<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 20-F


[ ]   REGISTRATION STATEMENT PURSUANT TO SECTION 12 (b) OR (g) OF THE
      SECURITIES EXCHANGE ACT OF 1934

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the fiscal year ended December 31, 2001

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from            to

                         COMMISSION FILE NUMBER: 0-29574
                                  ALTAREX CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                           PROVINCE OF ALBERTA, CANADA
               (JURISDICTION OF INCORPORATION OR ORGANIZATION)

                               610 LINCOLN STREET,
                          WALTHAM, MASSACHUSETTS 02451
                   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

      Securities registered or to be registered pursuant to Section 12 (b) of
the Act: None

      Securities registered or to be registered pursuant to Section 12 (g) of
the Act:

                         Common Shares without par value
                                (Title of Class)

      Securities for which there is a reporting obligation pursuant to
Section 15 (d) of the Act:  None

      The number of outstanding shares of each of the issuer's classes of
capital or common stock as of May 24, 2002: 41,663,556 Common Shares.

      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 the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                    [X] Yes                  [ ] No

      Indicate by check mark which financial statement item the registrant has
elected to follow.

                    [X] Item 17              [ ] Item 18
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                               Page
<S>                                                                           <C>
PART I

Item 1:  Identity of Directors, Senior Management and Advisers..............      1
Item 2:  Offer Statistics and Expected Timetable............................      1
Item 3:  Key Information....................................................      1
Item 4:  Information on the Company.........................................     10
Item 5:  Operating and Financial Review and Prospects.......................     26
Item 6:  Directors, Senior Management and Employees.........................     30
Item 7:  Major Shareholders and Related Party Transactions..................     38
Item 8:  Financial Information..............................................     39
Item 9:  The Offer and Listing..............................................     39
Item 10:  Additional Information............................................     40
Item 11:  Quantitative and Qualitative Disclosures About Market Risk........     47
Item 12:  Description of Securities Other than Equity Securities............     47
PART II

Item 13:  Defaults, Dividend Arrearages and Delinquencies...................     47
Item 14:  Material Modifications to the Rights of Security Holders and Use
          of Proceeds.......................................................     47
PART III

Item 15:   Financial Statements.............................................     48
Item 16:   Financial Statements.............................................     48
Item 17:   Exhibits.........................................................     48
</TABLE>


      Certain terms referred to in this annual report are defined in the
Glossary found elsewhere in this annual report, commencing at page 49.

      Unless the context otherwise requires, references herein to the
"Company" or to "AltaRex" are to AltaRex Corp. and its consolidated
subsidiaries.

      BrevaRex(R), OvaRex(R), GivaRex(TM), AIT(R) and ProstaRex(TM) are
trademarks of the Company. This annual report also contains trademarks of other
companies.
<PAGE>
                    NOTE REGARDING FORWARD LOOKING STATEMENTS

      Certain statements in this annual report constitute forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors which may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "intends," "expects"
and similar expressions are intended to identify forward-looking statements.
Such risks and uncertainties include, but are not limited to the risks detailed
under "Item 3: Key Information -- Risk Factors". In addition, any
forward-looking statements represent the Company's estimates only as of the date
this annual report was first filed with the Securities and Exchange Commission
and should not be relied upon as representing the Company's estimates as of any
subsequent date. While the Company may elect to update forward-looking
statements at some point in the future, the Company specifically disclaims any
obligation to do so, even if its estimates change.

                                     PART I

ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

      Not applicable.

ITEM 2: OFFER STATISTICS AND EXPECTED TIMETABLE

      Not applicable.

ITEM 3: KEY INFORMATION

SELECTED FINANCIAL DATA

      The following table presents selected financial data of the Company for
the periods indicated below. The selected financial data is derived from the
Consolidated Financial Statements of the Company and related Notes included in
this annual report under Item 17, which have been prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP"). These
principles, as applied to the Company, do not differ materially from those
accounting principles and requirements of the United States Securities and
Exchange Commission ("U.S. GAAP") except as disclosed in Note 9 to the Company's
Consolidated Financial Statements and related Notes. All figures set forth below
are in Canadian dollars. The selected financial data should be read in
conjunction with the Company's Consolidated Financial Statements and related
Notes and the Company's Operating and Financial Review and Prospects set forth
under Item 5 of this annual report. To date, the Company has not generated
sufficient cash flow from operations to fund ongoing operational requirements
and cash commitments. The Company has financed its operations principally
through the sale of its equity securities and its ability to continue operations
is dependent on the ability of the Company to obtain additional financing. See
"Item 5 - Operating and Financial Review and Prospects".


                                       1
<PAGE>
INCOME STATEMENT DATA:

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                   ----------------------------------------------------------------------------------------
                                       2001               2000               1999               1998               1997
                                   ------------       ------------       ------------       ------------       ------------
                                                                      (in Canadian dollars)
<S>                                <C>                <C>                <C>                <C>                <C>
Revenues                           $    523,095       $    389,826       $    687,710       $  1,013,742       $  1,619,836

Expenses

   Research and development          26,919,785         12,022,218         12,828,617          9,433,681          4,733,918
   General and administrative         7,405,676          6,091,686          6,802,546          4,695,990          1,563,555
   Settlement costs                        --                 --            5,074,714               --                 --
                                   ------------       ------------       ------------       ------------       ------------
Loss from operations               $(33,802,366)      $(17,724,078)      $(24,018,167)      $(13,115,929)      $ (4,677,637)
                                   ------------       ------------       ------------       ------------       ------------

                                   ============       ============       ============       ============       ============
Net loss                           $(33,802,366)      $(17,724,078)      $(24,018,167)      $(13,115,929)      $ (4,677,637)
                                   ============       ============       ============       ============       ============

Net loss per common share          $      (1.21)      $      (1.08)      $      (2.32)      $      (3.18)      $      (1.18)
                                   ============       ============       ============       ============       ============
</TABLE>


BALANCE SHEET DATA:

<TABLE>
<CAPTION>
                                                              AS OF DECEMBER 31,
                               -------------------------------------------------------------------------------
                                   2001             2000             1999             1998             1997
                               -----------      -----------      -----------      -----------      -----------
                                                             (in Canadian dollars)
<S>                            <C>              <C>              <C>              <C>              <C>
Cash and cash equivalents      $ 8,211,313      $ 9,665,187      $ 2,328,641      $ 8,581,688      $ 4,204,155
Short-term investments             856,051        3,591,323        4,878,039        4,241,732       20,797,951
Working capital                  2,536,765        9,892,448        5,057,620       10,997,161       24,495,936
Total assets                    10,791,057       14,754,556        8,567,429       15,159,774       27,299,744
Shareholders' equity             3,407,306       10,960,790        6,217,956       12,646,840       25,708,769
</TABLE>

      The Company has paid no dividends on its shares since incorporation and
does not anticipate doing so in the foreseeable future. The declaration of
dividends on the Common Shares of the Company ("Common Shares") is within the
discretion of the Company's board of directors and will depend upon, among other
factors, earnings, capital requirements, and the operating and financial
condition of the Company.

EXCHANGE RATE INFORMATION

      In this annual report, unless otherwise specified, all monetary amounts
are expressed in Canadian dollars ("$" or "Cdn. $"). The following tables set
forth, for the periods and dates indicated, certain information concerning the
exchange rates for the conversion of Canadian dollars into U.S. dollars, based
on the noon buying rate in New York City for cash transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of New
York. On May 24, 2002, the noon buying rate, as reported by the Federal Reserve
Bank of New York for the conversion of Canadian dollars into U.S. dollars, was
U.S. $0.6515 (U.S. $1.00 = Cdn. $1.5350).


                                       2
<PAGE>
<TABLE>
<CAPTION>
                                               Period         Average
Calendar period                                  End          Rate(1)           High            Low
---------------                                  ---          -------           ----            ---
                                                       (U.S. dollars per Canadian dollar)
<S>                                           <C>             <C>             <C>             <C>
May 2002  (through May 24, 2002)               0.6515          0.6434          0.6520          0.6366
April 2002                                     0.6377          0.6323          0.6397          0.6252
March 2002                                     0.6266          0.6298          0.6342          0.6266
February 2002                                  0.6231          0.6265          0.6295          0.6206
January 2002                                   0.6283          0.6251          0.6290          0.6200
December 2001                                  0.6279          0.6334          0.6396          0.6254
</TABLE>


<TABLE>
<CAPTION>
                                 Period         Average
Calendar period                    End          Rate(2)           High            Low
---------------                    ---          -------           ----            ---
                                           (U.S. dollars per Canadian dollar)
<S>                              <C>            <C>             <C>             <C>
1997                              0.6988          0.7224          0.7484          0.6951
1998                              0.6504          0.6740          0.7092          0.6341
1999                              0.6925          0.6744          0.6925          0.6535
2000                              0.6668          0.6723          0.6968          0.6410
2001                              0.6279          0.6446          0.6669          0.6279
</TABLE>

(1)   The average of the noon buying rates on each business day during the
      period.

(2)   The average of the noon buying rates on the last business day of each full
      calendar month during the period.

RISK FACTORS

      The following important factors, among others, could cause our actual
results to differ materially from those contained in forward-looking statements
made in this annual report or presented elsewhere by management from time to
time.

Capital Requirements

      The Company had cash, cash equivalents and short-term investments of
approximately $9,100,000 as of December 31, 2001 and approximately $2,300,000 as
of March 31, 2002. In April 2002, the Company entered into a license agreement
(the "License Agreement") with Unither Pharmaceuticals, Inc. ("Unither"), a
wholly-owned subsidiary of United Therapeutics Corporation ("United").
Concurrently with the execution and delivery of the license agreement, the
Company and United entered into a subscription and debenture purchase agreement
dated April 17, 2002 (the "Subscription Agreement") pursuant to which United
purchased 4,900,000 Common Shares of the Company at a price of U.S. $0.50 per
share for total proceeds to the Company of U.S. $2,450,000. In addition, the
Company issued to United a convertible debenture (the "First Debenture") in the
principal amount of U.S. $50,000, which is convertible into 100,000 Common
Shares at a price of U.S. $0.50 per share. The Company also issued to United a
warrant (the "Warrant") to purchase 3,250,000 Common Shares at a price of U.S.
$.50 per share. The Warrant may only be exercised in full and must be exercised
on or before August 20, 2002. Pursuant to the Subscription Agreement, the
Company granted to United the right to purchase a convertible debenture (the
"Second Debenture") in the principal amount of U.S. $875,000. Subject to receipt
of approval by the Company shareholders, U.S. $441,690 of the principal amount
of the Second Debenture is automatically convertible into 883,380 Common Shares
upon the issuance of the Second Debenture. United's right to purchase the Second
Debenture expires on August 14, 2002. If United does not exercise the Warrant on
or before August 20, 2002 or does not purchase the Second Debenture on or before
August 25, 2002, then the Company may terminate the License Agreement
immediately upon written notice to Unither.


                                       3
<PAGE>
      As a result of the License Agreement with Unither, the Company expects
that research and development expenses, and supporting general and
administrative expenses, will decrease significantly in 2002. If United
exercises the Warrant and purchases the Second Debenture, the Company believes
that its available cash, cash equivalents and short-term investments and
interest earned thereon, including proceeds from United's purchase of Common
Shares of the Company and the First Debenture, would be sufficient to finance
its operations and capital needs into 2003. If United does not exercise the
Warrant and purchase the Second Debenture, the Company believes that its
available cash, cash equivalents and short term investments and interest earned
thereon would be sufficient to finance its operations into the third quarter of
2002. The Company's future cash requirements will depend on many factors,
including continued scientific progress in its product discovery and development
programs, the number and breadth of these programs, progress in its preclinical
and clinical evaluation of product candidates, progress in corporate partnering
and the time and expense associated with filing, prosecuting and enforcing its
patent claims and costs associated with obtaining regulatory approvals.

      The Company will seek additional funding through public or private equity
or debt financing from time to time, as market conditions permit, or through
additional strategic relationships with pharmaceutical or biotechnology
companies. These activities will likely result in the issuance of additional
equity securities of the Company. The Company can make no assurance that such
funding will be available or, if available, that it will be available on
acceptable terms. If adequate funds are not available, the Company may have to
reduce substantially or eliminate expenditures for research and development,
obtain funds through arrangements with collaborators that require the Company to
relinquish rights to certain of its technologies or products that it would not
otherwise relinquish or terminate its operations. The Company can make no
assurance that it will be able to raise additional capital if its capital
resources are exhausted. The ability of the Company to arrange such financing in
the future will depend in part upon the prevailing capital market conditions as
well as the business performance of the Company.

No Assurance of Successful Development or Market Acceptance

      Prospects for companies in the biotechnology industry generally may be
regarded as uncertain given the nature of the industry and, accordingly,
investments in biotechnology companies should be regarded as highly speculative.
The Company's realization of its long-term potential will be dependent upon the
successful development and commercialization of products currently under
development. The Company can make no assurance that these products will be
developed successfully or receive regulatory approval. The new products of the
Company are currently in the research and development stages, the riskiest
stages for a company in the biotechnology industry. The Company can make no
assurance that its research and development programs will result in commercially
viable products. To achieve profitable operations, the Company, alone or with
others such as Unither, must successfully develop, introduce and market its
products. To obtain regulatory approvals for the products being developed and to
achieve commercial success, clinical trials must demonstrate that the products
are safe for human use and that they demonstrate efficacy. Unsatisfactory
results obtained from a particular study relating to a program may cause the
Company or its collaborators to abandon its commitment to that program. The
Company can make no assurance that any future animal or human test, if
undertaken, will yield favorable results.

      The Company can make no assurance that any products based on its
technology, if approved for marketing, will ever achieve market acceptance.
These products, if successfully developed, will compete with a number of
traditional drugs and therapies manufactured and marketed by major
pharmaceutical and other biotechnology companies, as well as new products
currently under development by such companies and others. The degree of market
acceptance of any of these products will depend on the clinical efficacy and
safety of the product candidates, their potential advantage over alternative
treatment methods, and reimbursement policies of government and third-party
payers. The Company can make no assurance that physicians, patients or the
medical community in general will accept and utilize any of these products, and
the lack of such market acceptance would have a material adverse effect on the
Company's business, financial condition and results of operations.

Uncertainties Associated with the Timing of Submission and Approval of a
Biologics License Application for OvaRex(R) MAb

      The Company's development program for its lead product, OvaRex(R) MAb, to
date has been focused on North America, a territory now under the control and
implementation of Unither. The program has been designed to lead to an initial
filing with the United States Food and Drug Administration ("FDA") of a
Biologics License


                                       4
<PAGE>
Application ("BLA") for the purpose of obtaining approval to market the product
in the United States. A BLA filing is extensive and includes, among other
things, detailed information regarding the design, conduct and results of
preclinical and clinical testing, the composition, synthesis and manufacture of
the product, and such other information and/or analyses as may be requested by
the FDA in support of the BLA. The timing of the filing of the BLA may be
impacted by, among other things, the sufficiency of results and data from
ongoing and completed clinical trials, the satisfactory completion of ongoing
development and manufacturing requirements and requests by the FDA for
additional information and data to support the filing.

      The Company can make no assurance that the ongoing and planned clinical
trials of OvaRex(R) MAb will provide sufficient data for such a filing. Further,
Unither and the Company are evaluating the potential use of alternative
manufacturers or sources, including Unither's own manufacturing in a start-up
facility, for the production of commercial consistency lots necessary to
complete the BLA filing. The Company can make no assurance that delays will not
be encountered in the remaining product development and manufacturing activities
required for regulatory filings. Also, the Company can make no assurance that
the FDA will not request additional information or data to support such filings.
For example, a delay in the filing of the BLA will impact the timing of the
FDA's review of the application and approval for marketing of the product and,
if approved, the timing of commercialization of the product. Any such delay may
have a material adverse effect on the Company's business, financial condition
and results of operations.

Uncertainty Associated with Preclinical and Clinical Testing

      Clinical trials of the Company's products are presently being conducted by
Unither in North America. The Company believes that additional clinical trials
are necessary to confirm the efficacy of OvaRex(R) MAb. As a result, while the
results reported to date from trials with OvaRex(R) MAb are encouraging, the
Company can make no assurance that OvaRex(R) MAb or its other products will
demonstrate a therapeutic benefit in the treatment of cancer patients that would
be sufficient for obtaining regulatory approval.

      Before obtaining regulatory approvals for the commercial sale of any of
the Company's potential new products, the products will be subjected to
extensive preclinical and clinical testing to demonstrate their safety and
efficacy in humans. Results of the initial preclinical and clinical testing of
products under development or any interim analyses of clinical trials are not
necessarily indicative of results that will be obtained from subsequent or more
extensive preclinical and clinical testing. Furthermore, the Company can make no
assurance that clinical trials of products under development will be completed
or will demonstrate the safety and efficacy of such products at all or to the
extent necessary to obtain regulatory approvals. Companies in the biotechnology
industry have suffered significant setbacks in advanced clinical trials, even
after achieving promising results in earlier trials. The failure to adequately
demonstrate the safety and efficacy of a therapeutic product under development
could delay or prevent regulatory approval of such product.

      The rate of completion of clinical trials depends on, among other factors,
the enrollment of patients. Patient accrual is a function of many factors,
including the size of the patient population, the proximity of patients to
clinical sites, the eligibility criteria for the study and the existence of
competitive clinical trials. Delays in planned patient enrollment in future
clinical trials may result in increased costs and delays in the completion of
the product development programs.

Regulatory Environment; No Assurance of Product Approval

      The FDA, the Therapeutic Products Programme ("TPP") of Health Canada, the
European Agency for the Evaluation of Medicinal Products ("EMEA") and comparable
agencies in other jurisdictions impose substantial requirements on biotechnology
and pharmaceutical companies prior to the introduction of therapeutic products.
These requirements include lengthy and detailed laboratory and clinical testing
procedures, sampling activities and other costly and time-consuming procedures,
together which involve the expenditure of substantial resources. Satisfaction of
these requirements typically takes a number of years and varies substantially
based on the type, complexity and novelty of the pharmaceutical product.

      Any future FDA, TPP, EMEA or other governmental approval of products
developed by the Company and/or its collaborators may entail limitations on the
indicated uses for which such products may be marketed.


                                       5
<PAGE>
Approved products may be subject to additional testing and surveillance programs
as required by regulatory agencies. In addition, product approvals may be
withdrawn or limited for noncompliance with regulatory standards or the
occurrence of unforeseen problems following initial marketing.

