INTRODUCTION

World Heart Corporation and its subsidiaries are collectively referred to as "WorldHeart" or the "Corporation." The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) discusses material changes in WorldHeart's financial condition and results of operations and cash flows for the three months ended March 31, 2009 and 2008. Such discussion and comments on the liquidity and capital resources should be read in conjunction with the information contained in WorldHeart's audited consolidated financial statements for the year ended December 31, 2008, prepared in accordance with U.S. GAAP included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

The discussion and comments contained hereunder include both historical information and "forward-looking statements" within the meaning of Section 27A of the United States Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts are "forward-looking statements" for the purposes of these provisions, including statements regarding our expectations with respect to future development plans for our next-generation product candidates, particularly the Levacor™ Rotary VAD (Ventricular Assist Device), the timing and scope of pre-clinical testing and clinical trials, our ability to secure additional funding or to form strategic partnerships, our cost reduction efforts and their impact on our ability to maintain operations, as well as other statements that can be identified by the use of forward-looking language, such as "believe", "feel", "expect", "may", "will", "should", "seek", "plan", "anticipate", "intend" or the negative of those terms, or by discussions of strategy or intentions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results and performance to be materially different from any future results and performance expressed or implied by such forward-looking statements. Potential risks and uncertainties include, without limitation: our need for additional significant financing in the future; costs and delays associated with clinical trials for our products and next-generation product candidates, such as Levacor Rotary VAD, MiVAD and PediaFlow; our ability to manufacture, sell and market our products; decisions and timing of decisions made by health regulatory agencies regarding approval of our products; competition from other products and therapies for heart failure; continued slower than anticipated destination therapy adoption rate for VADs; limitations on third-party reimbursements; our ability to obtain and enforce in a timely manner patent and other intellectual property protection for our technology and products; our ability to avoid, either by product design, licensing arrangement or otherwise, infringement of third parties' intellectual property; our ability to enter into corporate alliances or other strategic relationships relating to the development and commercialization of our technology and products; loss of commercial market share to competitors due to our financial condition; our ability to remain listed on the NASDAQ Capital Market; as well as other risks and uncertainties set forth under the heading "Risk Factors" in our Annual Report on Form 10-K, for the fiscal year ended December 31, 2008.

OVERVIEW

Our business is focused on the development and sale of ventricular assist devices ("VADs"), particularly our Levacor Rotary VAD (Levacor VAD or Levacor). VADs are mechanical assist devices that supplement the circulatory function of the heart by re-routing blood flow through a mechanical pump allowing for the restoration of normal blood circulation.

In the past, we derived most of our revenue from our Novacor LVAS and related peripheral equipment, which we sold, directly to medical clinics and hospitals in the United States, Europe and Canada and through a distributor in certain other countries. The legacy generation VAD, the Novacor LVAS, was commercially approved as a Bridge-to-Transplant device in the United States and Canada. In Europe, the Novacor LVAS had unrestricted approval for use as an alternative to transplantation, Bridge-to-Transplantation and to support patients who may be able to recover the use of their natural heart. In Japan, the device was commercially approved for use in cardiac patients at risk of imminent death from non-reversible left ventricular failure for which there was no alternative except heart transplantation.

In July 2005, we acquired the assets of MedQuest Products, Inc. ("MedQuest"), including a rotary VAD, now called the Levacor™ Rotary VAD. In conjunction with the acquisition, we raised approximately $22.7 million in gross financing proceeds from a private placement with Maverick Venture Management, LLC and the exercise of certain warrants and also converted all of the remaining convertible debentures from an earlier financing. Pre-clinical testing of the Levacor Rotary VAD was accelerated after the acquisition, with successful initial human feasibility use in Europe in 2006.

In November 2006, we announced a restructuring plan, which included a reduction of commercial operations associated with the Novacor LVAS, and a refocusing of our resources on the development of the next generation product, particularly the Levacor Rotary VAD. After more than twenty years in clinical use, the Novacor LVAS has reached the natural end of its life cycle and we have been focusing on the development of the Levacor Rotary VAD and on activities leading to the start of a US clinical trial with the Levacor Rotary VAD in the second half of 2009.

