic applications of MC-1 in lipid lowering and treatment of neurological conditions. The Company is moving forward in a cost conservative manner to advance preclinical studies and has begun to develop plans for future clinical studies. Clinical plans have not yet been finalized and studies will not be moved forward until sufficient resources are obtained and clinical costs can be minimized such that management is confident in the Company’s financial ability to complete them.

Cost incurred during the current quarter related to data analysis and planning for future clinical development.

For the three month period ended August 31, 2008, total expenditures for the MC-1 Chronic program were $24,000, as compared to $7,000 in fiscal 2008.

Medicure possesses a library of novel, anti-thrombotic small molecules developed by its Drug Discovery program. Further development of the anti-thrombotic program is only planned if partnerships or other third party funding can be established.

Amortization
The change in amortization for the three months ended August 31, 2008 and August 31, 2007 is reflected in the following table:

Amortization decreased during the three month period ending August 31, 2008 and is expected to be lower throughout the year as a result of the write-down in intangibles in the third quarter of Fiscal 2008. The majority of amortization expense in both periods relates to the amortization of AGGRASTAT intangibles.

The change in interest expense for the three months ended August 31, 2008 and August 31, 2007 is reflected in the following table:

	Three Months Ended
(in thousands of CDN$)	FY 2009	FY 2008	Increase (Decrease)

Interest and Other Income	104	306	(202)

The decrease in interest and other income in the first quarter of fiscal 2009 is the result of lower cash and cash equivalents balance as compared to the prior fiscal year. Investment income will continue to fluctuate in relation to cash and short term investment balances and interest yields.

Interest Expense
The change in interest expense for the three months ended August 31, 2008 and August 31, 2007 is reflected in the following table:

The increase in interest expense in the three month period ended August 31, 2008 as compared to fiscal 2008 is primarily due to interest on the US$25 million in long-term debt that the Company secured in the second quarter of fiscal 2008.

Foreign Exchange Loss (Gain)
The change in the foreign exchange loss (gain) for the three months ended August 31, 2008 and August 31, 2007 is reflected in the following table:

The foreign exchange loss in the first quarter of fiscal 2009 is due to an increase in a strengthening of the U.S. dollar relative to the Canadian dollar in the period and as a result of holding more U.S. dollar denominated debt as compared to the same time in fiscal 2008.

As at August 31, 2008, the Company has approximately US$16.4 million in U.S. denominated cash and cash equivalents and restricted cash compared with US$37.0 million in long-term debt. At August 31, 2007 the Company had approximately US$16.2 million in U.S. denominated cash and cash equivalents compared with US$14.4 million in long-term debt.

Loss for the Period
The consolidated net loss for the three months ended August 31, 2008 and August 31, 2007 is reflected in the following table:

	Three Months Ended
(in thousands of CDN$ except per share data)	FY 2009	FY 2008	Increase (Decrease)

Loss	3,008	15,083	(12,075)

Loss per share	0.02	0.13	(0.11)

The consolidated net loss for the three month period ended August 31, 2008 resulted mainly from interest expense and the foreign exchange loss. The decrease in the loss in the first quarter in fiscal 2009 compared to the same period in fiscal 2008 is primarily the result of the reduction in Research and Development costs and administration costs offset by higher interest costs and the foreign exchange loss.

Liquidity and Capital Resources
Since the Company’s inception, it has financed operations primarily from public and private sales of equity, debt financing, the issue of warrants and the exercise of stock options, and interest on excess funds held.

Cash used in operating activities for the first quarter of fiscal 2009 was $4.9 million, compared to $11.3 million for the same period in fiscal 2008 as a result of the reduction in the net loss of $12.1 offset by the use of $5.7 million to fund working capital requirements.

Cash used in financing activities in the first quarter of fiscal 2009 was $Nil, compared to $1.5 million for the same period in fiscal 2008. The net financing outflow in the first quarter of fiscal 2008 resulted from making principal repayments on the term loan facility.

At August 31, 2008 the Company had cash and cash equivalents totaling $6,893,000, as well as $12,744,000 of restricted cash, as compared to $11,905,000 of cash and cash equivalents as well as $11,916,000 of restricted cash as of May 31, 2008.

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 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 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.

The total number of common shares issued and outstanding at August 31, 2008 and at May 31, 2008 was 130,307,552.

As at October 10, 2008, the Company had 130,307,552 common shares outstanding and 7,302,960 and 15,961,271 options and warrants outstanding, respectively, to purchase common shares.