      The effect of governmental regulation may be to delay marketing the
Company's products for a considerable period of time, to impose costly
requirements on the Company's activities or to provide a competitive advantage
to other companies that compete with the Company and/or its collaborators.
Adverse clinical results could have a negative impact on the regulatory process
and timing. A delay in obtaining or failure to obtain regulatory approvals could
adversely affect the marketing of the Company's products and the Company's
and/or its collaborators' liquidity and capital resources. In addition, future
legislation or administrative action may result in governmental regulations
adverse to the Company. The Company cannot predict the potential adverse effect
on its business of any governmental regulation that may arise from future
legislation or administrative action.

      To date, the Company has submitted (and is now transferring to Unither)
Investigational New Drug Applications ("INDs") to the TPP and FDA for OvaRex(R)
MAb and to the FDA for BrevaRex(R) MAb, but has not submitted such documentation
for other products currently under development. The Company can make no
assurance that it, or Unither, will obtain regulatory approval to commercialize
OvaRex(R) MAb and BrevaRex(R) MAb, or that it, or Unither, will be in a position
to file the regulatory applications for its future products.

      The Company has developed in conjunction with the FDA a clinical plan to
study the comparability of cell culture-based OvaRex(R) MAb with its current
ascites-based material, which Unither has now undertaken. The Company can make
no assurance that the establishment of a clinical development plan or program in
conjunction with regulatory authorities will result in such plan or program
being sufficient for obtaining regulatory approval of a product upon submission
of a licensing application. The insufficiency of a program could delay or
prevent regulatory approval of any such product.

Lack of Product Revenues; History of Losses

      To date, the Company has not recorded any revenues from the sale of
biopharmaceutical products and there can be no assurance that significant
additional losses will not occur in the near future or that the Company will be
profitable in the future. The Company has accumulated net losses of
approximately $95.7 million to December 31, 2001. The Company anticipates that
it will continue to incur significant operating losses as it and its
collaborators advance its products through development and clinical trials to
commercialization. The amounts and timing of expenditures will depend on the
progress of ongoing research and development, the results of preclinical testing
and clinical trials, the rate at which operating losses are incurred, the
execution of any additional development and licensing agreements with
collaborators, the Company's development of additional products, the FDA, TPP,
EMEA and other regulatory processes and other factors, many of which are beyond
the Company's control.

      The Company does not expect to receive revenues from commercial sales of
its new products for the next few years, if at all. The Company expects to
continue to incur losses unless and until such time as strategic alliance
payments and royalty payments generate sufficient revenues to fund its
continuing operations. The ability of the Company to achieve profitability in
subsequent years depends upon, among other things, successfully completing
preclinical, clinical and product development efforts and obtaining regulatory
approval for its products. The development of the Company's products will
require the commitment of substantial resources to conduct the time-consuming
development of products to meet market and regulatory requirements and to
establish strategic relationships for production capabilities. The Company can
make no assurance that it will generate any revenues or achieve profitability.

      The Company believes that its available cash, cash equivalents and
short-term investments and interest thereon, including the proceeds from
United's purchase of Common Shares of the Company in April 2002, and assuming
the exercise of the Warrant and the purchase of the Second Debenture by United,
should be sufficient to finance its operations and capital needs into 2003. If
United does not exercise the Warrant and purchase the Second Debenture, the
Company believes that its available cash, cash equivalents and short term
investments and interest earned thereon should be sufficient to finance its
operations into the third quarter of 2002. Beyond that, the Company intends to
rely on cash, if any, generated from licensing revenues, collaborative
agreements and other capital-raising activities which will be highly dependent
on the Company's successful development and


                                       6
<PAGE>
commercialization of its products. The Company can make no assurance that these
products will be successfully developed or commercialized or that the underlying
assumed levels of expenses will prove to be accurate.

Reliance on Strategic Relationships with Unither and Other Third Parties

      The Company is a party to collaborative agreements with third parties
relating to OvaRex(R) MAb and its other products. Under these collaborations,
depending on the structure of the collaboration, the Company is dependent on its
collaborators to fund, to conduct clinical trials, obtain regulatory approvals
for, and manufacture, market and sell products using our technology. The
Company's collaborators may not devote the resources necessary or may otherwise
be unable to complete development and commercialization of these potential
products.

      The Company's future success is dependent on the development and
maintenance of strategic relationships. The Company intends to seek to enter
into additional strategic relationships with collaborators to commercialize
products and to participate in and continue to finance the later stage clinical
development of products. If the Company cannot maintain its existing
collaborations or establish new collaborations, it would be required to
terminate the development and commercialization of products or undertake product
development and commercialization activities at its own expense.

      In April 2002, the Company entered into an exclusive license agreement
with Unither for the development and commercialization of OvaRex(R) MAb and four
other monoclonal antibodies worldwide, with the major exception of member
nations of the European Union and certain other countries. The Company has also
entered into agreements with three pharmaceutical/biotechnology companies to
establish joint ventures or collaborations to commercialize its products in
local foreign markets. See "Item 4: Information on the Company - Strategic
Alliances and License Agreements." The Company intends to enter into similar
arrangements in other geographic locations in Northern Europe.

      If the Company fails to enter into strategic relationships for development
of products on terms favorable to the Company or if these collaborators fail to
effectively complete the clinical trials, the regulatory approval of the
Company's products may be delayed, and any such delay may have a materially
adverse effect on the Company's results of operations and business. The Company
may also rely on collaborators to market its products. If the Company fails to
enter collaborations or if its collaborators fail to effectively market the
Company's products, the Company may lose the opportunity to successfully
commercialize the products. The Company can make no assurance that it will be
able to enter additional collaborations on terms that are acceptable to the
Company.

      The Company and its collaborators do not manufacture antibodies or fill
vials, and will seek to enter into agreements with third parties to manufacture
its antibodies (or alternatively, to consider direct manufacturing) and to fill
vials. Pursuant to the Draximage Alliance Agreement referred to in "Item 4:
Information on the Company - Strategic Alliances and License Agreements -
Draximage Inc.", Draximage Inc. has filled OvaRex(R) MAb vials for clinical
trials and could have certain contingent rights with respect to the manufacture
and/or marketing in Canada of the OvaRex(R) MAb drug for commercial purposes. In
addition, Unither is now working with other vendors to fill OvaRex(R) MAb vials.
The Company previously worked with Lonza Biologics plc ("Lonza") on the
production of cell culture-based OvaRex(R) antibody and has subsequently
transferred its proprietary cell culture manufacturing processes and the
development responsibilities to Abbott Laboratories. The Company and Unither are
evaluating a potential transfer (or alternatively to consider direct
manufacturing) of such processes and responsibilities to a new commercial
manufacturer that could conduct manufacturing for Unither and the Company's
other collaborators. The Company can make no assurance that delays will not be
encountered in the remaining product development and manufacturing activities
required for regulatory filings for OvaRex(R) MAb, or that Unither's
manufacturing decisions would be appropriate for the Company and its other
collaborators. Also, if long-term arrangements for the production of OvaRex(R)
MAb and other antibodies cannot be entered into, the Company may experience
delays in the development and commercialization of its products. In addition, if
these contract suppliers fail to perform under the terms of the agreement, the
Company may incur significant costs.

      Scaling-up production and producing multiple consistency lots of cell
culture-derived materials will enable the Company and Unither to further pursue
regulatory approval and commercialization of OvaRex(R) MAb. Such regulatory
approval and commercialization is dependent upon the Company's and Unither's
ability to achieve such improvements in production.


                                       7
<PAGE>
      The Company also relies on a number of alliances and collaborative
partnerships for the development of its products. The Company cannot guarantee
that these relationships will continue or result in any successful developments.
See "Item 4: Information on the Company - Strategic Alliances and License
Agreements".

Manufacturing and Marketing

      The Company has limited experience in manufacturing biopharmaceuticals.
The Company and its collaborators intend to rely primarily on contract
manufacturers to produce antibodies and other components of its products for
research and development, preclinical and clinical trial purposes. The Company
and Unither may select contract manufacturers or may establish and validate its
own manufacturing facilities. The Company's products have never been
manufactured on a commercial scale, and the Company can make no assurance that
its products can be manufactured at a cost, in quantities, or in a timeframe
necessary to make them commercially viable. If the Company or Unither are unable
to contract or manufacture a sufficient supply of required products and
substances on acceptable terms, or the Company or Unither should encounter
delays or difficulties, the Company's preclinical and clinical testing would be
delayed, thereby delaying the submission of products for regulatory approval or
the market introduction and subsequent sales of such products. Any such delay
may have a material adverse effect on the Company's business, financial
condition and results of operations. Moreover, contract manufacturers that the
Company may use must continually adhere to current Good Manufacturing Practices
("cGMP") regulations enforced by the FDA through its facilities inspection
program. If the facilities of such manufacturers or Unither cannot pass a
pre-approval plant inspection, the FDA premarket approval of the Company's
products will not be granted.

      The Company currently has no sales, marketing or distribution experience.
The Company intends to rely on its current and future collaborators to market
its products; however, the Company can make no assurance that its collaborators
have effective sales forces and distribution systems. If the Company is unable
to maintain or establish such relationships and is required to market any of its
products directly, the Company will have to develop a marketing and sales force
with technical expertise and with supporting distribution capabilities. The
Company can make no assurance that it will be able to maintain or establish such
relationships with third parties or develop in-house sales and distribution
capabilities. To the extent that the Company depends on its collaborators or
third parties for marketing and distribution, any future revenues of the Company
will depend upon the efforts of such collaborators or third parties, and the
Company can make no assurance that such efforts will be successful.

Competition

      Technological competition in the pharmaceutical industry is intense. There
are many companies and institutions, both public and private, including
pharmaceutical companies, chemical companies, specialized biotechnology
companies and research, government and academic institutions, that are engaged
in developing synthetic pharmaceuticals and biotechnology products for human
therapeutic applications, including the applications targeted by the Company.
The Company may have to compete with these competitors to develop products aimed
at treating similar conditions. Many of these competitors have substantially
greater resources than the Company. The Company can make no assurance that
developments by others will not render its products or technologies
non-competitive or adversely affect the commitment of the Company's commercial
collaborators to the Company's programs.

      The pharmaceutical industry is also characterized by extensive research
efforts and rapid technological change. Competition can be expected to increase
as technological advances are made and commercial applications for
biopharmaceutical products increase. Competitors of the Company may use
different technologies or approaches to develop products similar to products
which the Company is seeking to develop, or may develop new or enhanced products
for processes that may be more effective, less expensive, safer or more readily
available before the Company obtains approval of its products. The Company can
make no assurance that its products will compete successfully or that research
and development by competitors will not render the Company's products obsolete
or uneconomical.

Proprietary Rights and Patent Protection

      Due to the length of time and expense associated with bringing new
products through development and the governmental approval process to the
marketplace, the pharmaceutical industry has traditionally placed considerable


                                       8
<PAGE>
importance on obtaining and maintaining patent and trade secret protection for
significant new technologies, products and processes.

      The patent protection afforded to biotechnology and pharmaceutical firms
is uncertain and involves many complex legal, scientific and factual questions.
There is no clear law or policy involving the breadth of claims allowed in such
cases, or the degree of protection afforded under patents. These issues are
further complicated in this field by the abundance of publications and/or prior
art, including publications by the Company. Thus, while the Company believes
that its proprietary information is protected to the fullest extent practicable,
the Company can make no assurance that (i) additional patents will be issued to
the Company in any or all appropriate jurisdictions, (ii) litigation will not be
commenced seeking to challenge the Company's patent protection or that such
challenges will not be successful, (iii) processes or products of the Company do
not or will not infringe upon the patents of third parties, or (iv) the scope of
patents that may be issued to the Company will successfully prevent third
parties from developing similar and competitive products. The Company cannot
predict how any patent litigation will affect the Company's efforts to develop,
manufacture or market its products. The cost of litigation to uphold the
validity and prevent infringement of any patents issued to the Company may be
significant.

      The products being developed by the Company also incorporate technology
and processes that will not be protected by any patent and are capable of being
duplicated or improved upon by competitors. Accordingly, the Company may be
vulnerable to competitors, which develop competing technology, whether
independently or as a result of acquiring access to the proprietary products and
trade secrets of the Company. In addition, the Company may be required to obtain
licenses under patents or other proprietary rights of third parties. The Company
can make no assurance that any licenses required under such patents or
proprietary rights will be available on terms acceptable to the Company. If the
Company does not obtain any required licenses, it could encounter delays in
introducing one or more of its products to the market while it attempts to
design around any relevant patents, or it could find that the development,
manufacture or sale of products requiring any required licenses could be
foreclosed.

      The Company can make no assurance that its patent applications will
further mature into issued patents, or will afford legal protection against
competitors, or will provide significant proprietary protection or competitive
advantage. In addition, the Company can make no assurance that its patents will
not be held invalid or unenforceable by a court, infringed or circumvented by
others or that others will not obtain patents that the Company would need to
license or circumvent. Competitors or potential competitors may have filed
patent applications or received patents, and may obtain additional patents and
proprietary rights relating to the products or processes competitive with the
products and processes of the Company.

Key Personnel

      The Company is highly dependent on its senior officers, scientific
personnel, consultants and management staff, the loss of whose services might
significantly delay or prevent the Company's achievement of its scientific or
business objectives. Competition among biotechnology and biopharmaceutical
companies for qualified employees is intense, and the ability to retain and
attract qualified individuals is critical to the Company's success. The Company
can make no assurance that it will be able to attract and retain qualified
individuals currently or in the future on acceptable terms, or at all, and the
failure to do so could have a material adverse effect on the Company's business,
financial condition and results of operations.

Product Liability and Insurance

      The testing, marketing, sale and use of products under development by the
Company may entail risk of product liability. Such risk exists in human clinical
trials and even with respect to those products that receive regulatory approval
for commercial sale. The Company can make no assurance that it can avoid
significant product liability exposure. The Company currently has in place
product liability insurance for its biopharmaceutical products and expects that
as it expands, the Company will require additional insurance. The Company can
make no assurance that it will be able to obtain appropriate levels of product
liability insurance prior to any sale of its biopharmaceutical products. 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 Company. The obligation to pay
any product liability claim or recall a product could have a material adverse
effect on the business, financial condition and future prospects of the Company.


                                       9
<PAGE>
Unstable Share Price

      Market prices for securities of biotechnology companies generally, and of
common shares in particular, are volatile. Factors such as announcements
(publicly made or at scientific conferences) of technological innovations, new
commercial products, patents, the development of proprietary rights by the
Company or others, results of clinical trials, regulatory actions, publications,
quarterly financial results or public concern over the safety of
biotechnological products, future sales of Common Shares by the Company or by
its current shareholders and other factors could have a significant effect on
the market price of the Common Shares of the Company.

Issue of Additional Common Shares and Preferred Shares

      The Company's Board of Directors may issue an unlimited number of Common
Shares and an unlimited number of Preferred Shares, issuable in one or more
series, without any vote or action by the Company's shareholders. If the Company
issues any additional Common Shares or any Preferred Shares, the percentage
ownership of existing shareholders may be reduced and diluted. In addition, the
Company's Board of Directors may determine the price, rights, preferences,
privileges and restrictions, including voting, dividend and conversion rights,
of the preferred shares and determine to whom they shall be issued. There are
currently no preferred shares outstanding. However, the rights of the holders of
any preferred shares that may be issued in the future may be senior to the
rights of holders of Common Shares, which could preclude holders of Common
Shares from receiving dividends, proceeds of a liquidation or other benefits.
The issuance of Preferred Shares, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could make
it more difficult for a third party to acquire control of the Company by, for
example, discouraging an unsolicited acquisition proposal or a proxy contest,
the effect of which may be to deprive the Company's shareholders of a control
premium that might otherwise be realized in connection with an acquisition of
the Company.

ITEM 4:  INFORMATION ON THE COMPANY

COMPANY OVERVIEW

      The Company is a corporation amalgamated under the laws of the Province of
Alberta, Canada, which was incorporated in 1995. The registered office of the
Company is located at 1900, 715-5 Avenue SW, Calgary, Alberta, T2P 2X6. The
executive offices of the Company are located at 610 Lincoln Street, Waltham,
Massachusetts 02451, and its telephone number is (781) 672-0138.

      The Company is engaged in the research, development and commercialization
of foreign antibodies that activate the immune system for the treatment of
certain cancers and other illnesses. The Company's proprietary expertise
involves the use of foreign monoclonal antibodies as antigen-binding agents that
can alter patients' immune system responses in a therapeutically beneficial
manner. While its technology has been developed in the cancer field to date, the
Company also believes that its platform can be applied to other disease areas.

      The Company's products are murine monoclonal antibodies ("MAbs") developed
by the Company's scientists or licensed to the Company. Based upon preclinical
and clinical studies to date, AltaRex believes that these MAbs can be used to
complement and/or supplement conventional cancer therapies. The Company believes
that its MAb products can elicit immune responses that are capable of killing
cancer cells without impacting healthy cells.

      The Company's MAbs are administered intravenously in low dose to target
and bind to a specific tumor associated antigen in circulation. The
antibody-antigen complex can "reprogram" the immune system to recognize "self"
antigens as "foreign", thereby triggering immune system attack on both antigen
and tumor. These immune responses employ both arms of the immune system (humoral
and cellular). The Company believes that its foreign antibodies enhance the
ability of the human immune system to produce its own anti-tumor response.

      The Company has been granted two patents by the United States Patent and
Trademark Office including an OvaRex(R) patent that covers the Company's novel
technology of administering a low-dose foreign antibody to any patient whose
cancer expresses the target antigen, thereby activating an anti-tumor response
unique to that individual. In more general terms, the Company has discovered a
patented method to enable any particular cancer


                                       10
<PAGE>
patient to develop the natural ability to fight their own disease. The Company
has 17 patent applications pending in the United States related to its
technology. Most of these patent applications have been or will be the subject
of corresponding international patent applications.

      On April 17, 2002, the Company entered into a license agreement with
Unither for the development of OvaRex(R) MAb and the Company's four additional
monoclonal antibodies for the treatment of certain cancers. Under the terms of
this agreement, Unither received exclusive rights for development and
commercialization of the five cancer antibody products worldwide, with the
exception of rights retained by the Company to member nations of the European
Union and certain other countries where previous agreements exist. As of the
date of the agreement, Unither assumed responsibility for the costs of clinical
trials, manufacturing and other development and commercialization expenses for
each product in the licensed territories. Unither will pay to the Company
development milestone payments and royalty fees from product sales. Pursuant to
the agreement, in May 2002, about one-half of the Company's employees (those
involved in the clinical development, manufacturing and regulatory aspects of
the OvaRex(R) MAb development program) became employees of Unither.