In July 2008, we completed a $30.0 million private placement transaction and recapitalization under the terms of the Recapitalization Agreement (the "Recapitalization Agreement") dated June 20, 2008 and amended on July 31, 2008, among the Corporation, our wholly owned subsidiary World Heart Inc. ("WHI"), Abiomed, Inc. ("Abiomed"), Venrock Partners V, L.P., Venrock Associates V, L.P. and Venrock Entrepreneurs Fund V, L.P. (collectively, "Venrock"), Special Situations Fund III QP, L.P., Special Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P., Special Situations Life Sciences Fund, L.P. and Austin W. Marxe (collectively, "SSF") and New Leaf Ventures II, L.P. ("New Leaf"). Simultaneously with the closing of the recapitalization, Abiomed entered into a Termination and Release Letter Agreement with us and converted the full amount of principal and interest owed on the $5,000,000 8% Secured Convertible Promissory Note (the "Note") previously issued to Abiomed by the Corporation and WHI into 2,866,667 of our common shares, released the security interest in all of our assets and those of WHI that secured the Note, terminated the warrant Abiomed held to purchase 113,333 of our common shares, forgave other amounts we owed to Abiomed and terminated previously existing agreements, arrangements and understandings with us. The purchase price delivered by Venrock and SSF at the closing was offset by repayment of the principal and interest owed on the bridge loan facility of $1,400,000 that Venrock and SSF had previously provided to us. As part of the recapitalization transaction, we issued warrants to purchase an aggregate of 83,333 common shares to our advisors, Pacific Growth Equities, LLC and Stifel, Nicolaus and Company.

On August 21, 2008, we announced that we were embarking on a phased consolidation into a primary facility at our current location in Salt Lake City, Utah. On August 22, 2008, we completed the first phase of our consolidation plan and eliminated five positions at our Oakland facility, including the position of Vice President of Manufacturing. On February 4, 2009, as part of our consolidation plan, we announced that we had appointed Salt Lake City-based Mr. John Alexander Martin as our President and Chief Executive Officer. Mr. Jal S. Jassawalla, our former President and CEO, continues to be based in Oakland, along with certain key employees in areas such as Research and Development, Clinical Affairs and Regulatory Affairs and continues to serve the Corporation as Executive Vice President and Chief Technology Officer. Included in the consolidation plan is the appointment of a Chief Financial Officer to be based in Salt Lake City, the elimination of some positions in Oakland and the relocation of certain positions to Salt Lake City by approximately the fourth quarter of 2009.

Research and development by our competitors is proceeding on several rotary flow devices. Certain of these devices have received the CE mark in Europe and are advancing through clinical trials in the United States and Europe, and one device received U.S. marketing approval last year. We believe that our Levacor VAD is the most advanced fourth-generation rotary device under development.

RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2009 COMPARED
WITH THE THREE MONTH PERIOD ENDED MARCH 31, 2008:



                                                       Three Months Ended March 31,
(Unaudited)                                              2009               2008
Revenue                                             $            5    $            636
Cost of goods sold                                              28                 400

Gross profit                                                   (23 )               236

Operating expenses
Selling, general and administrative                          1,443               1,200
Research and development                                     2,104               2,492
Clinical and marketing support                                   -               6,479
Restructuring costs                                             53                   -
Amortization of intangibles                                     48                  48

Total operating expenses                                     3,648              10,219

Operating loss                                              (3,671 )            (9,983 )

Other income (expense)                                          19              (1,494 )

Net loss applicable to common shareholders          $       (3,652 )  $        (11,478 )

Weighted average number of common shares
outstanding basic and diluted                               13,254                 384

Basic and diluted loss per common share             $        (0.28 )  $         (29.92 )

Revenue: In the past, sales of Novacor LVAS implant kits and related peripheral equipment and services accounted for the majority of our revenue. In addition, we generate revenue from sales of SPUS (Segmented Poly Urethane Solution) used by one other medical device manufacturer, which has contributed a greater percentage of overall revenue in recent quarters. We primarily sell our products directly, except for a few countries where we sell through distributors.