Contractual Obligations
As at August 31, 2008 and in the normal course of business the Company has obligations to make future payments, representing contracts and other commitments that are known and committed as follows:

	Contractual Obligations Payment Due By Fiscal Period
(in thousands of CDN$)	Total	2009	2010	2011	2012	2013	Thereafter
Long-term debt obligations ¹	$39,294	$2,124	$10,620	-	$883	$1,843	$23,824
Purchase Agreement Commitments²	2,671	324	485	648	809	405	-
Total	$41,965	$2,448	$11,105	648	$1,692	$2,248	$23,824

^{_______________________________________________
1}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.

²The Company has entered into manufacturing and supply agreements to purchase a minimum quantity of AGGRASTAT from a third party. During the first quarter of fiscal 2009 the contract was renegotiated, extending the terms and adjusting the yearly minimum commitments. The agreement expires fiscal 2013.

Long-term debt obligations reflect principal repayment obligations (excluding interest payments) over the term of this debt. The long-term debt obligations of the Birmingham agreement equal the total minimum annual payments over the term of the agreement discounted using an effective interest rate of 13.3% .

In addition to the contractual obligations disclosed above, the Company and its wholly-owned subsidiaries, 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.

In addition, as at August 31, 2008, the Company has committed to fund up to a maximum of $26,231,000 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 Company and the agreements may be terminated at any time provided thirty (30) days notice is provided.

As at August 31, 2008, the Company has provided a research advance of $200,000 (May 31, 2008 - $200,000) to one of the third parties disclosed above, which is non-interest bearing, unsecured and repayable on demand.

Guarantees
The Company periodically enters into research agreements with third parties that include indemnification provisions customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result of claims arising from research and development activities undertaken on behalf of the Company. 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 Company from making a reasonable estimate of the maximum potential amount it could be required to pay. Historically, the Company 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.

Royalties
The Company has granted royalties to third 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.

The above commitments exclude any royalty obligations to Birmingham in excess of minimum annual payments pursuant to the debt financing agreement.

Off-balance sheet arrangements
The Company does not have any off-balance sheet arrangements other than as discussed above.

Financial Instruments
The Company is exposed to market risks related to changes in interest rates and foreign currency exchange rates. The fair values of cash and cash equivalents, accounts receivable, restricted cash, research advance and accounts payable and accrued liabilities approximate their carrying values due to their short term to maturity. The fair value of the long-term debt approximates its carrying value as it has a variable interest rate and the borrowing arrangement is comparable to current market terms and conditions for similar debt. The Company does not believe that its results of operations or cash flows would be materially affected by sudden change in market interest rates. The Company has not entered into any futures or forward contracts as at August 31, 2008. The Company is subject of foreign exchange rate changes that could have a material effect on the future operating results or cash flows.

Based on the above net exposures as at August 31, 2008, assuming that all other variables remain constant, a 5% appreciation or deterioration of the Canadian dollar against the U.S. dollar would result in a decrease/increase of approximately $1,100,000 in the Company’s net losses.

Related Party Transactions
During the three month periods ended August 31, 2008 and August 31, 2007 the Company paid companies controlled by a director, a total of $88,000 and $81,000, respectively, for office rent, supplies and consulting fees.

These transactions are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.

Outlook
The Company’s strategic focus in fiscal 2009 will be to continue sales and marketing efforts of AGGRASTAT, and evaluate development opportunities for MC-1 in chronic cardiovascular as well as non cardiovascular indications, secure additional sources of funding and to continue to focus on cost savings measures.

The Company expects to continue to incur operating losses throughout fiscal 2009 as it proceeds with implementing its strategic focus. Research and development expenses are expected to be significantly lower in fiscal 2009 as compared to fiscal 2008. Sales and marketing expenses are expected to be comparable to fiscal 2008 with some increase in revenue from sales of AGGRASTAT.

It continues to be the Company’s plan to explore partnership opportunities for the clinical development and commercialization of MC-1 Chronic, MC-1 Acute and its preclinical antithrombotic program. Such a partnership could provide funding for research and development in the respective program and a license agreement for the sale and distribution of the Company’s lead product in return for milestone payments and any future product royalties.

The Company believes it has sufficient resources to fund operations to the end of the 2009 fiscal year. However, funding requirements may vary depending on a number of factors including the progress of the Company’s research and development programs, the securing of a partnership, the revenues generated and expenses resulting from the Company’s AGGRASTAT operations, the results of preclinical studies and clinical trials and changes in the focus and direction of the Company’s product development projects.