      The Company continues to work with its collaborators in Southern Europe
and the Middle East, Dompe Farmaceutici, Medison Pharma and Genesis Pharma, with
respect to a previously established profit-sharing licensing agreement with
Medison Pharma and memoranda of understanding with Dompe Farmaceutici and
Genesis Pharma for territories that include Italy, Austria, Switzerland, Spain,
Portugal, Israel, Greece, Turkey and Israel. The Company is seeking a
collaborator(s) for Northern Europe, a market that represents an almost equal
number of ovarian cancer patients as North America.

      OvaRex(R) MAb (oregovomab), in phase II/III clinical study for the
treatment of late-stage ovarian cancer, is the most advanced of five cancer
antibodies in development. The Company has also completed a phase I safety and
dose ranging clinical trial of BrevaRex(R) MAb without apparent toxicity.

       OvaRex(R) MAb targets a tumor-associated antigen known as CA125, which is
expressed in greater than 80% of ovarian cancer patients with late-stage
disease. Over 500 ovarian cancer patients have participated in six comprehensive
OvaRex(R) MAb clinical trials across North America and Germany. Clinical results
demonstrate an increase in time to relapse and/or prolonged survival, coupled
with a benign safety profile for OvaRex(R) MAb. Results from five of six
OvaRex(R) MAb studies have been reported, including results from the Company's
largest study in 345 ovarian cancer patients in "watchful waiting", the period
of disease remission following first-line treatment of surgery and chemotherapy.
These clinical results demonstrate a six- to ten-month prolongation in time to
disease relapse for OvaRex(R) MAb-treated patients (vs. placebo) in well-defined
populations of 29%-48% of the 345 patients in the study. These well-defined
populations also demonstrate a 19%-41% reduced risk of relapse for OvaRex(R) MAb
patients (vs. placebo). A decreased risk of relapse of 20%-25% is generally
considered clinically significant by practicing physicians.

      OvaRex(R) MAb has received both Orphan Drug and Fast Track designations by
the FDA. The designations provide the potential for expedited regulatory review
and accelerated approval. Unither will determine the timeline for OvaRex(R)
regulatory submission for their licensed territories and AltaRex, for the
remaining territories. The Company, Unither and its expert advisors believe that
the composite of clinical data has established a target population and dosing
regimen for a confirmatory trial to the reported results of the lead 345-patient
trial which will be conducted by Unither as part of their OvaRex(R) registration
plan as appropriate following a program review with the FDA. A similar plan is
under evaluation for Europe.

      The Company has also developed, in conjunction with the FDA, a plan to
demonstrate comparability between the ascites-based manufactured product used in
clinical trials and a state-of-the-art low-cost protein-free cell culture-based
manufactured product for commercial purposes. This testing involves a 24-patient
pharmacokinetic study, recently completed for enrollment, to demonstrate safety
and immunology data from patients who receive either cell culture-based or
ascites product. Under European comparability procedures, the United States
comparability plan could suffice; nonetheless the Company is planning with
existing and potential European collaborators the conduct of cell culture-based
efficacy trials if necessary. The pharmacokinetic study is expected to be
completed for primary analysis in the second quarter of 2002. The Company and
Unither are working with Abbott Laboratories, and may engage alternative
manufacturers or consider manufacturing on its own, to produce


                                       11
<PAGE>
the necessary commercial consistency lots that will be required to initiate
regulatory filings in both North America and Europe.

BUSINESS STRATEGY

      The key elements of the Company's strategy are to:

      -     Focus on securing a northern European collaboration for OvaRex(R)
            MAb and its other products;

      -     Strategically interface United's North American OvaRex(R) MAb
            development strategy with the Company's European Union development
            strategy for timely commercialization on a global basis; and

      -     Further develop the breadth and application of the Company's
            technology platform involving the use of murine antibodies as
            immunotherapeutics:

            -     strengthen and broaden patent protection for the Company's
                  intellectual property and novel technology platform; and

            -     through strategic relationships with third parties, pursue the
                  application of the Company's technology to other diseases.

MARKET FOR CANCER THERAPEUTICS

      Overall, the annual costs for cancer in the United States (2000) are
estimated by the National Institute of Health at over U.S.$180 billion which
includes U.S.$60 billion for direct medical costs, U.S.$15 billion for morbidity
costs (loss of productivity) and U.S.$105 billion for mortality cases.

      The world market for cancer therapeutics was estimated at more than $15
billion in 1998 (BioSpace Cancer Primer, June 2000) and is expected to increase
significantly from aging populations and the development of new products.

      According to the American Cancer Society, approximately one out of every
two American men and one out of every three American women will have some type
of cancer at some point during their lifetime, with the majority (80%) of
cancers occurring in people over the age of 55. It is anticipated that as the
population continues to age, cancer treatment will likely become the single
largest health care expenditure in the United States and other industrialized
nations.

APPROACHES TO CANCER THERAPY

      Conventional approaches for the treatment of cancer have been based on a
combination of surgery, radiation and chemotherapy. Despite increasing resources
to develop new therapies for cancer, survival rates for cancer patients have not
materially improved over the last 15 years (American Cancer Society, 1998 Cancer
Facts & Figures). This ongoing inability to significantly improve survival or
quality of life for cancer patients creates a compelling need for alternative
medical strategies.

      The potential market for antibody-based therapies in the management of
advanced cancer has rapidly expanded, as evidenced by the acceptance of IDEC
Pharmaceuticals Corp.'s Rituxan(R) (rituximab) for the treatment of
non-Hodgkin's lymphoma and Genentech Inc.'s Herceptin(R) (trastuzumab) for the
treatment of certain breast cancers. Rituxan(R) first-year sales surpassed
U.S.$150 million, and increased to U.S.$818 million by year four (2001).
Herceptin(R) first-year sales also surpassed U.S.$150 million and reached
U.S.$346 million by year three (2001).


                                       12

<PAGE>
   IMMUNOTHERAPEUTIC APPROACHES TO CANCER

      The immunotherapeutic approach to cancer therapy is based on the principle
that the human immune system is capable of recognizing and eliminating cancer
cells. In cancer patients, the immune system has failed, for unknown reasons, to
respond to the presence of cancer cells. Immunotherapeutic approaches attempt to
stimulate and enhance an anti-cancer response by the patient's own immune
system.

      The immunotherapeutic approach has inherent advantages in comparison to
current conventional treatment practices, which are often radical in nature and
associated with severe toxicities, thereby compromising the patient's quality of
life. In addition, tumors treated conventionally often re-emerge in more
aggressive and treatment-resistant forms. Immunotherapy, which can be utilized
in combination with conventional treatments or as a single treatment, can be
substantially less toxic than chemotherapy and therefore may improve the
patient's quality of life.

ALTAREX'S ANTIBODIES AS AN IMMUNOTHERAPEUTIC APPROACH TO CANCER

      The Company's technology approach is to generate products that alter the
way antigens are processed by the immune system and to make the immune system
recognize and attack tumors. Therapeutic candidates that have been advanced to
date by the Company include a series of foreign (murine) monoclonal antibodies
specific for tumor associated antigens that are shed or secreted into the
circulation. The original premise for the therapeutic mechanism of action was
induction of the idiotype network, or the theory revolving around the generation
of antibody responses to antibodies in a cascade. Subsequent research by the
Company has found that, although evidence for the idiotype network exists, it
appears not to be the dominant mechanism of action.

      The Company's antibodies in their current application specifically induce
cellular and humoral immunity against an autologous antigen that normally is not
recognized by the immune system. Clinical benefit is achieved through induction
of a beneficial immune response targeted against the tumor associated antigen
and the source malignant cells producing the antigen. The antibody complexes
with the tumor associated antigen in the circulation and brings the antigen to
the antigen presenting system where a multifocal immune response is induced.
Induction of human anti-mouse antibodies, Ab2, antigen specific T cells and
antibody to the tumor associated antigen have all been correlated with clinical
benefit in clinical studies.

      The Company's technology is the process by which the Company produces,
selects, modifies and administers unique murine MAbs that can selectively bind
to TAAs that are highly associated with certain types of cancers. The Company
has found that the selective binding of MAbs to TAAs can induce a number of
specific anti-tumor immune responses in a cancer patient.

      The Company has shown that the MAb B43, the primary component of OvaRex(R)
MAb, has a high degree of specificity to the TAA CA125, an antigen
over-expressed by over 80% of ovarian cancer patients. The Company has developed
murine MAbs that have specificity for TAAs associated with seven of the ten most
lethal forms of cancer in the United States. In addition, the Company has
announced a collaboration with Epigen Inc. ("Epigen"), for the development of
antibody-based treatments for cancers associated with the human carcinoma
antigen ("HCA"), subject to demonstrating proof-of-principle using the Company's
proprietary dendritic cell assay and the Company's proprietary technology (see "
-- Strategic Alliances and License Agreements -- Epigen, Inc.").

      The Company believes that its approach to immunotherapy may provide the
following advantages over conventional approaches to immunotherapy:

      -     The Company's approach uses a foreign (murine) antibody to a single
            epitope of a multi-epitopic TAA that induces the immune system to
            mount its own generalized anti-tumor response to multiple epitopes
            of the TAA. The technology mobilizes an immune response that is not
            restricted by selection of idiotype or vaccine fragment;

      -     The Company's approach has demonstrated the stimulation of both a
            humoral and cellular immune response;


                                       13

<PAGE>
      -     The Company's approach utilizes low dosages and intravenous infusion
            of antibody, minimizing the risk of toxicity and lowering the cost
            of the treatment; and

      -     The use of a foreign MAb induces a potent immune response that would
            not result from Chimeric or humanized antibodies.

THE COMPANY'S PRODUCTS

      The Company has established a portfolio of five cancer antibodies for
initial therapeutic product development. Unither will now conduct ongoing
product development in its licensed territories, pursuant to the License
Agreement, and the Company and its current and planned collaborators will
similarly conduct product development for the European Union and certain other
countries. See " -- Strategic Alliances and License Agreements". The first and
most advanced of these product candidates is OvaRex(R) MAb for the treatment of
late stage ovarian cancer patients with tumors expressing the TAA CA125. Other
products in development include BrevaRex(R) MAb (for tumors expressing MUC1),
AR54 MAb (for tumors expressing TAG72), ProstaRex(TM) MAb (for tumors expressing
PSA) and GivaRex(TM) MAb (for tumors expressing CA 19.9).

   OVAREX(R) MAB OVERVIEW

      In the United States, Canada and Europe, ovarian cancer causes more deaths
than any other cancer of the female reproductive tract. It is estimated that in
the United States, approximately 23,000 new cases of ovarian cancer were
diagnosed and approximately 14,000 women will die from this disease annually
(American Cancer Society, 2000 Cancer Facts & Figures). An almost equal number
of new (incidence) and existing (prevalence) cases occur in Europe.

      Although detection of ovarian cancer at an early stage is now associated
with an improved chance for curative treatment, survival figures have not
changed significantly over the past 15 years. This is partially due to a lack of
efficient diagnostic methods or markers for routine tests that could increase
the number of patients diagnosed at the early stage of their disease.
Consequently, in approximately three-quarters of diagnosed patients, the tumor
has already progressed to an advanced stage (Stage III or IV), making treatment
much more difficult. Of these Stage III and IV patients, more than 80% express
the tumor associated antigen CA125.

      The therapeutic approach prescribed for those patients whose tumors have
progressed to an advanced stage consists of surgery (debulking) in combination
with adjuvant chemotherapy, which improves the patient's prognosis, particularly
if the residual tumor is smaller than two centimeters in diameter. Despite the
high rate of patients whose advanced stage cancer enters into clinical
remission, 90% of them will eventually suffer a recurrence of their disease.
(Hoskins et al., Journal of Clinical Oncology, October 1992).

      Those patients who either have residual tumors larger than two centimeters
or are left with progressive disease, or a no change situation after first-line
chemotherapy, have a particularly poor prognosis. These individuals typically
require additional chemotherapy within a period of only a few weeks or months.
Second-line chemotherapy, however, suffers from a lack of suitable therapeutic
agents as the tumors can become chemo-resistant due to their inherent
heterogeneity and adaptability to preceding first-line treatment.

      In recent years, new chemotherapeutic agents used either as single
treatments or in combination with other therapeutic agents have demonstrated an
increase in survival time by as much as 50%. However, despite their apparent
positive effect on survival time, these agents are generally associated with
significant toxicity and side effects that reduce the patient's quality of life.

      Given the rigors of repeated chemotherapeutic treatments, and taking into
account the low response rates and the modest effects on survival time, patient
quality of life has become a major issue. This is increasingly true as ovarian
cancer affects a large number of older and postmenopausal women.

      OvaRex(R) MAb uses a murine MAb having a high degree of specificity to a
TAA (CA125) over-expressed by the majority of late stage ovarian cancer
patients. The Company believes that the product acts as an immunotherapeutic
agent by inducing or amplifying the human body's immune response against ovarian
cancer.


                                       14

<PAGE>
This response is characterized by a cascade of events involving the production
of specific antibodies and cytotoxic T-cells in the body, which target the tumor
cells. The Company believes that this combination of humoral and cellular immune
responses account for the observed improvement in the clinical outcome of
patients receiving the OvaRex(R) MAb.

   OVAREX(R) MAB REGULATORY APPROVAL STRATEGY

      In 1996, the Company received Orphan Drug status from the FDA for
OvaRex(R) MAb for the treatment of ovarian cancer and has a similar application
pending for the European Union. In 1998, the FDA designated OvaRex(R) MAb as a
Fast Track development program for treatment of ovarian cancer in-patients
following primary treatment with surgery and chemotherapy.

      Generally, the FDA approves the marketing of a drug based on adequate and
well-controlled trials. The FDA also has regulations that are intended to
expedite the development, evaluation and marketing of a new drug used for the
treatment of serious diseases for which there is no other satisfactory
treatment. In appropriate circumstances, the FDA may, in its discretion, approve
the marketing of a drug based on one adequate and well-controlled trial, if
supported by information from other related adequate and well-controlled studies
or if the trial is a single multi-center trial. Fast Track designation makes a
product eligible for consideration for a number of programs, including meeting
with the FDA to discuss research protocol design and the possibility that the
marketing of the product may be approved immediately after the conclusion of
phase II studies. As a result of the FDA Modernization Act of 1997 ("FDAMA"),
products can receive Fast Track designation from the FDA if they meet an
inadequately addressed medical condition or unmet medical need and can also
receive accelerated approval based on a surrogate endpoint that is reasonably
likely to predict clinical benefit. Approval may be subject to the requirements
that the sponsor conduct appropriate post-approval studies and submit all
promotional materials related to the Fast Track product at several different
points in time. Full and accelerated (involving a surrogate endpoint with a
follow-on commitment for post-approval trials) approvals for other cancer agents
have been granted by the FDA on the basis of both phase II and phase III
studies. The primary criteria for FDA accelerated review is the meeting of an
inadequately addressed medical condition(s) or unmet medical need(s), either on
the basis of efficacy or improved safety. FDA provisions also allow for
accelerated approval of a product based on a surrogate endpoint. Similar
regulations exist in Canada and the European Union and in other parts of the
world.

      With consideration for previous FDA and EMEA practice regarding these
various regulatory alternatives, the Company and Unither are now reviewing the
overall OvaRex(R) MAb program to date and intend to seek input from the FDA and
EMEA for the purpose of establishing registration plans for OvaRex(R) MAb. For
North America, Unither is expected to design and implement a confirmatory
randomized clinical study (presumably phase III) to the recently reported
primary results of the Company's lead 345-patient phase IIb study. Similarly,
the Company and its other collaborators will address the registration plans for
non-Unither territories.

      See "Item 3:  Risk Factors - Reliance on Strategic Relationships".

   EARLY RETROSPECTIVE CLINICAL EXPERIENCE (RECURRENT DISEASE) WITH OVAREX(R)
MAB

      An earlier formulation of OvaRex(R) MAb was administered to more than 200
patients in Germany for imaging purposes. Of the patients who received the
imaging antibody, about 50% were evaluated for an immunological response to
OvaRex(R) MAb. The principal investigators observed that following the
administration of the imaging antibody, particularly in those patients who
received more than one dose, the patients developed a clinical response to
treatment characterized by what appeared to be unusually long survival times.

      A subsequent retrospective statistical analysis, initially prepared by an
independent statistician at the University of Dortmund in Germany, identified a
statistically significant treatment effect in the survival time of patients
receiving the earlier OvaRex(R) MAb, when compared to a historical control group
treated with conventional chemotherapy. An additional independent analysis by a
statistician at the University of Western Ontario in Canada was undertaken with
almost identical results. In this Cox Statistical Analysis, the median length of
survival was 30 months for the group treated with conventional chemotherapy and
59 months for the group that received the earlier formulation of OvaRex(R) MAb.
Additionally the five year survival rates as determined by this analysis were
11.4% for the chemotherapy group and 40.7% for the group that received the
earlier formulation of OvaRex(R) MAb.


                                       15

<PAGE>
      Cox Statistical Analysis is a statistical method of comparing two
different populations with respect to the length of survival of patients who
received a drug with those who did not, while balancing the effect of other
parameters that can also affect survival.

   CURRENT TRIALS WITH OVAREX(R) MAB

      345-Patient Double Blind Placebo-Controlled Trial in Watchful Waiting

      Based on the encouraging results obtained in the early retrospective
analysis and a subsequent substantial body of evidence based on immunological
laboratory research, the Company initiated a prospective multi-center
double-blind placebo-controlled North American clinical trial with late stage
ovarian cancer patients following primary therapy ("watchful waiting") to
evaluate the clinical utility of OvaRex(R) MAb. As of January 31, 2000, this
trial was completely enrolled with 345 patients participating. This trial
completed for primary endpoint analysis in the third quarter of 2001. As part of
the overall analysis of this lead, designated pivotal trial, and without
compromising the trial's "blinded" nature, the Company conducted an interim
analysis on the first 252 patients (of 345 total enrolled) who had an
opportunity to receive three doses of OvaRex(R) MAb as of August 1999. The
statistical analysis of this interim data set was conducted using the Cox
proportional hazard model, a method that adjusts the data set to control for
differences between OvaRex(R) MAb and placebo treated patients and for
differences within each patient population. The interim analysis indicated that
circulating levels of CA125 prior to first dose of treatment (OvaRex(R) MAb or
placebo) is a strong predictor of patients projected time to relapse (TTR), the
primary endpoint of the trial.