The composition of revenue in thousands ($000's) is as follows except for units:

                               Three Months Ended March 31,
                                 2009                 2008
(Unaudited)                  $       Units         $       Units
Novacor Product Revenues
Implant kits               $   -         Nil    $    318       5
Peripherals and other          5                     228
                               5                     546
SPUS Revenues                  -                      90
Total Revenue              $   5                $    636

Revenue for the quarter ended March 31, 2009 was $5,000 reflecting a decrease of $631,000, or 99%, compared with the quarter ended March 31, 2008. There were no Novacor LVAS implant kits sold in the quarter ended March 31, 2009 compared to five implant kits sold in the quarter ended March 31, 2008. Novacor peripherals and other revenue, including Novacor LVAS hardware, peripherals, and services, was $5,000 for the quarter ended March 31, 2009 a decrease of $223,000, or 98%, compared with Novacor peripherals and services revenue of $228,000 recorded in the quarter ended March 31, 2008. The overall revenue decrease is attributable to our November 2006 decision to reduce our commercial efforts with respect to the Novacor and focus our resources on the development of our Levacor Rotary VAD. In 2007 and 2008, we made the Novacor LVAS available to medical centers only until our inventory was depleted, which occurred in mid-2008. We continue to support our Novacor patients but have discontinued the manufacture and sale of additional Novacor implant kits. Patient support revenue from peripheral Novacor LVAS products is anticipated to be minimal throughout the remainder of 2009.

There was no SPUS revenue for the quarter ended March 31, 2009 compared with $90,000 in the quarter ended March 31, 2008. We anticipate no additional revenues from SPUS over the remainder of 2009 as we have begun to dismantle the production equipment for transfer to Salt Lake City.

Cost of goods sold: For the three months ended March 31, 2009, cost of goods sold consisted entirely of royalties payable under a minimum annual royalty agreement. For the three months ended March 31, 2008, cost of goods sold was 63% of revenue and consisted of raw materials, labor, royalties and other costs related to the manufacture of our Novacor LVAS. The decrease in cost of goods sold during the three months ended March 31, 2009, compared with the same quarter last year is entirely due to the complete phase out of our Novacor LVAS product resulting in revenue of zero.

Selling, general and administrative: Selling, general and administrative expenses consist primarily of payroll and related expenses for executives, sales, marketing, accounting and administrative personnel. Selling expenses primarily relate to enrollment of new centers in the anticipated Levacor clinical trials, field support of existing Novacor patients and marketing/trade show costs. Our other administrative expenses include professional fees, communication expenses, insurance premiums, public reporting costs and general corporate expenses.

The composition of selling, general and administrative expenses in thousands ($000's) is as follows:

                                Three Months Ended March 31,
(Unaudited)                       2009                2008

Selling                      $           149     $           248
General and administrative             1,294                 952
Total                        $         1,443     $         1,200

Selling expenses for the three months ended March 31, 2009 decreased by $99,000, or 40%, compared with the same period in 2008. The decrease is attributable to reduced Novacor LVAS support efforts. For the three month periods ended March 31, 2009 and 2008, we recorded $6,000 and $5,000, respectively, in stock-based compensation expense as part of our selling expenses. Selling expenses are expected to increase over the remainder of 2009 as we begin to distribute our next generation Levacor device for evaluation in the clinical trials.

General and administrative expenses for the three months ended March 31, 2009 increased by $342,000, or 36%, compared with the same period in 2008. The increase is attributable to increases in salaries, benefits, recruitment and legal fees associated with the Corporation's phased consolidation plan, including hiring of our new CEO and the transition of our former CEO into another executive position. For the three month periods ended March 31, 2009 and March 31, 2008, we recorded $69,000, and $53,000, respectively, in stock-based compensation expense as part of our general and administrative expenses. General and administrative expenses are expected to decrease slightly in the next quarter and remain at that level for the remainder of 2009.

Research and development: Research and development expenses consist principally of salaries and related expenses for research personnel, consulting, prototype manufacturing, testing, clinical trials, material purchases and regulatory affairs incurred at our Oakland and Salt Lake City facilities.

Research and development expenses for the three months ended March 31, 2009 decreased $388,000, or 16%, compared with the three months ended March 31, 2008. The decrease is attributable to the Levacor Rotary VAD prototype build which occurred in first quarter of 2008, and personnel savings resulting from the elimination of Novacor LVAS manufacturing in early 2008 and the elimination of several positions as part of the August 2008 phased consolidation and restructuring plan. For the three month periods ended March 31, 2009 and March 31, 2008, we recorded $29,000 and $22,000, respectively, in stock based compensation expense as part of our research and development expenses. For the remainder of 2009, research and development expenses are expected to remain at about the same level or may decrease slightly due to the elimination of some personnel as part of the previously announced phased consolidation and restructuring, slightly offset by continuing efforts towards the development and manufacture of our Levacor Rotary VAD and preparation for our clinical trials.