Depending upon the results of the Company’s AGGRASTAT operations, research and development programs and the availability of financial resources, the Company could decide 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 managing the cash burn rate.

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 further deferral, reduction or elimination of significant planned expenditures. The Company’s plan to address the expected shortfall of working capital is to increase operating revenue and continue to reduce operating expenses and to secure additional funding through partnerships and/or equity financing. There is no certainty that the Company will be able to obtain sources of financing on acceptable terms, or at all or that it will increase product revenue or reduce operating expenses to the extent necessary.

Internal Controls over Financial Reporting
The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian generally accepted accounting principles ("GAAP"). The Company reported a material weakness in the design of its internal control over financial reporting as part of its May 31, 2008 year end reporting in connection with its reconciliation from Canadian GAAP to United States GAAP, as discussed in the MD&A for the year ended May 31, 2008. The Company is continuing to address this weakness.

There were no changes to the Company’s internal controls over financial reporting during the three months ended August 31, 2008, which have materially affected, or are reasonable likely to materially affect the Company’s internal controls over financial reporting.

Additional Information
Additional information regarding the Company, including the Company’s Annual Report on Form 20-F, can be obtained on SEDAR (www.sedar.com).

Risks and Uncertainty
With the exception of AGGRASTAT, all of the Company’s products and technologies are currently in the research and development stages. To obtain regulatory approvals for the Company’s clinical 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 relating to one or more of the Company’s products may cause the Company to reduce or abandon its commitment to that program. The Company does not and may never have a commercially viable drug formulation approved for marketing of these clinical products. There can be no assurance that the Company will be successful in obtaining necessary market approvals for our products, including MC-1 Chronic. There can also be no assurance that we will be successful in marketing and distributing our products, or achieving appropriate reimbursement from government or private health authorities.

In the near-term, a key driver of revenues will be our ability to achieve market penetration of AGGRASTAT. At the present time we are not prepared to provide a forecast level of revenues that we will realize from sales of AGGRASTAT or from the other products that we may successfully develop and commercialize. We are therefore not prepared to estimate when we will achieve profitability, if at all.

The Company’s business, financial condition and results of operations will depend to a large extent on its ability to obtain additional financing which may not be available under favorable terms, if at all (See Note 1 to the Company’s Consolidated Financial Statements). Based on the Company’s operating plan, its existing working capital is not sufficient to meet the cash requirements to the 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

further deferral, reduction or elimination of significant planned expenditures. The Company’s plan to address the expected shortfall of working capital is to increase operating revenue and reduce operating expenses and to secure additional funding through partnerships and/or equity financing. There is no certainty that 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. These consolidated financial statements have been prepared on a going concern basis in accordance with Canadian generally accepted accounting principles. The going concern basis of presentation assumes that the Company will 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. There is significant doubt about the appropriateness of the use of the going concern assumption because the company has experienced operating losses and cash outflows from operations since incorporation. The Company’s financial statements do not reflect adjustments to the carrying values of the assets and liabilities which may be required should the Company be unable to continue as a going concern.

The ability of the Company to arrange such financing in the future and its ability to meet its obligations under outstanding debt financing arrangements will depend in part upon the prevailing capital market conditions as well as the business performance of the Company. If the Company’s capital resources are exhausted and adequate funds are not available, it may have to further reduce 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 Company to relinquish rights to certain of its technologies or products.

Additional risks and uncertainties relating to the Company and its business can be found in the "Risk Factors" section of its Annual Report on Form 20-F for the year ended May 31, 2008, which can be obtained on SEDAR (www.sedar.com).

Product Candidate	Therapeutic focus	Stage of Development
MC-1-Chronic	Lipid lowering/metabolic syndrome	Phase II studies - planning
MC-1-Chronic	Neurological indications	Phase II studies - planning
MC-45308	Anti-thrombotic small molecules	Discovery–pursuing partnership

Technology license	8 years
Patents	5-20 years
Trademark	10 years
Customer list	10 years

		August 31,			May 31,
(Expressed in $U.S.)		2008			2008

Cash and cash equivalents	$	4,277,639		$	7,454,830
Accounts receivable		684,891			524,432
Restricted cash		12,000,000			12,000,000
Accounts Payable and accrued liabilities		(3,127,641	)		(4,832,260	)
Long term debt		(37,000,000	)		(37,000,000	)

Net	$	(23,165,111	)	$	(21,852,998	)