      In January of 2002, the Company announced final results of the primary
analysis of this trial. TTR, the primary endpoint of the trial, was determined
by the clinical investigators and subsequently evaluated further by an EMB. The
results reported reflect the EMB determinations, although they were consistent
with those of the investigators.

      The results of the overall analysis of all 342 treated patients did not
reveal a significant difference in TTR between active and placebo treatment, the
primary endpoint evaluation. Further analysis did reveal that the results were
discordant in the United States and Canadian studies, which together comprised
the overall phase IIb trial as accepted by the FDA. After a quality review of
dosing, data management, medical practices and risk factors for early relapse,
it was determined that there was a single predominant difference accounting for
the results between the United States and Canada: Canadian patients were less
optimally managed or had more severe disease than their United States
counterparts prior to administration of study drug (OvaRex(R)MAb or placebo).
Accordingly, an analysis of U.S. patients who had received at least four doses
of OvaRex(R) MAb or placebo and who had a median or greater level of CA125 at
initiation of OvaRex(R) MAb or placebo treatment resulted in a statistically
significant difference (p=0.055) between OvaRex(R) MAb treatment as compared
with placebo (non-significant in Canada).

      The Company subsequently re-analyzed the combined phase IIb trial results
on the basis of certain pre-defined risk factors. Major risk factors impacting
outcome included residual tumor following primary surgery, CA125 levels prior to
the third cycle of primary chemotherapy, and CA125 levels at the initial dose of
OvaRex(R) MAb. These new analyses involved the most impactful prognostic factors
and demonstrated a six- to ten-month prolongation in time to disease relapse for
OvaRex(R) -treated patients (as compared to placebo) in 29%-48% of the 345
patients in the study. These well-defined populations demonstrated a 19-41%
reduced risk of relapse for OvaRex(R) patients (as compared to placebo). A
decreased risk of relapse of 20-25% is generally considered clinically
significant by practicing physicians.

      Importantly, OvaRex(R) MAb treatment in all trials, including the
345-patient study, demonstrates a benign safety profile and no diminution of
quality of life as compared with placebo (in two double-blind placebo-controlled
trials) with a validated quality of life instrument.

      In summary, the analysis of the 345-patient phase IIb study demonstrated
clinical benefit in the OvaRex(R) MAb treatment group in populations
characterized by available CA125 antigen coupled with a more indolent set of
risk factors. These analyses are important for considering the broadest
enrollment criteria for a confirmatory randomized study to be conducted by
Unither for its territories and by the Company and its other collaborators in


                                       16

<PAGE>
Europe, and have identified a well-defined population characterized by an unmet
medical need coupled with a highly favorable OvaRex(R) MAb risk to benefit
profile.

      55-Patient Double Blind Placebo-Controlled Trial in Late Watchful Waiting

      The Company has also completed a small double-blind placebo-controlled
phase II trial in an ovarian cancer population in late "watchful waiting".
Unlike patients in the lead 345-patient trial, those involved in this study were
in "biochemical relapse" on entry into the study, as defined by elevated CA125
levels but no measurable tumor. This supportive and well-controlled 55-patient
trial was completed for primary endpoint analysis (time to disease relapse,
immune responders vs. non-responders, p<.001), with results first released in
July 2001. In light of the findings from the 345-patient study, the Company
undertook new analyses of time to disease relapse from its 55-patient controlled
trial, and reported these findings in March 2002. Consistent with the results of
the 345-patient trial in the well-defined group referred to above, and when
taking into consideration risk factors associated with early relapse, there is a
demonstrable but not significant benefit associated with OvaRex(R) MAb treatment
(10.8 months for OvaRex(R) versus 6.9 months for placebo). While this outcome is
not statistically significant (largely due to smaller trial size), it
demonstrates consistency and the Company expects it should provide a positive
contribution to the integrated analysis for regulatory approval of OvaRex(R)
MAb.

      102-Patient Controlled Trial in Watchful Waiting

      The Company announced initial results from a 102-patient OvaRex(R) dosing
regimen study in the same population as the lead 345-patient trial in May 2002.
In this study, three dosing regimens are being compared for immune responder
time to relapse and safety, including the dosing regimen used in the 345-patient
study. Results to date indicate that the dosing schedule used in the 345-patient
study is optimal for generating humoral and cellular responses.

      Open Label Recurrent Disease Trials

      The management of patients who are outside the well-defined populations,
generally patients who are less responsive or refractory to primary therapy or
those who have relapsed disease, may necessitate the use of OvaRex(R) in
conjunction with other therapeutic modalities. Favorable preliminary data on the
clinical application of OvaRex(R) concurrent with chemotherapy in an open trial
(20 patients) in relapsed disease was presented in March 2002. In this study,
OvaRex(R) T cell responders demonstrated a significant benefit over
non-responders in time to disease progression (p<0.0001) and survival (p=0.008).

      The Company has conducted one other prospective open label phase II
clinical trial as well as the retrospective German study in patients with more
advanced, relapsed or chemotherapy refractory ovarian cancer. Generally,
OvaRex(R) administration can induce robust immunity in the presence of tumor
burden that can be maintained during subsequent chemotherapy, and the activity
of chemotherapy can be preserved when administered concurrently with OvaRex(R)
MAb.

   BREVAREX(R) MAB

      The Company is also developing a cancer therapeutic based on its platform
technology for the treatment of MUC1 expressing cancers including multiple
myeloma, lung and prostate cancer. Tumor marker MUCI, also known as CA15.3, is
present in a specific form in a majority of individuals with multiple myeloma
(Treon et. al., Blood, 1999).

      The Company completed a phase I trial of BrevaRex(R) MAb in 17 late-stage
cancer patients with substantial tumor burden. In this trial, the Company
monitored safety and immunological parameters. Treatment with BrevaRex(R) MAb
was well tolerated and without significant treatment associated toxicity. In
addition, immune responses were induced to both the antibody and the tumor
associated antigen MUCI, to which BrevaRex(R) MAb is targeted. These immune
responses are consistent with the Company's understanding of its proprietary
mechanism for using a low dose foreign antibody to induce immunity in cancer
patients. Further clinical study will be conducted as determined by Unither for
the licensed territories and as resources allow for the Company for its
territories.


                                       17

<PAGE>
   OTHER ANTIBODIES

      The relationship between a particular antibody and its associated target
antigen, and overlap among antibodies and antigens is depicted in the following
chart:

                           Company Antibody Platform

<TABLE>
<CAPTION>
                                     % Patients Expressing Target Antigen(1)
                         ---------------------------------------------------------------
             Antibody:   BrevaRex(TM)   OvaRex(R)    AR 54   GivaRex(TM)   ProstaRex(TM)
Disease:     Antigen:       MUC1          CA125     TAG 72     CA19.9         PSA
<S>           <C>           <C>           <C>        <C>         <C>           <C>
----------------------------------------------------------------------------------------
Ovarian                     65%           97%        53%         --            --
Breast                      95%           14%        27%         --            --
Lung                        70%           33%        52%         --            --
Pancreas                    --            67%        38%         92%           --
Stomach                     --            --         55%         60%           --
Colorectal                  --            --         67%         58%           --
Prostate                    --            --         --          --            85%
----------------------------------------------------------------------------------------
</TABLE>

      ----------------

      NOTE:

      (1)   Data in the above table are derived from the following sources:
            American Cancer Society, 2000 Cancer Facts & Figures; Montz, F.J.
            CA125, in Serological Cancer Markers (S. Sell, ed.), Humana Press,
            Totowa, 1992, 99. 417-427; Kenemans, P. et al. CA125 in
            Gynecological Pathology - a review, Eur. J. Obst. Gyn. Reprod. Biol.
            49, 115-124, 1993; Hayes, D.F. et al. Clinical Applications of
            CA15-3, in Serological Cancer Markers (S. Sell, ed.), Humana Press,
            Totowa, 1992, pp. 281-307; Treon, S.P. et al. The MUC-1 epitope
            CA27.29 is expressed on myeloma cells, circulates at elevated levels
            and shows a relationship to disease activity in multiple myeloma
            patients. Blood, 2000, in press; Schlom, J. et al. TAG-72 as a Tumor
            Marker, in Serological Cancer Markers (S. Sell, ed.), Humana Press,
            Totowa, 1992, pp. 387-416; Thor, A. et al., J. Natl. Cancer Inst.
            76, 995-1006, 1986; Gero, E.J., et al., J. Clin. Lab. Anal. 3,
            360-369, 1989; Lamerz, R. CA19-9, GICA (Gastrointestinal Cancer
            Antigen), in Serological Cancer Markers (S. Sell, ed.), Humana
            Press, Totowa, 1992, pp. 309-339; Ming Chu T. Prostate-Specific
            Antigen in Serological Cancer Markers (S.Sell, ed.), Humana Press,
            Totowa, 1992, pp. 99-115; Stenman, U.H. et al., Cancer Res. 51,
            222-226, 1991; Christensson, A. et al., J. Urol. 150, 100-105, 1993.


OVERVIEW TO REGULATORY APPROVAL PROCESS

   Regulatory Requirements

      Regulations imposed by governmental authorities in Canada and the United
States, as well as their counterparts in other countries, are a significant
factor in the conduct of the research, development, manufacturing and eventual
marketing activities for the Company's proposed products. In Canada, these
activities are regulated by the Food and Drug Act and the rules and regulations
promulgated thereunder, which are enforced by the TPP of Health Canada. Drugs
and biological products are subject to rigorous regulation by the FDA in the
United States and by EMEA in Europe. The regulatory processes in Canada, the
United States and Europe follow similar essential steps although timing and
results may be different.

      The regulatory process for the development and approval of a new drug
includes the conduct of preclinical and clinical trials. The duration of those
trials and number of subjects required to meet the requirements of the various
authorities may vary according to, among other things, the disease studied, the
seriousness of the side


                                       18

<PAGE>
effects, whether there is any current or conventional therapy, the size of the
target population, and the nature of the proposed treatment.

   Preclinical Evaluation

      The purpose of preclinical evaluation is essentially to determine the
safety, pharmacokinetics and efficacy of a new drug in animals before it is
administered to humans. The data collected during preclinical studies must be
presented in the form of an IND application to the regulatory authorities in the
country where clinical trials will be conducted. In the United States and
Canada, unless otherwise notified, clinical trials may begin 30 days after the
IND application is filed.

   CLINICAL TRIALS

   Phase I Clinical Trials

      Phase I clinical trials are commonly performed in healthy human subjects
or, more rarely, in selected patients with the targeted disease or disorder. The
objective of these trials is to study the pharmacokinetics and pharmacodynamics
of the drug, as well as the toxicity of the treatment and the patient's
tolerance to it. Data regarding the absorption, distribution, metabolism and
excretion of the drug is also compiled in phase I clinical trials.

   Phase II Clinical Trials

      In phase II clinical trials, preliminary evidence is sought regarding the
pharmacological effects of the drug and the desired therapeutic efficacy with a
small number of patients with the targeted disease. At this stage, efforts are
made to evaluate the effects of various dosages and to establish an optimal
dosage level and dosage schedule. Additional safety data may also be compiled
from these trials.

      Phase IIb (sometimes called phase II/III) trials can be undertaken for
serious or fatal diseases and consist of well-controlled trials to evaluate
efficacy (and safety) in patients with the disease or condition to be treated,
diagnosed or prevented which may be deemed to be pivotal. Phase IIb trials can
lead to both full and accelerated approval by the FDA of the product for
commercial sale conditional upon the completion of subsequent post-market
information studies. Phase IIb trials incorporate certain design and control
features of phase III trials. If data collected from phase IIb trials is
statistically significant, authorization for approval may be sought.

   Phase III Clinical Trials

      The phase III clinical development program generally consists of expanded,
large-scale studies of patients with the targeted disease or disorder so as to
obtain definitive statistical evidence of the efficacy and safety of the
proposed product and dosing regimen in comparison with standard therapy.

      After an appropriate analysis, the TPP, FDA or EMEA may interrupt clinical
trials at any stage if the drug has a clear efficacy advantage or,
alternatively, if the health of the subjects is threatened or the side effects
are not compensated for by the drug's benefits.

   REGULATORY APPROVAL

      Once phase III clinical trials (or in certain circumstances phase IIb
clinical trials) have been completed, the applicant will compile all results, as
well as all information concerning the product and its composition, synthesis,
manufacture, packaging and labeling methods, for the purpose of obtaining
approval to market the product. This application is known either as a New Drug
Application ("NDA") or a Biologics License Application ("BLA") for a
well-characterized biologic, such as a monoclonal antibody, or a combination of
a Product License Application ("PLA") and an Establishment License Application
("ELA") for all other biologicals in the United States. Subsequently (or
concurrently), an application can be made to Canada as a New Drug Submission
("NDS") and Europe as a Marketing Authorization Application ("MAA").


                                       19
<PAGE>
      Since drug manufacturing is also regulated, the applicant is required to
ensure that it complies with cGMP's, which are quality standards that require
the control of production activities, raw-material procurement, complaint
management, product recalls, labeling and promotional material. In addition to
these standards, which are common to all drugs, certain biologics are subject to
ELAs and lot by lot release agreed to by FDA to ensure batch to batch
comparability. In Europe, certain biologics are also subject to lot by lot
release.

      In certain circumstances, the FDA may expedite the development, evaluation
and marketing of new drugs used for the treatment of serious diseases for which
there is no other satisfactory treatment by granting such programs a Fast Track
designation. In Europe, the applicant may engage their rapporteur (on behalf of
the applicant) to request expedited review of their application.

   ORPHAN DRUG STATUS

      Orphan Drug designation is designed to facilitate the introduction of
drugs into the market in the United States for use in treating rare diseases or
conditions. The disease must affect fewer than 200,000 patients in the United
States. Upon obtaining marketing approval for the drug, the FDA will grant a
period of seven years during which no approval will be given to a subsequent
sponsor of the same drug product for the same indication. The only exception to
this is if a competitor can show superiority of a second product which generally
requires a head to head comparison. Written application for Orphan Drug status
must be submitted to the Office of Orphan Drug Products Development of the FDA
and must include documentation supporting the request for the particular
indication. Orphan Drug designation also allows the manufacturer to apply for
grants from the United States government to help defray the cost of the clinical
testing of the drug in the United States and may allow for faster review of
pending United States patent applications filed with the United States Patent
and Trademark Office. The Company has received Orphan Drug status for OvaRex(R)
MAb for ovarian cancer (prevalence of 191,000 patients, ACS SEER 1996-1999) in
the United States.

      Written application for Orphan Drug designation for OvaRex(R) in Europe
has been submitted to the EMEA. The submission must include: life-threatening or
debilitating nature of the condition, medical plausibility of the proposed
orphan indication, prevalence of the condition (less than or equal to 5 in
10,000) and that no satisfactory method of diagnosis prevention or treatment
exists. Once the submission is validated for content, it is evaluated by the
Committee for Orphan Medicinal Products (COMP). Upon completion of the
evaluation and adoption of its opinion, the decision is reported to the EMEA and
subsequently forwarded to the sponsor by EMEA.

   FAST TRACK DESIGNATION

      Fast Track designation is a result of the FDAMA and is intended to
facilitate development and expedite review of drugs to treat serious and
life-threatening conditions that fill an unmet medical need. It allows the FDA
to approve a marketing application for a product that shows efficacy on either a
defined clinical endpoint or a reasonably predictive surrogate endpoint. It also
allows the FDA to review the marketing submission on a rolling basis, thereby
shortening the review time. FDAMA also specifies FDA's ability to approve
marketing applications based on one well-controlled trial if sufficient
supporting data are available.

      In December 1998, the Company received FDA Fast Track designation for
OvaRex(R) MAb for the treatment of late stage ovarian cancer in-patients
following primary treatment with surgery and chemotherapy.

STRATEGIC ALLIANCES AND LICENSE AGREEMENTS

      As part of its business strategy the Company intends to seek to enter into
strategic relationships with collaborators to commercialize products and to
participate in and finance the later stage development of products. The
Company's current alliances are described below.

   UNITED THERAPEUTICS CORPORATION

      The Company entered into the License Agreement with Unither, a
wholly-owned subsidiary of United, for the development of five monoclonal
antibodies that activate the immune system to treat cancer. Under the terms of
the License Agreement, the Company has granted to Unither an exclusive,
non-transferable (except in limited


                                       20

<PAGE>
circumstances) royalty bearing license (the "License") throughout the world
(other than the member nations of the European Union as of April 17, 2002 and
other specified jurisdictions) to use the Company's intellectual property with
respect to the five antibodies (the "Licensed Technology").

      The Company and Unither have agreed to work together for a period of up to
240 days commencing on April 17, 2002 (the "Initial Assessment Period") for the
purposes of assessing all aspects of the development of the Licensed Technology
conducted by or on behalf of the Company prior to April 17, 2002 and to develop
solutions and strategies going forward with respect to all aspects of the
successful development of the Licensed Technology. During the Initial Assessment
Period, Unither will fund all reasonable and direct ongoing development costs
incurred by either the Company or Unither in accordance with the License
Agreement with respect to developing the Licensed Technology, according to a
budget approved by Unither. If Unither does not provide written notice to the
Company of its decision to proceed with the development of the Licensed
Technology prior to the end of the Initial Assessment Period, then the Company
may, in its discretion, terminate the License upon 15 days' advance written
notice to Unither, unless Unither issues such notice of intention to the Company
within that 15 day period. Upon 15 days' written notice to the Company at any
time during the Initial Assessment Period, Unither may terminate the License.

      Unither has agreed to use commercially reasonable efforts to develop,
market and commercialize such products in the licensed territory utilizing the
Licensed Technology as Unither determines are commercially feasible, including
the conduct of related research, development and pre-clinical and clinical
trials and obtaining all necessary regulatory approvals. If Unither elects to
proceed with the development of the Licensed Technology, the License will
continue and Unither will be solely responsible for the development of the
Licensed Technology, including the commercialization of the five antibodies in
the licensed territory. In particular, Unither has agreed to pay the Company
certain amounts based upon the achievement of specified milestones together with
royalties based upon sales of products utilizing or incorporating the Licensed
Technology sold in the licensed territory. The Company has granted Unither a
right of first refusal to any other technology developed by the Company for
application in the field of cancer.