Clinical and marketing support-non-cash: On December 11, 2007, we issued a 5-year warrant to Abiomed to purchase up to 113,333 of our common shares, exercisable at $0.30 per share, as compensation for clinical and marketing support services. Upon issuance, approximately 20% of the warrant was immediately exercisable and the remaining 80% became exercisable in January 2008. In the first quarter of 2008, we recorded non-cash expense of $6.5 million related to the fair value of the warrant. There was no such charge recorded for the quarter ended March 31, 2009.

Restructuring costs: In the quarter ended March 31, 2009, we recorded restructuring costs of $53,000. This was primarily related to accruals for termination benefits for employees whose positions will be eliminated over time. There was no such charge recorded for the quarter-ended March 31, 2008. The total accrual for this one-time termination benefit is $165,000 spread over their service periods through approximately the fourth quarter of 2009.

Amortization of intangibles: Amortization of the acquired MedQuest workforce for each of the three month periods ended March 31, 2009 and 2008 was $48,000. This intangible asset is being amortized on a straight-line basis over four years and will be fully amortized in the third quarter of 2009.

Foreign Exchange: Foreign exchange transactions resulted in a gain of $12,000 for the three month period ended March 31, 2009 compared with a loss of $6,000 for the three month period ended March 31, 2008. The change relates primarily to fluctuations in the relative value of the U.S. dollar compared with the Euro and Canadian dollar. We expect continued fluctuations of foreign exchange gains and losses.

Investment and other income: Investment and other income for the quarter ended March 31, 2009 was $8,000 compared to $23,000 during the quarter ended March 31, 2008. Although average daily balances of invested cash were greater in the 2009 quarter, the earnings were lower due to the significant decline in interest rates in 2009. We anticipate our investment income will decrease over the remainder of 2009 resulting from consumption of cash to fund operations and a continuing decline in interest rates.

Interest expense: In quarter ended March 31, 2008, we recorded interest expense of $1,512,000, of which $1,414,000 related to the beneficial conversion feature of the $4.0 million convertible note issued to Abiomed on January 3, 2008. $98,000 was accrued interest calculated at 8% on the entire $5.0 million convertible note. The note and accumulated interest was converted into common shares as part of the Recapitalization Agreement. There were no such charges in the quarter ended March 31, 2009 and only minor interest expense of $400 was incurred under a capital lease during the quarter ended March 31, 2009. During the remainder of 2009, we anticipate interest expense to increase when we add to our capital leases.

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have funded losses from operations through the sale of equity and issuance of debt instruments. Combined with revenue and investment income, these funds have provided us with the resources to operate our business, sell and support our products, fund our research and development program and clinical trials, apply for and obtain the necessary regulatory approvals and develop new technologies and products.

At March 31, 2009, we had cash and cash equivalents of $17.4 million, a decrease of $3.3 million from December 31, 2008. During the first quarter of 2009 cash used to fund operating activities was $3.2 million consisting primarily of the net loss for the period of $3.7 million offset by non-cash charges of $89,000 for depreciation and amortization and $104,000 of non-cash stock compensation expense. Working capital changes consisted of a $262,000 decrease in accounts receivable and an increase of $196,000 in accounts payable and accrued compensation offset by an increase of $236,000 in prepaid expenses and other assets.

Investing activities requiring cash resources for the quarter ended March 31, 2009 consisted of $64,000 in property and equipment additions.

With the receipt of the proceeds from the July 2008 recapitalization, based on our current operating expenses and projected sales of our Levacor Rotary VAD, we believe we have sufficient cash to fund operations into 2010.

We are continuing to explore all strategic and financing alternatives, including equity financing transactions and corporate collaborations. Equity financings could include, but are not limited to, private investments in public equity transactions, convertible debentures and strategic equity investment by interested companies. Corporate collaborations could include licensing of one or more of our products, co-funding of our products or potential sale of WorldHeart or our subsidiaries. We initiated a phased-in restructuring program in the third quarter of 2008 re-aligning our spending to focus on our key development program, the Levacor Rotary VAD, have further reduced spending and will continue to carefully manage our overall cash usage.

Our long-term working capital and capital requirements will depend upon numerous factors, including the following: our ability to bring the Levacor Rotary VAD to clinical trials in 2009 and its acceptance in the marketplace, the rate of investment in our next-generation technologies, particularly the Levacor Rotary VAD; the clinical trial costs and the approval process for our next-generation products; our general efforts to improve operational efficiency, conserve cash and implement other cost conservation programs.

OFF- BALANCE SHEET ARRANGEMENTS

None.