      Concurrently with the execution and delivery of the License Agreement, the
Company and United entered into the Subscription Agreement pursuant to which
United purchased 4,900,000 Common Shares of the Company at a price of U.S. $0.50
per share for total proceeds to the Company of U.S. $2,450,000. In addition, the
Company issued to United the First Debenture in the principal amount of U.S.
$50,000, which is convertible into 100,000 Common Shares at a price of U.S.
$0.50 per share. The Company has also issued to United the Warrant to purchase
3,250,000 Common Shares at a price of U.S. $.50 per share. The Warrant may only
be exercised in full and must be exercised on or before August 20, 2002.
Pursuant to the Subscription Agreement, the Company granted to United the right
to purchase the Second Debenture in the principal amount of U.S. $875,000.
Subject to receipt of approval by the Company's shareholders, U.S. $441,690 of
the principal amount of the Second Debenture is automatically convertible into
883,380 Common Shares upon the issuance of the Second Debenture. United's right
to purchase the Second Debenture expires on August 14, 2002. If United does not
exercise the Warrant on or before August 20, 2002 or does not purchase the
Second Debenture on or before August 25, 2002, then the Company may terminate
the License Agreement immediately upon written notice to Unither.

   GENESIS PHARMA, MEDISON PHARMA AND DOMPE FARMACEUTICI

      In June and July 2000, the Company announced the signing of memoranda of
understanding with Genesis Pharma S.A. ("Genesis Pharma") and Medison Pharma
Ltd. ("Medison Pharma"), respectively, to establish joint ventures for the
commercialization of OvaRex(R) MAb and other cancer therapeutics of the Company.
In April 2002 a definitive agreement was signed with Medison Pharma for the
establishment of a joint venture covering the territories of Israel and the
Middle East. The memorandum of understanding with Genesis Pharma covers the
territories of Greece, Turkey, Cypress and the Balkans. Under the agreement
contemplated by the memorandum of understanding with Genesis Pharma and the
agreement with Medison Pharma, the Company would supply the joint venture
entities with clinical drug supply while those entities would be responsible for
any local development costs. Genesis Pharma and Medison Pharma would utilize
their sales forces and provide infrastructure for distribution of the Company's
products upon receipt of regulatory approval of such products. The resulting
profits of the joint ventures from product commercialization would be shared
equally by the parties. As part of these arrangements, the


                                       21

<PAGE>
Company issued 18,512 Common Shares to Medison Pharma and an affiliate and
18,750 Common Shares to principals of Genesis Pharma in August 2000, for
aggregate gross proceeds of approximately $300,000.

      On November 15, 2000, the Company entered into a memorandum of
understanding with Dompe Farmaceutici S.p.A. ("Dompe") to establish a strategic
business alliance for the commercialization of OvaRex(R) MAb in a territory that
includes Italy, Spain, Portugal, Switzerland, Austria and certain Eastern
European countries. Under the terms of the memorandum, the Company is
responsible for global product development and registration. Dompe becomes
responsible for certain OvaRex(R) MAb clinical trial obligations, including
clinical trial costs, and for product marketing, sales and distribution of
OvaRex(R) MAb in the territory. The Company and Dompe will share profits after
expenses as contemplated in the memorandum. Dompe purchased 3,522,727 Common
Shares on a private placement basis at a price of Cdn$2.20 per share, on
December 22, 2000. In addition, Dompe has an option to purchase an additional
U.S. $5,000,000 in Common Shares on a private placement basis concurrent with a
future United States public offering of Common Shares based on the then current
market price, subject to regulatory approval. Additionally, Dompe agreed to pay
up to U.S. $1,250,000 upon the commercialization of OvaRex(R) MAb in Spain and
Portugal. In June 2001, Dompe entered into an agreement with FAES S.A. ("FAES")
of Spain whereby FAES agreed to commercialize OvaRex(R) MAb in Spain and
Portugal. FAES invested in the Company's June 2001 Special Warrant offering and
the Company has agreed with Dompe that the investment by FAES satisfied Dompe's
milestone obligation to AltaRex for commercialization of OvaRex(R) MAb in Spain
and Portugal.

   EPIGEN INC.

      In June 2001, the Company announced the signing of a memorandum of
understanding to establish, subject to demonstrating proof-of-principle, a joint
collaboration with Epigen for the research and development of antibody-based
treatments for cancers associated with the HCA. HCA is Epigen's proprietary
antigen that appears in circulation in early stage disease and is associated
with the vast majority of epithelical cancers including ovarian, prostate,
breast and non-small cell lung cancers.

      Epigen brings to the collaboration the antigen HCA and a series of foreign
monoclonal antibodies specific to HCA. The Company brings to the collaboration
its proprietary dendritic cell assay that will be utilized to evaluate which, if
any, of Epigen's antibodies are capable of inducting beneficial immune responses
against the target antigen. Additionally, the Company will contribute a license
to its intellectual property related to its ability to elicit immune system
responses against a targeted antigen in circulation, the mechanism the companies
believe is operable.

   ALBERTA RESEARCH COUNCIL, INC.

      The Company has licensed a family of four United States issued patents and
foreign counterparts from the Alberta Research Council, Inc. ("ARC"). These
patents allow the Company to extend its technology to the development of
treatments in the area of autoimmune/inflammatory disease, such as multiple
sclerosis, Crohn's disease and allergy/asthma.

   DRAXIMAGE INC.

      The Company is a party to an alliance agreement with Frosst
Radiopharmaceuticals (a division of Merck Frosst Canada Inc.) dated February 20,
1996 and assigned to Draximage Inc. ("Draximage"), a wholly-owned subsidiary of
Draxis Health Inc. ("Draxis Health"), by agreement dated August 1, 1997 (the
"Draxis Alliance Agreement"). Under the Draxis Alliance Agreement, the Company
and Draximage agreed to collaborate on the manufacture of pilot and scale-up
batches of OvaRex(R) MAb. Draximage agreed to manufacture (fill/finish) vials of
OvaRex(R) MAb for clinical trials at a fixed price per vial and may have certain
rights with respect to the manufacture and/or marketing of the OvaRex(R) MAb
drug in Canada for commercial purposes. There are various conditions to be
fulfilled by the parties before such manufacturing and/or marketing can
commence.

   UNIVERSITY OF ALBERTA AND THE NOUJAIM INSTITUTE

      In 1998, the Company entered into a three year collaborative research
agreement (the "NI Research Agreement") with the University of Alberta and its
Noujaim Institute for Pharmaceutical Oncology Research (the


                                       22

<PAGE>
"Noujaim Institute"). Under the NI Research Agreement, the Noujaim Institute
performed research on behalf of and at the direction of the Company in the
development of tumor binding agents and therapeutic compositions. During the
term of the NI Research Agreement the Company compensated the University for
services rendered in an amount up to $300,000 per year. The NI Research
Agreement terminated on March 31, 2000. The Company may also owe to the
University a nominal royalty on any net sales (as defined in the NI Research
Agreement) derived from a prostate cancer immunotherapeutic composition
developed under the NI Research Agreement.

   ALBERTA HERITAGE FOUNDATION AGREEMENT

      The Alberta Heritage Foundation for Medical Research ("AHFMR") is a
foundation established by the Government of the Province of Alberta to support
medical research in the Province of Alberta. AHFMR contributed $500,000 to the
funding of the current Canadian double blind placebo-controlled trial of
OvaRex(R) MAb pursuant to an agreement dated March 1, 1997 (the "AHFMR
Agreement"). The Company is required to pay to AHFMR on an annual basis an
amount equal to the lesser of 5% of the gross product sales (as defined in the
AHFMR Agreement) received from commercialization of OvaRex(R) MAb and $100,000.
The maximum total payments by the Company under the AHFMR Agreement are $1
million.

   BIOMIRA LICENSE AGREEMENT

      The Company holds an exclusive worldwide license from Biomira Inc.
("Biomira") for the use of the murine working hybridoma cell bank and murine
antibody MAb-B43.13 (the "B43 Technology") for all anti-idiotype induction
applications and products, as well as for the use of such related experimental
and clinical data for anti-idiotype induction applications and products.
MAb-B43.13 is the functional component of the OvaRex(R) MAb product.

      The Company obtained the license from Biomira pursuant to a license
agreement dated November 24, 1995 (the "Biomira License Agreement"). Under the
terms of the Biomira License Agreement:

      -     The Company paid an up-front fee of $150,000;

      -     The Company agreed to use its best efforts to commercialize the B43
            Technology;

      -     The Company agreed to and did spend $3,000,000 to develop the B43
            Technology from December 1, 1995 to December 1, 1999; and

      -     The Company agreed to pay a royalty to Biomira on the sale of any
            products developed using the B43 Technology as set out in the
            Biomira License Agreement.

      The Biomira License Agreement only pertains to the products that will
potentially use MAb-B43.13 or a derivative thereof. Products developed by the
Company, which do not incorporate the B43 Technology, are not subject to the
Biomira License Agreement.

   BIOMIRA SETTLEMENT

      In February 1999, Biomira commenced legal action against the Company and
certain individuals affiliated with the Company asserting Biomira's ownership of
an invention disclosed in an international patent application filed by the
Company. In March 1999, the Company filed suit against Biomira seeking a
declaratory judgment concerning the terms of a license agreement between the
companies and for certain breaches of contract. On September 3, 1999, the
Company and Biomira Inc. announced that they had reached a settlement with
respect to issues that were the subject of litigation between the two
biotechnology companies. In addition to the termination of the respective
lawsuits the settlement included the following:

      -     The license agreement that was the subject of the Company's suit
            against Biomira was amended and restated to clarify certain terms of
            the agreement that had given rise to issues raised by each of the
            parties.

                                       23
<PAGE>
         -        Biomira agreed to assign to the Company any interest Biomira
                  might have in the patent application that was the subject of
                  Biomira's lawsuit against the Company. The Company granted to
                  Biomira a royalty-free, non-exclusive license, if and when
                  this patent issues, in relation to antigen-based or idiotypic
                  cancer vaccines. This agreement will also extend to two
                  additional antibodies, one of which will be royalty-bearing to
                  the Company.

         -        The Company has paid, on behalf of Biomira, a $4.2 million
                  repayment of Biomira's liability to Industry Canada, an agency
                  of the Canadian government, under a 1991 contribution
                  agreement. The Company will similarly fund a $250,000
                  liability to the Alberta Government, under a separate
                  contribution agreement, upon successful commercialization of
                  OvaRex(R) MAb. Both governments had financially supported
                  research and development work at Biomira, and Biomira Research
                  Inc., that ultimately principally benefited the Company. As a
                  result of the above, the Industry Canada agreement has been
                  terminated.

MANUFACTURING

      The Company has entered into a non-binding agreement with Abbott
Laboratories for the remaining development, scale-up, process validation and
clinical and commercial supply of OvaRex(R) MAb. The Company and Unither are
currently evaluating whether Unither will continue with Abbott, select an
alternative commercial manufacturer, or manufacture on its own.

HUMAN RESOURCES

      As of the end of May 2002, the Company expects to have 14 employees, 4 of
whom will be located at the Company's location in Edmonton, Alberta and 10 of
whom will be located at the Company's executive office in Waltham,
Massachusetts. Of these 14, the Company expects 7 employees will be working in
research and product development, with 4 of the 7 holding PhD's and 1 Doctor of
Veterinary Medicine.

      None of the employees are governed by a collective bargaining agreement.
The Company believes that working relationships with its employees are
excellent.

      As part of the license agreement with Unither, in May 2002, approximately
14 employees of the Company became employees of Unither.

LEASED PROPERTIES

      The Company's research and development facility is located at 1134
Dentistry Pharmacy Building, University of Alberta, Edmonton, Alberta T6G 2N8
which, as of July 2000, includes the Company's Canadian office. The Company's
executive offices are located at 610 Lincoln Street, Waltham, Massachusetts
02451. The Company leases each of the above premises.

      The Canadian lease is for a term of five years, terminating on July 31,
2002. On August 1, 2002, the lease for this facility will become the
responsibility of another research company and the Company will sub-lease a
portion of such space from that company. The United States lease is for a term
expiring on August 31, 2002. The Company is currently evaluating alternatives
for the United States office space upon the expiration of this lease. The total
lease costs under leases for the Company's lab and office space, net of the
impact of a sub-lease for a portion of the United States offices, were
approximately $500,000 for the fiscal year ended December 31, 2001.

COMPETITION

      The biopharmaceutical industry is intensely competitive. Many companies,
including other biopharmaceutical companies and biotechnology companies, are
actively engaged in activities similar to those of the Company, including
research and development of drugs for the treatment of cancer. More
specifically, competitors for the development of new therapeutic products to
treat cancer also focus on MAb-based cancer therapeutics, cancer vaccines and
other approaches that are based on either stimulation of the body's own immune
response or on MAbs. Many of these companies have substantially greater
financial and other resources, larger research and


                                       24
<PAGE>
development capabilities and more extensive marketing and manufacturing
organizations than the Company. In addition, some such companies have
considerable experience in preclinical testing, clinical trials and other
regulatory approval procedures. There are also academic institutions,
governmental agencies and other research organizations which are conducting
research in areas in which the Company is working; they may also market
commercial products, either on their own or through collaborative efforts.

      The Company expects to encounter significant competition for the
pharmaceutical products it plans to develop. Companies that complete clinical
trials, obtain required regulatory approvals and commence commercial sales of
their products before their competitors may achieve a significant competitive
advantage. In addition, certain pharmaceutical and biotechnology firms,
including major pharmaceutical companies and specialized structure-based drug
design companies, have announced efforts in the field of immunological therapy
that exploit the presence of TAAs, and the Company is aware that other companies
or institutions are pursuing development of new drugs and technologies directly
targeted at applications for which the Company is developing its
biopharmaceutical products.

      Based on its review of the industry, the Company is not aware of any other
company that is focusing on its technology. There are a number of companies
however, that focus on the broader use of antibodies to treat various diseases.
These companies include Genentech, IDEC, Medarex Inc. and Antisoma plc among
others. The Company expects that its platform technology will attract
significant additional competitors over time. In order to compete successfully,
the Company's goal is to develop proprietary positions in patented drugs for
therapeutic markets which have not been satisfactorily addressed by conventional
research strategies and, in the process, extend its expertise in
biopharmaceutical product design.

PROPRIETARY PROTECTION

      The Company vigorously pursues a policy of seeking patent protection to
preserve its proprietary technology and its right to capitalize on the results
of its research and development activities and, to the extent it may be
necessary or advisable, to exclude others from appropriating its proprietary
technology. The Company also relies upon trade secrets, know-how, continuing
technological innovations and licensing opportunities to develop and maintain
its competitive position. The Company plans to prosecute and defend its
intellectual property, including any patents that have issued or may issue, and
proprietary technology. The Company regularly searches for third-party patents
in its fields of endeavor, both to shape its own patent strategy as effectively
as possible and to identify licensing opportunities.

     PATENTS

      In general, the Company pursues a policy of obtaining patent protection
both in the United States and in selected foreign countries for subject matter
considered patentable and important to its business. In addition, a portion of
the Company's proprietary position is based upon the use of technology and
products the Company has licensed from others, including the master cell bank
licensed from Biomira for OvaRex Mab (OvaRex(R)). The license agreement
generally requires the Company to pay royalties upon commercialization of
products covered by the licensed technology.

      The Company owns 17 pending or provisional United States patent
applications for its therapeutic products and processes, most of which have been
or will be filed in countries throughout the world. These patent applications
cover various aspects of the Company's core technology products, processes, and
the methods for their production and use. These patent applications include both
broad and specific claims to various tumor therapies. The Company will continue
to aggressively protect its technology with new patent filings with the intent
of further extending its patent coverage.

      The Company has been granted two patents by the United States Patent and
Trademark Office including a patent which covers the Company's novel technology
of administering a low-dose foreign antibody (OvaRex(R) MAb) to any patient
whose cancer expresses the target antigen (CA125) and thereby activating an
anti-tumor response unique to that individual. In addition, the Company has been
issued patents by each of the Australian, South African, and New Zealand patent
offices, which broadly cover its technology platform.


                                       25
<PAGE>
     TRADEMARKS AND TRADE NAMES

      The Company also relies upon trademarks and trade names to protect its
technology. In the United States, the Company has a registered trademark for its
AIT(R) mark and its OvaRex(R) and BrevaRex(R) marks as well as pending
applications for the brand names related to its other developing products. In
addition, the Company has received registration and has pending applications for
registration of its marks and names in other jurisdictions.

     TRADE SECRETS

      The Company also relies in part on trade secrets, unpatented know-how and
continuing technological advancements to maintain its competitive position. It
is the practice of the Company to enter into confidentiality agreements with
employees, consultants and corporate sponsors. There can be no assurance,
however, that these measures will prevent the unauthorized disclosure or use of
the Company's trade secrets and know-how.

SCIENTIFIC ADVISORY BOARD

      The Scientific Advisory Board of the Company is composed of
internationally recognized scientists. The Board meets to review the operational
aspects of the Company's technology and discovery research programs. With the
exclusion of Dr. Noujaim, upon a meeting of the Scientific Advisory Board,
members receive an honorarium of U.S. $5,000 plus additional per diem amounts as
outlined in their agreements with the Company.

<TABLE>
<CAPTION>
Name                                        Institution
----                                        -----------
<S>                                         <C>
Antoine Noujaim, Ph.D.                      Chief Scientific Officer of AltaRex

Jeffrey Schlom, Ph.D.                       National Cancer Institute at the
                                            National Institutes of Health, USA

Dean Mann, M.D., Ph.D.                      University of Maryland, USA

Hans Wigzell, M.D., D.Sc.                   Karolinska Institute, Sweden
</TABLE>

ITEM 5:  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

      The following discussion and analysis explains trends in the Company's
financial condition and results of operation for the years ended December 31,
2001, 2000, and 1999. This discussion and analysis should be read in conjunction
with the financial statements and the related notes included elsewhere in this
document. The financial statements have been prepared by management in
accordance with accounting principles generally accepted in Canada.

OVERVIEW

      The Company's business is the research, development and commercialization
of biopharmaceutical products for the treatment of cancer and other diseases.
Substantially all of the Company's products are subject to regulation by the
Therapeutic Products Programme ("TPP") of Health Canada in Canada, the Food and
Drug Administration ("FDA") in the United States, the European Agency for the
Evaluation of Medicinal Products ("EMEA") in Europe and similar agencies in
other countries. None of the Company's products have been approved by regulatory
agencies for sale to date. The Company has not been profitable since inception
and expects to continue to incur substantial losses in continuing the research,
development and clinical trials of its products. The Company does not expect to
generate significant revenues until such time as, and unless, its therapeutic
products are approved by the various regulatory agencies and become commercially
viable.

ACQUISITION AND AMALGAMATION

      Effective July 17, 1996, the Company (at that time known as Allrich Energy
Group Inc.) acquired all of the outstanding shares of AltaRex Inc. for a
purchase price satisfied through the issue of 1.9 million of the Company's
Common Shares. These shares gave AltaRex Inc.'s shareholders a controlling
interest in the Company and


                                       26
<PAGE>
effectively constituted a reverse take-over by the shareholders of AltaRex Inc.
At the time of acquisition, Allrich was an inactive public company. The purpose
of the acquisition was to realize funds associated with a private placement and
special warrant offering that were completed at that time and to provide future
access to public market funding. Effective May 31, 1997, the Company amalgamated
with AltaRex Inc. and continued under the name of AltaRex Corp.

RESULTS OF OPERATIONS

      Through the Company's predecessor AltaRex, Inc., the Company commenced
operations on December 1, 1995 and completed its first full year of operations
on December 31, 1996. As of December 31, 2001, the Company has incurred
cumulative losses of $95.7 million. This includes annual losses of $33.8
million, $17.7 million, $24.0 million, $13.1 million, and $4.7 million for the
years ended December 31, 2001, 2000, 1999, 1998 and 1997 respectively, and a
loss of $2.4 million for the period from inception on December 1, 1995 to
December 31, 1996. These losses are primarily due to the cost of clinical and
product development activities, supporting efforts in product commercialization
and the settlement of outstanding litigation in 1999.

      On April 17, 2002, the Company entered into a license agreement with
Unither, a subsidiary of United Therapeutics Corporation, for the development of
OvaRex(R) MAb and four other monoclonal antibodies. Under the terms of this
agreement, Unither received exclusive rights for development and
commercialization of the products worldwide, with the exception of rights
retained by the Company to the European Union and certain other countries.
Unither will be responsible for the costs of clinical trials, manufacturing and
other development expenses for each product in the licensed territories and will
pay development milestone payments and royalties from product sales to the
Company. Pursuant to the agreement, in May 2002 a number of employees of the
Company became employees of Unither. As a result of this transaction, the
Company expects that its research and development costs and supporting general
and administrative costs will decrease significantly in 2002.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

REVENUES

      Revenue for the year ended December 31, 2001, consisting of interest
income, totaled $0.5 million an increase of $0.1 million from $0.4 million for
the year ended December 31, 2000. The increase is due to higher average levels
of cash and short-term investments in the year ended December 31, 2001 as
compared to the same period in the prior year.

EXPENSES

      Expenses for the year ended December 31, 2001 increased by $16.2 million,
from $18.1 million for the year ended December 31, 2000 to $34.3 million for the
year ended December 31, 2001. Research and development expenses increased by
$14.9 million, from $12.0 million for the year ended December 31, 2000 to $26.9
million for the year ended December 31, 2001. This increase is due to an
increase of $10.6 million in manufacturing development costs as the Company
worked with Abbott Laboratories and others to complete the development and
scale-up of the manufacturing of cell culture based OvaRex(R) MAb, and an
increase of $4.0 million in clinical trial costs due largely to a now fully
enrolled 102 patient OvaRex(R) MAb trial (commenced in September 2000) and the
primary endpoint analysis of the Company's 345 patient OvaRex(R) MAb phase IIb
trial (completed in September 2001). General and administrative expenses
increased by $1.3 million, from $6.1 million for the year ended December 31,
2000 to $7.4 million for the year ended December 31, 2001 due to additional
professional fees related to the Company's intellectual property portfolio and
other corporate matters and office expenses due to the occupancy of new office
space in the United States in October 2000.

      As a result of the Unither license agreement, the Company anticipates that
research and development expenses, and supporting general and administrative
expenses, will decrease significantly in 2002. The actual levels of research and
development and general and administrative expenditures will depend on many
factors, including the progress and results of discovery research and
preclinical studies, the cost, timing and outcome of the regulatory process, the
costs of materials, the cost of preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims, the availability and cost of required
personnel, the cash resources available to the Company and the extent to


                                       27
<PAGE>
which the Company enters into affiliations with collaborators for ongoing
research and development activities. See " -- Liquidity and Capital Resources".

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

REVENUES

      Revenues for the year ended December 31, 2000 decreased by $0.3 million,
from $0.7 million for the year ended December 31, 1999 to $0.4 million for the
year ended December 31, 2000. The decrease is due to the completion of a grant
in 1999, which contributed $65,000 to revenue in the first quarter of fiscal
1999, and to lower interest income as a result of lower average levels of cash
equivalents and short-term investments in the year ended December 31, 2000 as
compared to the year ended December 31, 1999.

EXPENSES

      Expenses for the year ended December 31, 2000 decreased by $6.6 million,
from $24.7 million for the year ended December 31, 1999 to $18.1 million for the
year ended December 31, 2000. Expenses for the year ended December 31, 1999
included $5.1 million related to the settlement of litigation. Research and
development expenses decreased by $0.8 million, from $12.8 million for the year
ended December 31, 1999 to $12.0 million for the year ended December 31, 2000.
This decrease was primarily due to operational changes made in the fourth
quarter of 1999 to focus on the development of OvaRex(R) MAb. Clinical trial and
product development costs for OvaRex(R) MAb were largely unchanged from 1999 to
2000, but such costs decreased by approximately $0.8 million for other products,
primarily BrevaRex(R) MAb, due to completion or deferral of work.

      General and administrative expenses decreased by $0.7 million, from $6.8
million for the year ended December 31, 1999 to $6.1 million for the year ended
December 31, 2000. This decrease reflects decisions made to reduce costs,
resulting in decreases in spending in many areas, particularly consulting,
professional services and travel.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

REVENUES

      Revenues for the year ended December 31, 1999 decreased by $0.3 million,
from $1.0 million in 1998 to $0.7 million in 1999. Interest income decreased by
$0.3 million, from $0.9 million in 1998 to $0.6 million in 1999, due to a lower
average balance of cash, cash equivalents and short-term investments in 1999.
Research contract revenue from government research contracts remained relatively
constant in 1998 and 1999.

EXPENSES

      Expenses for the year ended December 31, 1999 increased by $10.6 million,
from $14.1 million in 1998 to $24.7 million in 1999. Research and development
expenses increased by $3.4 million, from $9.4 million in 1998 to $12.8 million
in 1999. This increase is primarily due to the advancement and continued
expansion of the Company's clinical trial programs which included the
acceleration of and increase in enrollment in the North American OvaRex(R) MAb
lead double-blind placebo-controlled trial, the commencement of a second
double-blind placebo-controlled trial for OvaRex(R) MAb and the completion of
enrollment in the OvaRex(R) MAb open-label phase II and the BrevaRex(R) MAb
phase I trials. The increase includes costs related to production of antibody
for clinical trial purposes.

      General and administrative expenses increased by $2.1 million, from $4.7
million in 1998 to $6.8 million in 1999. This increase is due to the costs
associated with the first full year of operation of the Company's office in the
United States, the related support costs for increasing research and development
activities and increased corporate development activities and patent related
costs.


                                       28
<PAGE>
      Settlement costs of $5.1 million incurred in 1999 related to the
settlement of outstanding litigation with Biomira that pertained to the claimed
ownership of certain intellectual property rights and breaches of the Biomira
license agreement. These costs incurred included the settlement payment and
legal fees.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      At December 31, 2001, the Company had cash, cash equivalents and
short-term investments of $9.1 million. Included in these balances were
short-term financial instruments with a carrying value, including accrued
interest, of $0.8 million and $3.6 million, respectively, consisting of
obligations of Canadian federal and provincial governments as well as corporate
obligations. These instruments carry maturities of nine months or less and their
carrying value approximates fair value. These instruments have a weighted
average interest rate of 4.2%. The Company purchased such financial instruments
for investment purposes only and not for trading or speculative purposes.

      The Company's risks relative to these securities are credit risk and
interest rate risk. Regarding credit risk, the Company mitigates such risk by
investing only in federal or provincial government securities or investment
grade corporate obligations in the form of commercial paper or bankers'
acceptances. Regarding interest rate risk, exposure results from changes in
short-term interest rates or early redemption of securities. These risks are
mitigated by the short-term nature of the portfolio.

FOREIGN CURRENCY EXPOSURE

      The Company currently has a significant portion of its operations in the
United States, including the operation of its United States office and the
ongoing administration of clinical trials and development and production
activities related to the Company's products. Accordingly, a significant portion
of the Company's transactions are denominated in U.S. dollars and the Company
has an exposure risk to foreign exchange rates. The Company partially offsets
this risk by maintaining cash balances and short-term investments denominated in
U.S. currency. At December 31, 2001 the Company had $1.0 million (or 11%) of the
total cash and short-term investments invested in U.S. dollar denominated
financial instruments and cash deposits. Other than as mentioned here, the
Company does not actively engage in hedging or other activities to control the
risk of its foreign currency exposure.

LIQUIDITY AND CAPITAL RESOURCES

      Cash, cash equivalents and short-term investments totaled $9.1 million at
December 31, 2001. From the Company's inception through December 31, 2001, the
Company has financed its operations primarily through private placements and
public offerings of equity securities amounting to approximately $99.1 million,
interest income on invested balances amounting to $3.5 million and amounts
received under research contracts of $0.8 million. The Company currently has no
contributing cash flows from operations. As a result, the Company relies on
external sources of financing such as the issue of equity or debt securities,
the exercise of options or warrants and investment income.

      The Company's net cash used in operating activities amounted to $29.8
million, $16.4 million and $23.2 million for the years ended December 31, 2001,
2000 and 1999, respectively, and resulted primarily from its net operating
losses. The Company's investing activities resulted in a net provision of cash
of $2.2 million and $1.2 million, respectively, for the years ended December 31,
2001 and 2000 and a net use of cash $0.8 million for the year ended December 31,
1999.

      As a result of the License Agreement with Unither, the Company expects
that research and development expenses, and supporting general and
administrative expenses, will decrease significantly in 2002. Concurrently with
the execution and delivery of the License Agreement, the Company and United
entered into the Subscription Agreement dated April 17, 2002, pursuant to which
United purchased 4,900,000 Common Shares of the Company at a price of U.S. $0.50
per share for total proceeds to the Company of U.S. $2,450,000. In addition, the
Company issued to United the First Debenture in the principal amount of U.S.
$50,000, which is convertible into 100,000 Common Shares at a price of U.S.
$0.50 per share. The Company also issued to United the Warrant to purchase
3,250,000 Common Shares at a price of U.S. $.50 per share. The Warrant may only
be exercised in full and must be


                                       29
<PAGE>
exercised on or before August 20, 2002. Pursuant to the Subscription Agreement,
the Company granted to United the right to purchase the Second Debenture in the
principal amount of U.S. $875,000. Subject to receipt of approval by the Company
shareholders, U.S. $441,690 of the principal amount of the Second Debenture is
automatically convertible into 883,380 Common Shares upon the issuance of the
Second Debenture. United's right to purchase the Second Debenture expires on
August 14, 2002. If United does not exercise the Warrant on or before August 20,
2002 or does not purchase the Second Debenture on or before August 25, 2002,
then the Company may terminate the License Agreement immediately upon written
notice to Unither. If United exercises the Warrant and purchases the Second
Debenture, the Company believes that its available cash, cash equivalents and
short-term investments and interest earned thereon, including the United
purchase of Common Shares and the First Debenture, should be sufficient to
finance its operations and capital needs into 2003. If United does not exercise
the Warrant and purchase the Second Debenture, the Company believes its cash,
cash equivalents and short term investments and interest earned thereon would be
sufficient to finance its operations into the third quarter of 2002.

      The Company's funding needs may vary depending on a number of factors,
including the progress of its research and development programs, the number and
breadth of these programs, the results of preclinical studies and clinical
trials, the cost, timing and outcome of the regulatory process, the
establishment of collaborations, the cost of preparing, filing, prosecuting,
maintaining, defending and enforcing patent claims, the status of competitive
products and the availability of other financing.

      The Company will seek additional funding through public or private equity
or debt financings from time to time, as market conditions permit, or through
collaborative arrangements. The Company's ability to access the capital markets
or to enlist collaborators is substantially dependent on the progress of its
research and development programs and regulatory approval of its products. There
can be no assurance that additional financing will be available on acceptable
terms, if at all. If adequate funds are not available, the Company may be
required to delay, reduce the scope of, or eliminate one or more of its research
and development programs or may be required to significantly scale back or cease
operations.

ITEM 6:  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND OFFICERS

The Directors and Executive Officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME                                                POSITION(S)
----                                                -----------
<S>                                                 <C>
Richard E. Bagley(1)                                President, Chief Executive Officer and Director
Dr. Antoine A. Noujaim                              Chairman of the Board and Chief Scientific Officer
Jacques R. Lapointe                                 Vice Chairman of the Board
Bruce D. Brydon(2)                                  Director
William R. McMahan(1)(2)                            Director
Robert H. Uhl(2)                                    Director
Dr. Jim A. Wright(1)                                Director
Robert A. Newman                                    Vice President, Business Operations
</TABLE>

(1) Member of the Compensation Committee
(2) Member of the Audit Committee

Richard E. Bagley. Mr. Bagley has been the President and Chief Executive Officer
and a Director of the Company since February 23, 1998. Prior to joining the
Company, Mr. Bagley was Chairman and Chief Executive Officer of ProScript, Inc.,
a Massachusetts based biotechnology company from 1995 to 1998 and prior to that
he was President and Chief Executive Officer of ImmuLogic Pharmaceutical Company
("ImmuLogic"), a Massachusetts based publicly-owned biotechnology company. Mr.
Bagley previously held several executive positions with Bristol-Myers Squibb
Company from 1985 to 1990, including President of E.R. Squibb & Sons, U.S. and
President of SquibbMark. Prior thereto, Mr. Bagley held executive positions with
SmithKline Beecham Company from 1968 to 1985, including President of SmithKline
Consumer Products.


                                       30
<PAGE>
Dr. Antoine A. Noujaim. Dr. Noujaim is the founder, Chairman and Chief
Scientific Officer of the Company. From inception of the Company to February 22,
1998, Dr. Noujaim was also the President and Chief Executive Officer of the
Company. From 1985 to 1995, Dr. Noujaim was associated with Biomira, a Canadian
publicly-owned biotechnology company as an officer and a director. From 1994 to
1995 he was President of Biomira's subsidiary, Biomira Research. Prior to 1994
he was Senior Vice President of the Immunoconjugate Division of Biomira. Dr.
Noujaim is also Professor Emeritus of the University of Alberta, President and
Chief Executive Officer of Virexx Corp., a privately-owned biotechnology
company, and a director of Oncolytics Biotech Inc., a Canadian publicly-owned
biotechnology company. Dr. Noujaim has served as an officer or Chairman of
various scientific organizations, editorial boards and national scientific
committees and has authored more than 200 publications.

Jacques R. Lapointe. Mr. Lapointe has been a Director of the Company since May
2001 and has served as Vice Chairman since January 2002. He is recent President
and Chief Operating Officer of BioChem Pharma, Inc. (Montreal, Quebec). Mr.
Lapointe has more than 30 years of leadership and operational experience with
global biotechnology and pharmaceutical organizations. Prior to BioChem Pharma,
Mr. Lapointe was with Glaxo Wellcome plc for 12 years and held the positions of
President and CEO of Glaxo Canada as well as Glaxo Wellcome U.K. Mr. Lapointe is
a former Chairman of the Pharmaceutical Manufacturers Association of Canada
(PMCA), now known as Canada's Research-based Pharmaceutical Companies (Rx&D).

Bruce D. Brydon. Mr. Brydon has been a Director of the Company since May 2001.
Mr. Brydon served as Chief Executive Officer of Biovail Corporation from 1997 to
2001, and has served as a Director of that company since 1995. Mr. Brydon was
President and Chief Executive Officer of Biovail Corporation from 1995 to 1997.
Previously, Mr. Brydon was President, Managing Director and Chairman of the
Canadian business for Boehringer Mannheim from 1990 to 1995.

William R. McMahan. Mr. McMahan has been a Director of the Company since July
15, 1996. He has served as President of Oxbow Capital Corporation and Oxbow
Investments Inc. from 1993 to present and Director of International Marketing
for Oxbow Research Limited from 1992 to 1993. Mr. McMahan is also the Chief
Operating Officer and a Director of Oxbow Equities Corp., a mutual fund listed
on The Toronto Stock Exchange. Mr. McMahan is a Director of UltraVision, Inc.
(contact lenses) a Canadian publicly-traded company. Mr. McMahan was formerly a
Director of Abacus Software Group Inc., which was the subject of a cease trade
order of the Alberta Securities Commission issued on September 3, 1998.

Robert H. Uhl. Mr. Uhl has been a Director of the Company since April 2001. Mr.
Uhl has served as Senior Vice President and Director of Research of Leerink
Swann & Company from 1998 to present. Previously, he was Vice President and
Specialty Pharmaceutical Analyst at Salomon Smith Barney in 1998. Mr. Uhl was
Vice President and Pharmaceutical Analyst at Salomon Brothers from 1995 to 1997.

Dr. Jim A. Wright. Dr. Wright has been a Director of the Company since May 1998.
Since October 1999, Dr. Wright has been a member of the Board of Directors of
Lorus Therapeutics Inc. and serves as its President. In 1996 Dr. Wright
co-founded GeneSense Technologies Inc. and prior to the recent merger of
GeneSense and Lorus, he held various positions in GeneSense including Chairman
of the Board, President and Chief Scientific Officer. Dr. Wright has also held
positions as Professor of Microbiology, Chemistry and Molecular Biology at the
University of Manitoba, Associate Director of the Manitoba Institute of Cell
Biology, Professor of Medical Biophysics, Faculty of Medicine at the University
of Toronto and he has been a Terry Fox Senior Scientist of the National Cancer
Institute of Canada. Dr. Wright is not seeking re-election to the Company's
Board of Directors at the annual meeting of shareholders to be held in June
2002.

Robert A. Newman. Mr. Newman has served as Vice President, Business Operations
since April 2002. Mr. Newman previously served as Vice President, Clinical
Affairs and Business Development for the Company from February 2000 to April
2002. From February 1997 to May 1998 he held the position of Director of
Marketing for the Company and from June 1998 to February 2000, he held the
position of Executive Director, Business Development. Mr. Newman was Marketing
Manager, Canada for Ligand Pharmaceuticals from 1995 to 1997 and
Marketing/Program Manager for QLT Phototherapeutics 1994 to 1995.


                                       31
<PAGE>
COMPENSATION

     COMPENSATION OF EXECUTIVE OFFICERS

      The following table sets for the compensation paid to Richard E. Bagley,
Edward M. Fitzgerald, Dr. Christopher F. Nicodemus, Dr. James L. Levin, Marlene
R. Booth, Dr. Antoine Noujaim, Peter C. Gonze and Robert A. Newman (the "Named
Executive Officers") for each of the fiscal years ended December 31, 2001, 2000
and 1999. Mr. Bagley, Dr. Noujaim, Dr. Levin and Mr. Newman remain officers of
the Company.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                   LONG-TERM
                                                                                  COMPENSATION
                                                             ANNUAL COMPENSATION       AWARDS
                                                             -------------------       ------
                                                                                    COMMON SHARES       ALL OTHER
NAME AND                                                   SALARY                  UNDER OPTIONS      COMPENSATION
PRINCIPAL POSITION                               YEAR      ($)(7)        BONUS ($)    GRANTED (#)          ($)(8)
------------------                               ----      ------       ---------    -----------          ------
<S>                                              <C>      <C>          <C>           <C>                <C>
RICHARD E. BAGLEY(1)                             2001     418,905          --        350,000             10,202
    President and Chief Executive Officer        2000     401,054          --        402,500             14,934
                                                 1999     386,158          --        257,812              8,376

EDWARD M. FITZGERALD(2)                          2001     318,368          --        100,000              8,583
    Former Senior Vice President, Chief          2000     304,801          --        183,750             10,249
    Financial Officer and Secretary              1999     293,480          --         54,687              7,370


DR. CHRISTOPHER F. NICODEMUS(3)                  2001     343,502          --        100,000              8,440
    Former Senior Vice President, Clinical       2000     328,864          --        186,250             10,872
    Research and Development                     1999     290,696      14,973         54,687              7,345


PETER C. GONZE(4)                                2001     302,542          --        150,000              8,818
    Former Senior Vice President, Operations     2000     294,185          --        100,000              8,951
                                                 1999      33,115      14,365         18,750              1,304

DR. JAMES L. LEVIN(5)                            2001     287,027      37,580         40,000              8,538
    Vice President, Manufacturing and            2000     121,853          --         62,500              1,617
    Development                                  1999          --          --             --                 --

MARLENE R. BOOTH(6)                              2001     287,027      33,882         60,000              8,538
    Former Vice President, Regulatory            2000     207,945      33,356         25,000              7,690
    Affairs and Project Management               1999     120,660          --         25,000              2,335

DR. ANTOINE A. NOUJAIM                           2001     220,000          --        300,000             12,620
    Chief Scientific Officer                     2000     220,000          --        112,500             12,620
                                                 1999     220,000          --         75,000              6,777

ROBERT A. NEWMAN                                 2001     232,725          --         40,000              2,283
    Vice President,                              2000     221,652          --         56,250             16,693
    Business Operations                          1999     204,631          --         15,725             28,111
</TABLE>


NOTES:

      (1)   Perquisites and other personnel benefits did not exceed the greater
            of $50,000 and 10% of the total annual salary and bonus of the Named
            Executive Officer for the financial year.


                                       32
<PAGE>
      (2)   Mr. Fitzgerald resigned as Senior Vice President, Chief Financial
            Officer and Secretary of the Company as of May 3, 2002.

      (3)   Dr. Nicodemus resigned as Senior Vice President, Clinical Research
            and Development of the Company as of May 22, 2002.

      (4)   Mr. Gonze joined the Company on October 1, 1999 and resigned as
            Senior Vice President, Operations of the Company as of May 23, 2002.

      (5)   Dr. Levin joined the Company on July 24, 2000. The Company expects
            Dr. Levin to resign as Vice President, Manufacturing and Development
            of the Company in June 2002.

      (6)   Ms. Booth joined the Company on June 1, 1999 and left the position
            of Vice President, Regulatory Affairs and Project Management of the
            Company as of May 31, 2002.

      (7)   None of Mr. Bagley, Mr. Fitzgerald, Dr. Nicodemus, Mr. Gonze or Mr.
            Newman received an increase in annual compensation in 2001. The
            increases in their salaries noted above are due solely to changes in
            exchange rates and the effect of such changes on U.S. dollar based
            compensation.

      (8)   Compensation under the column "All Other Compensation" is with
            respect to employee benefits such as health care, life insurance, a
            group retirement savings plan and relocation benefits.


            STOCK OPTIONS GRANTED TO NAMED EXECUTIVE OFFICERS

      The following table details information with respect to the grant of
options by the Company to the Named Executive Officers during the financial year
of the Company ended December 31, 2001.

         OPTION GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR

<TABLE>
<CAPTION>
                                                                                 MARKET VALUE
                                                   % OF TOTAL                      OF COMMON
                                                    OPTIONS                         SHARES
                                       COMMON      GRANTED TO                     UNDERLYING
                                       SHARES      EMPLOYEES     EXERCISE OR    OPTIONS ON THE
                                       UNDER           IN         BASE PRICE     DATE OF GRANT
                                      OPTIONS      FINANCIAL      ($/COMMON        ($/COMMON
NAME                                 GRANTED #        YEAR          SHARE)          SHARE)          EXPIRATION DATE
<S>                                   <C>            <C>            <C>             <C>             <C>
RICHARD E. BAGLEY.............        350,000        21.8%          $3.13           $3.13                May 24, 2011
EDWARD M. FITZGERALD..........        100,000        6.3%           $3.13           $3.13                May 24, 2011
DR. CHRISTOPHER F. NICODEMUS..        100,000        6.3%           $3.13           $3.13                May 24, 2011
MARLENE R. BOOTH..............         60,000        3.8%           $3.13           $3.13                May 24, 2011
DR. JAMES L. LEVIN............         40,000        2.5%           $3.13           $3.13                May 24, 2011
DR. ANTOINE A. NOUJAIM........        300,000        18.8%          $3.13           $3.13                May 24, 2011
PETER C. GONZE................        150,000        9.4%           $3.13           $3.13                May 24, 2011
ROBERT A. NEWMAN..............         40,000        2.5%           $3.13           $3.13                May 24, 2011
</TABLE>


      The following table details information with respect to all options of the
Company held by the Named Executive Officers and outstanding on December 31,
2001. None of the Named Executive Officers exercised options in 2001.


                                       33
<PAGE>
<TABLE>
<CAPTION>
                                                                                          VALUE OF UNEXERCISED
                                                                UNEXERCISED OPTIONS AT    IN-THE-MONEY OPTIONS
                                                                  DECEMBER 31, 2001       AT DECEMBER 31, 2001
                                                                     EXERCISABLE/             EXERCISABLE/
NAME                                                              UNEXERCISABLE (#)         UNEXERCISABLE ($)
---------------------------------------------------------------  -----------------         -----------------
<S>                                                             <C>                            <C>
RICHARD E. BAGLEY.............................................. 1,049,894 / 166,668            152,500 /  --
EDWARD M. FITZGERALD...........................................    332,186 / 50,001            108,750 /  --
DR. CHRISTOPHER F. NICODEMUS...................................    334,686 / 50,001            123,500 /  --
MARLENE R. BOOTH...............................................     84,998 / 25,002            9,333 / 4,667
DR. JAMES L. LEVIN.............................................     60,883 / 41,667                --  /  --
DR. ANTOINE A. NOUJAIM.........................................    506,249 / 75,001             75,000 /  --
PETER C. GONZE.................................................    202,083 / 66,667                --  /  --
ROBERT A. NEWMAN...............................................     81,816 / 42,742                --  /  --
</TABLE>

     EMPLOYMENT AGREEMENTS

      The Company has entered into agreements with its executive officers
regarding terms of employment and severance arrangements as follows:

      -     Dr. Noujaim's agreement, dated January 1, 1996 and amended on June
            3, 1999, provides for his employment at will as Chairman and Chief
            Scientific Officer through December 31, 2001, subject to renewal
            thereafter, and severance upon termination other than for cause of
            one year of base salary. The Company is in the process of renewing
            this agreement.

      -     Mr. Bagley's agreement, dated February 28, 1998 and amended on June
            4, 1999, provides for his employment at will as President and Chief
            Executive Officer and severance upon termination other than for
            cause of one year of base salary.

      -     Mr. Fitzgerald's agreement, dated September 14, 1998 and amended on
            June 1, 1999, provided for his employment at will as Senior Vice
            President, Chief Financial Officer and Secretary of the Company and
            severance upon termination other than for cause of one year of base
            salary. Mr. Fitzgerald resigned as of May 3, 2002.

      -     Dr. Nicodemus' agreement, dated December 16, 1998 and amended on
            June 1, 1999, provided for his employment at will as Senior Vice
            President, Clinical Research and Development and for severance upon
            termination other than for cause of one year of base salary. Dr.
            Nicodemus resigned as of May 22, 2002 and has joined Unither.

      -     Ms. Booth's agreement, dated May 4, 1999, provided for her
            employment at will as Vice President, Regulatory Affairs and Project
            Management, and severance upon termination other than for cause of
            six months of base salary. Ms. Booth was terminated as of May 31,
            2002.

      -     Dr. Levin's agreement, dated June 27, 2000, provided for his
            employment at will as Vice President, Manufacturing and Development,
            and severance upon termination other than for cause of one year of
            base salary. The Company expects Dr. Levin to resign in June 2002
            and subsequently join Unither.

      -     Mr. Gonze's agreement dated October 1, 1999 and amended February 1,
            2000, provided for his employment at will as Senior Vice President,
            Operations, and severance upon termination other than for cause of
            one year of base salary. Mr. Gonze resigned as of May 23, 2002 and
            has joined Unither.

      -     Mr. Newman's agreement, dated January 13, 1997, as amended, provides
            for his employment at will as Vice President, Business Operations
            and severance upon termination other than for cause of six months of
            base salary.

     COMPENSATION OF DIRECTORS

      Each director of the Company, with the exception of Dr. Noujaim and Mr.
Bagley, receives a fee of U.S. $10,000 per annum. Further, all directors are
eligible to receive stock options and are entitled to receive


                                       34
<PAGE>
reimbursement of their reasonable out-of-pocket disbursements incurred on the
business of the Company. In the aggregate, a total of $108,911 in fees was paid
to members of the Board of Directors during the period from January 1, 2001 to
December 31, 2001.

BOARD PRACTICES

      The shareholders of the Company elect the Directors annually, to serve
until the time of the Company's next annual meeting.

      With the exception of Dr. Noujaim and Mr. Bagley, none of the directors
have service contracts with the Company providing for benefits upon termination
of employment. See "Employment Agreements" for information on the service
contracts of Dr. Noujaim and Mr. Bagley.

     AUDIT COMMITTEE

      The Audit Committee of the Board of Directors of the Company consists of
William R. McMahan, Robert H. Uhl and Bruce D. Brydon.

      The Audit Committee is responsible for the engagement of the Company's
independent auditors and reviews with them the scope and timing of their audit
services and any other services they are asked to perform. The Committee also
reviews with the auditors their report on the Company's financial statements
following completion of the audit and on the Company's policies and procedures
with respect to internal accounting and financial controls. During 2001, there
were four meetings of this committee.

     COMPENSATION COMMITTEE

      The Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") consists of William R. McMahan, Dr. Jim A. Wright and
Richard E. Bagley. Dr. Wright is the Chairman of the Compensation Committee. Dr.
Wright has advised the Company that he does not intend to stand for re-election
as a director of the Company. Following the election of directors at the
Meeting, it is expected that the Board of Directors will appoint a successor to
Dr. Wright as a member of the Compensation Committee.

      The task of the Compensation Committee is to periodically review the
compensation structure of the Company with respect to its executive officers to
ensure that the Company continues to attract and retain quality and experienced
individuals to its management team and to motivate these individuals to perform
to the best of their ability and in the best interests of the Company. The
Compensation Committee makes recommendations with respect to the compensation of
the Company's executive officers to the Board of Directors, which gives final
approval regarding any executive compensation matters and issues.

      The primary objectives of the Company's executive compensation program are
to enable the Company to attract, motivate and retain outstanding individuals
and to align their success with that of the Company's Shareholders through the
achievement of strategic corporate objectives and creation of shareholder value.
The level of compensation paid to an individual is based on the individual's
overall experience, responsibility and performance. Factors also to be
considered are the compensation levels of similarly situated positions in the
biopharmaceutical industry and other labor markets in which the Company competes
for employees. The Compensation Committee compares remuneration for executive
officers of the Company to the remuneration for similar executives in the
relevant labor markets. In the case of newly hired employees, the individual's
performance and compensation level in his or her prior positions will also be a
determining factor.

      The key components for the compensation of the executive officers of the
Company are base salaries, bonuses and stock options. It is the policy of the
Company that the base salaries paid to its executive officers, in addition to
the criteria set out above, reflect the individual responsibility and experience
of the executive officer and the contribution that is expected from the
executive officer. Base salaries and bonuses are reviewed by the Compensation
Committee periodically to ensure that these criteria are satisfied. The Board of
Directors grants stock options under the Company's stock option plan to
executive officers from time to time as a long-term performance incentive.


                                       35
<PAGE>
SHARE OWNERSHIP

      The following table sets forth the beneficial share ownership of the
Company's Directors and Executive Officers as of May 24, 2002:

<TABLE>
<CAPTION>
                                                                    PERCENTAGE OF
                                                  NUMBER OF          OUTSTANDING
NAME                                            COMMON SHARES      COMMON SHARES(%)
----------------------------------              -------------      ----------------
<S>                                             <C>                <C>
Richard E. Bagley(1)                             1,368,988               3.3
Dr. Antoine A. Noujaim(2)                        2,018,750               4.8
Jacques R. Lapointe(3)                              20,000                 *
Bruce D. Brydon(4)                                  20,000                 *
William R. McMahan(5)                               70,833                 *
Robert H. Uhl(6)                                    20,000                 *
Dr. Jim A. Wright(7)                                39,167                 *
Dr. Christopher F. Nicodemus(8)                    373,929                 *
Peter C. Gonze(9)                                  325,535                 *
Robert A. Newman(10)                               106,058                 *
Marlene R. Booth(11)                               101,667                 *
Dr. James L. Levin(12)                              81,667                 *
</TABLE>

* Less than 1%

(1)  Includes 1,082,395 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(2)  Includes 518,750 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(3)  Comprised entirely of shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(4)  Comprised entirely of shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(5)  Includes 39,167 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(6)  Comprised entirely of shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(7)  Comprised entirely of shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(8)  Includes 322,604 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(9)  Includes 229,167 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(10) Includes 105,808 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

(11) Comprised entirely of shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.


                                       36
<PAGE>
(12) Comprised entirely shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of May 24, 2002.

STOCK OPTION PLAN

      The Company maintains a stock option plan (the "Plan"). The Plan is
designed to develop the interest of the directors, officers, employees and other
persons who provide ongoing services to the Company and its subsidiaries in the
growth and development of the Company by providing such persons with the
opportunity to acquire an increased proprietary interest in the Company and to
better enable the Company and its Subsidiaries to attract and retain persons of
desired experience and ability.

      The maximum number of Common Shares which may be reserved for issuance to
any person under the Plan or any other previously established or proposed share
compensation arrangement of the Company in respect of all options granted to any
one person at any one time may not exceed 5% of the issued and outstanding
Common Shares. The maximum number of Common Shares reserved for issuance at any
time pursuant to the Plan is currently 5,500,000. The vesting and expiry date of
options granted under the Plan are determined by the Board of Directors at the
time the options are granted provided that the expiry date cannot be later than
10 years from the date of grant of such option. The exercise price of options
granted under the Plan is fixed by the Board of Directors and must either be the
closing price of the Common Shares on the Toronto Stock Exchange on the first
date preceding the date of grant or alternatively the weighted average of the
trading prices of the Common Shares for the five days preceding the date of
grant.

     STOCK OPTIONS

      As at May 24, 2002, there were outstanding options to purchase a total of
4,105,555 Common Shares under the Plan and the following table sets out in
detail all stock options issued and outstanding under the Plan.

<TABLE>
<CAPTION>
                                          NUMBER OF                            EXERCISE
                                         SHARES UNDER                          PRICE PER
GROUP                                       OPTION          DATE OF GRANT        SHARE          EXPIRATION DATE
-----                                       ------          -------------        -----          ---------------
<S>                                      <C>            <C>                    <C>         <C>
Directors..........................          1,875      July 26, 1996             $7.20    July 26, 2006
     (excluding Executive Officers)            625      July 8, 1997             $14.72    July 8, 2007
                                            20,000      May 21, 1998              $8.72    May 21, 2008
                                            17,500      February 17, 2000         $5.96    February 17, 2010
                                            60,000      April 10, 2001            $1.95    April 10, 2011
                                           140,000      May 24, 2001              $3.13    May 24, 2011







Executive Officers.................         93,750      July 26, 1996             $7.20    July 26, 2006
                                             3,333      February 4, 1997         $24.00    February 4, 2007
                                           206,250      March 4, 1998            $12.00    March 4, 2008
                                             3,000      May 21, 1998              $8.72    May 21, 2008
                                             6,250      August 4, 1998            $4.60    August 4, 2008
                                            43,750      September 15, 1998        $3.64    September 15, 2008
                                            43,750      December 23, 1998         $2.12    December 23, 2008
                                            25,000      May 11, 1999              $1.84    May 11, 2009
                                           382,911      July 8, 1999              $4.12    July 8, 2009
                                            18,750      October 8, 1999           $3.60    October 8, 2009
                                           447,500      December 22, 1999         $1.40    December 22, 2009
                                           500,000      February 17, 2000         $5.96    February 17, 2010
                                           193,750      June 1, 2000              $4.16    June 1, 2010
                                            62,500      June 26, 2000             $3.84    June 26, 2010
                                           100,000      April 10, 2001            $1.95    April 10, 2011
                                         1,140,000      May 24, 2001              $3.13    May 24, 2011
















</TABLE>


                                       37
<PAGE>
<TABLE>
<CAPTION>
                                          NUMBER OF                            EXERCISE
                                         SHARES UNDER                          PRICE PER
GROUP                                       OPTION          DATE OF GRANT        SHARE          EXPIRATION DATE
-----                                       ------          -------------        -----          ---------------
<S>                                      <C>            <C>                    <C>         <C>
Employees..........................         12,874      July 26, 1996             $7.20    July 26, 2006
                                             2,500      December 31, 1996        $23.60    December 31, 2006
                                            18,750      May 21, 1998              $8.72    May 21, 2008
                                             6,250      August 4, 1998            $4.60    August 4, 2008
                                             4,187      August 19, 1999           $3.60    August 19, 2009
                                            53,250      February 17, 2000         $5.96    February 17, 2010
                                            61,250      June 1, 2000              $4.16    June 1, 2010
                                            25,000      July 12, 2000             $4.04    July 12, 2010
                                            53,750      December 6, 2000          $1.41    December 6, 2010
                                            42,500      April 10, 2001            $1.95    April 10, 2011
                                           133,500      May 24, 2001              $3.13    May 24, 2011
                                            85,000      September 4, 2001         $2.80    September 4, 2011
                                            18,750      March 20, 2002            $0.87    March 20, 2012

</TABLE>


ITEM 7:  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

     MAJOR SHAREHOLDERS

      To the knowledge of the directors or officers of the Company, as of May
24, 2002, no person beneficially owns or exercises control or direction over
more than 5% of the Common Shares of the Company (being the only class of shares
of the Company outstanding), except for Dompe which beneficially owns 3,879,869
Common Shares of the Company (9.2% of the outstanding Common Shares of the
Company), which includes 357,142 Common Shares of the Company issuable upon
exercise of Special Warrants of the Company that are currently exercisable (see
"Item 4: Information on the Company -- Strategic Alliances and License
Agreements -- Genesis Pharma, Medison Pharma and Dompe Farmaceutici"); and
United which beneficially owns 4,900,000 Common Shares of the Company (11.8% of
the outstanding Common Shares) (see "Item 4: Information on the Company --
Strategic Alliances and License Agreements -- United Therapeutics Corporation").

      Except as disclosed above, as of May 24, 2002, the current directors and
officers of the Company as a group own, directly or indirectly, or exercise
control or direction over a total of 3,745,463 Common Shares representing
approximately 8.6% of the issued and outstanding Common Shares.

      As of May 24, 2002, 28.8% of the Common Shares outstanding are held by 30
record holders in the United States.

      The Company is not owned or controlled by another corporation or by any
foreign government.

     RELATED PARTY TRANSACTIONS

      Since January 1, 1999, the only transactions in which the directors or
officers of the Company or any of the major shareholders of the Company
mentioned under " -- Major Shareholders", or any associate or affiliate of any
of the foregoing persons or companies has had a material interest, direct or
indirect, which has materially affected or will materially affect the Company or
any of its subsidiaries are as follows:

      -     Directors and officers of the Company (including associates thereof)
            purchased an aggregate of (i) 290,047 Special Warrants of the
            Company at a price of $4.24 per unit in February 2000 which were
            exercised for 290,047 Common Shares of the Company and (ii) 208,000
            Common Shares of the Company at a price of $1.90 per share in
            February 2001;

      -     Dompe entered into a Memorandum of Understanding with the Company
            relating to the commercialization of OvaRex(R) MAb in Italy, Spain,
            Portugal, Switzerland, Austria and certain other eastern European
            countries in November 2000, and purchased (i) 3,522,727 Common
            Shares of the Company at a price of $2.20 per share in December
            2000, and (ii) 357,142 Special Warrants of the Company at a price of
            $2.80 per unit in June 2001 which are exercisable into 357,142


                                       38
<PAGE>
            Common Shares of the Company (see "Item 4: Information on the
            Company -- Strategic Alliances and License Agreements -- Genesis
            Pharma, Medison Pharma and Dompe Farmaceutici"); and

      -     In April 2002, the Company and United entered into the Subscription
            Agreement, pursuant to which United purchased 4,900,000 Common
            Shares of the Company at a price of U.S. $0.50 per share. In
            addition, the Company issued to United the First Debenture in the
            principal amount of U.S. $50,000, which is convertible into 100,000
            Common Shares at a price of U.S. $0.50 per share. The Company also
            issued to United the Warrant to purchase 3,250,000 Common Shares at
            a price of U.S. $.50 per share. The Warrant may only be exercised in
            full and must be exercised on or before August 20, 2002. Pursuant to
            the Subscription Agreement, the Company granted to United the right
            to purchase the Second Debenture in the principal amount of U.S.
            $875,000. Subject to receipt of approval by the Company
            shareholders, U.S. $441,690 of the principal amount of the Second
            Debenture is automatically convertible into 883,380 Common Shares
            upon the issuance of the Second Debenture. United's right to
            purchase the Second Debenture expires on August 14, 2002. See "Item
            4: Information on the Company -- Strategic Alliances and License
            Agreements -- United Therapeutics Corporation."

ITEM 8:  FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

      The following financial statements together with the reports of Arthur
Andersen LLP, Chartered Accountants are filed as part of this annual report as
Exhibit A hereto:

<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                            ----
<S>                                                                                                         <C>
     INDEX TO THE FINANCIAL STATEMENTs
     Report of Arthur Andersen LLP, Chartered Accountants                                                   F-2
     Consolidated balance sheets as at December 31, 2001 and December 31, 2000                              F-3
     Consolidated statements of loss for the years ended December 31, 2001, 2000
         and 1999, and for the period December 1, 1995 to December 31, 2001                                 F-4
     Consolidated statements of  shareholders' equity and accumulated deficit for the years ended
         December 31, 2001, 2000, 1999, 1998, 1997, 1996 and 1995                                           F-5
     Consolidated statements of cash flows for the years ended December 31,
         2001, 2000 and 1999, and for the period December 1, 1995 to December 31, 2001                      F-6
     Notes to Consolidated Financial Statements                                                             F-7
</TABLE>


     LEGAL PROCEEDINGS

      On April 26, 2002, ICN Pharmaceuticals, Inc. ("ICN") brought suit against
the Company in the Superior Court of Orange County, California claiming that the
Company breached a letter of intent between ICN and the Company and seeking
unspecified damages.

ITEM 9:  THE OFFER AND LISTING

      The Common Shares of the Company are listed and posted for trading on The
Toronto Stock Exchange under the symbol "AXO" and are traded on the Electronic
Quotation Service of The Pink Sheets LLC under the symbol "ALXFF". The Common
Shares of the Company were listed and posted for trading on the Alberta Stock
Exchange on June 7, 1994 and on the Toronto Stock Exchange on December 20, 1996.
The Company's shares were subsequently voluntarily delisted on the Alberta Stock
Exchange on February 2, 1997. On November 21, 2000, the Company effected a
consolidation of all of the issued and outstanding Common Shares on a
one-for-four basis.


                                       39
<PAGE>
      The following table sets forth the high and low sale prices per share of
the Common Shares of the Company as reported on the Toronto Stock Exchange for
the fiscal years ending December 31, 1997, 1998, 1999, 2000 and 2001.

<TABLE>
<CAPTION>
                                     HIGH                  LOW
                                     ----                  ---
                                     Cdn.$                Cdn.$
<S>                                  <C>                  <C>
         FISCAL YEAR ENDING
         December 31, 1997           7.00                 2.10
         December 31, 1998           3.25                 0.42
         December 31, 1999           1.38                 0.24
         December 31, 2000           5.10                 0.48
         December 31, 2001           4.02                 1.70
</TABLE>

         The following table sets forth for the periods indicated the high and
low sale prices per share of the Common Shares during each of the quarters set
forth below as reported on the Toronto Stock Exchange for fiscal years ending
December 31, 2000 and December 31, 2001.

<TABLE>
<CAPTION>
                                     HIGH                  LOW
                                     ----                  ---
                                     Cdn.$                Cdn.$
<S>                                  <C>                  <C>
         2000
         First quarter               5.10                 0.49
         Second quarter              2.50                 0.75
         Third quarter               1.16                 0.68
         Fourth quarter              1.94                 0.48

         2001
         First quarter               2.80                 1.70
         Second quarter              4.02                 1.95
         Third quarter               3.70                 2.00
         Fourth quarter              2.70                 1.70
</TABLE>


         The following table sets forth the high and low sale prices per share
of the Common Shares during each of the months set forth below as reported on
the Toronto Stock Exchange for the most recent six months.

<TABLE>
<CAPTION>
                                     HIGH                  LOW
                                     ----                  ---
                                     Cdn.$                Cdn.$
<S>                                  <C>                  <C>
         MONTH
         December 2001               2.55                 1.96
         January 2002                3.35                 0.56
         February 2002               1.43                 0.85
         March 2002                  1.07                 0.65
         April 2002                  0.98                 0.58
         May 2002
        (through May 24, 2002)       0.69                 0.55
</TABLE>

ITEM 10:  ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF ASSOCIATION

      The Company is a corporation amalgamated under the Business Corporations
Act (Alberta). There are no restrictions on the business that the Company may
carry on. The Company's articles provide that the Board of Directors shall
consist of such number of directors, being a minimum of three and a maximum of
ten, as may be from time to time determined by resolution of the Board of
Directors.

      The authorized share capital of the Company consists of an unlimited
number of Common Shares and an unlimited number of Preferred Shares. The holders
of Common Shares are entitled to dividends, if as and when


                                       40
<PAGE>
declared by the directors, to one vote per Common Share at meetings of the
holders of Common Shares of the Company and, upon liquidation, to receive such
assets of the Company as are distributable to the holders of the Common Shares.
The Preferred Shares may be issued in one or more series, and the directors are
authorized to fix the number of Preferred Shares in each series and to determine
the designation, rights, privileges, restrictions and conditions attached to the
Preferred Shares of each series. The Preferred Shares are entitled to a priority
over the Common Shares in respect of the payment of dividends and distribution
of assets upon liquidation of the Company. Under the Business Corporations Act
(Alberta) a special resolution of the shareholders is required to amend the
rights of any class of shares.

      On June 27, 1997 articles of amendment were filed to provide that meetings
of shareholders may be held at any place within Canada and the United States.
The directors of the Company must call an annual meeting of shareholders not
later than 15 months after holding the last preceding annual meeting and may at
any time call a special meeting of shareholders. In addition, the holders of not
less than 5% of the issued shares of the Company may requisition the Board of
Directors to call a meeting of shareholders. For the purpose of determining
shareholders entitled to receive notice of the meeting of shareholders, the
directors may fix in advance a date as the record date for that determination of
shareholders, but that record date shall not precede by more than 50 days or
less than 21 days the date on which the meeting is to be held. If a shareholder
becomes a shareholder after the setting of the record date, such person will be
entitled to vote at the meeting if he can produce a properly endorsed share
certificate, or can otherwise establish that he owns the shares, and demands,
not later than 10 days before the meeting, that his name be included among those
eligible to vote at the meeting.

MATERIAL CONTRACTS

      Except for contracts entered into the normal course of business, the only
material contracts entered into by the Company during the past two years prior
to the date hereof are the License Agreement dated April 17, 2002 between the
Company and Unither Pharmaceuticals Inc., Subscription and Debenture Purchase
Agreements and related agreements dated April 17, 2002 between the Company and
United Therapeutics Corporation referred to under "Item 4: Information on the
Company -- Strategic Alliances and License Agreements -- United Therapeutics
Corporation," the memorandum of understanding dated November 15, 2000 between
the Company and Dompe Farmaceutici S.p.A. referred to under "Item 4: Information
on the Company -- Strategic Alliances and License Agreements -- Genesis Pharma,
Medison Pharma and Dompe Farmaceutici," and the manufacturing agreement dated
May 1, 2001 between the Company and Abbott Laboratories referred to under "Item
4: Information on the Company -- Manufacturing."

EXCHANGE CONTROLS

      There are no laws, governmental decrees or regulations in Canada that
restrict the export or import of capital or which affect the remittance of
dividends, interest or other payments to non-resident holders of the Company's
Shares, other than specific embargoes enacted by regulations under the United
Nations Act (Canada) and withholding tax requirements. See " -- Taxation".

      There are no limitations under the laws of Canada or the Province of
Alberta, or in the Articles of Amalgamation of the Company, with respect to the
right of non-resident or foreign owners to hold or vote the Common Shares of the
Company other than those imposed by the Investment Canada Act (Canada) (the
"Investment Act").

      The following summarizes the principal features of the Investment Act for
non-residents other than WTO investors (defined in section 14.1(b) of the
Investment Act as being individual investors who are nationals of, or have the
right of permanent residence in, a Member of the World Trade Organization and
corporate investors who are either WTO investor-controlled in fact, or
two-thirds of whose board of directors is comprised of any combination of
Canadians and WTO investors) who propose to acquire Common Shares of the
Company.

      The Investment Act prohibits implementation of a reviewable investment by
an individual, government (or agency thereof), company, partnership, trust or
joint venture which is not a "Canadian" (as defined in the Investment Act (a
"non-Canadian")) or a WTO investor, unless after review the minister responsible
for the Investment Act (the "Minister") is satisfied that the investment is
likely to be of net benefit to Canada. A reviewable investment under


                                       41
<PAGE>
the Investment Act is characterized as an investment for control of a Canadian
business with assets valued at $5,000,000 or more, or in the case where the
total assets of the Canadian business are less than half of the total assets
acquired, the Canadian business assets are $50,000,000 or more. Notwithstanding
the above limits, an investment can become a reviewable investment if an order
for review is made by the Federal cabinet on the grounds that the investment is
related to Canada's cultural heritage or national identity.

      An investment in Common Shares of the Company by a WTO investor would only
be reviewable under the Investment Act if it was an investment to acquire
control of the Company and the value of the assets of the Company equals or
exceeds an amount determined annually by the Minister pursuant to a formula
specified in the Investment Act ($192,000,000 for 2000).

      A non-Canadian, whether a WTO investor or otherwise, would acquire control
of the Company for the purposes of the Investment Act if he acquired a majority
of the Common Shares of the Company. The acquisition of less than a majority,
but one-third or more, of the Common Shares of the Company would be presumed to
be an acquisition of control of the Company unless it could be established that
the Company was not controlled in fact by the acquirer through the ownership of
Common Shares.

      Certain transactions in relation to Common Shares of the Company would be
exempt from the Investment Act, including:

            1.    the acquisition of Shares by a person in the ordinary course
                  of the person's business as a trader or dealer in securities;

            2.    the acquisition of control of the Company in connection with
                  the realization of security granted for a loan or other
                  financial assistance and not for any purpose related to the
                  provisions of the Investment Act; and

            3.    the acquisition of control of the Company by reason of an
                  amalgamation, merger, consolidation or corporate
                  reorganization following which the ultimate direct or indirect
                  control in fact of the Company, through the ownership of
                  voting interests, remain unchanged.

      The Investment Act further contains provisions which require notification
to be given under the Investment Act in the circumstances where a "non-Canadian"
(as defined in the Investment Act) acquires control of the Company
notwithstanding that such investment is not a reviewable investment as described
above.

      In addition to the foregoing, certain transactions involving the Company
and its security holders may be subject to notification and review under the
Competition Act (Canada). In general, in order for a transaction to be
notifiable, the parties together with their affiliates (defined to include
parent, subsidiary and sister companies) must have assets in Canada or gross
revenues from sales in, from or into Canada that exceed $400,000,000. Assuming
this threshold is met, additional thresholds based on the type of transaction
must be met before notification is required. If a transaction is ultimately
notifiable, the parties must provide the Commissioner of Competition (the
"Commissioner") with detailed information about the transaction and the parties,
and observe a waiting period prior to closing the transaction. However, in the
event that the Commissioner determines that a proposed transaction may result in
a substantial lessening of competition, the Commissioner may bring a proceeding
before the Competition Tribunal to enjoin the transaction or to seek other
remedies.

TAXATION

      The following is a general summary only and should not be considered as
income tax advice or relied upon for tax planning purposes.

     CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES

      The following summary describes the principal Canadian federal income tax
consequences of the acquisition, ownership and disposition of common shares
generally applicable to holders of the Company's Common Shares who are residents
of the United States ("United States Holders") for the purposes of the
Canada-


                                       42
<PAGE>
United States Income Tax Convention (1980) (the Convention), who are not
residents of Canada for the purposes of the Income Tax Act (Canada) the ("Tax
Act"), who hold their Common Shares of the Company as capital property, who deal
at arm's length with the Company for the purposes of the Tax Act and who do not
use or hold and are not deemed to use or hold such Common Shares in connection
with a business carried on in Canada. Common Shares of the Company will
generally be considered to be capital property to a United States Holder unless
they are held as inventory in the course of carrying on a business or were
acquired in a transaction considered to be an adventure in the nature of trade.
This summary is based upon the current provisions of the Tax Act, the
regulations thereunder, all specific proposals to amend the Tax Act and
regulations thereunder publicly announced by or on behalf of the Minister of
Finance prior to the date hereof (the "Proposals") and the provisions of the
Convention as in effect on the date hereof. Other than the Proposals, this
summary does not take into account or anticipate any changes in law, whether by
legislative or judicial action, nor does it take into account tax laws of any
province or territory of Canada or of any jurisdiction outside Canada. There can
be no assurance that the Proposals will be enacted as proposed or at all.

      This summary is of a general nature only and is not intended to be, nor
should it be construed to be, legal or tax advice to any particular United
States Holder. Accordingly, United States Holders should consult with their own
tax advisors for advice with respect to their own particular circumstances.

     DISPOSITIONS

      A United States Holder will not be subject to tax in Canada on any capital
gain realized on a disposition of Common Shares of the Company, provided that
the shares do not constitute "taxable Canadian property" of the United States
Holder. Common Shares of the Company will not generally constitute taxable
Canadian property of a United States Holder unless, at any time within the
60-month period immediately preceding the disposition, the United States Holder,
persons with whom the United States Holder did not deal at arm's length or the
United States Holder together with all such persons owned, had an interest in or
option in respect of, 25% or more of the issued shares of any series or class of
the capital stock of the Company.

     DIVIDENDS

      Dividends paid or credited or deemed to be paid or credited to a United
States Holder in respect of Common Shares of the Company will generally be
subject to Canadian withholding tax on the gross amount of the dividends. Under
the Convention, the rate of Canadian withholding tax which would apply on
dividends paid by the Company to a United States Holder is (i) 5% with respect
to dividends paid if the beneficial owner of the dividends is a company, which
owns at least 10% of the voting stock of the Company and (ii) 15% in all other
cases.

      A purchase of Common Shares of the Company of a United States Holder by
the Company (other than by a purchase in the open market in the manner in which
shares are normally purchased by a member of the public) will give rise to a
deemed dividend to such United States Holder equal to the amount paid by the
Company on the purchase in excess of the paid-up capital of such shares,
determined in accordance with the Tax Act. Any such dividend deemed to have been
received by a United States Holder will be subject to non-resident withholding
tax as described above. The amount of any such deemed dividend will reduce, for
Canadian tax purposes, the proceeds of disposition to a United States Holder of
Common Shares of the Company for the purposes of computing the amount of such
United States Holder's capital gain arising on the disposition as described
above.

     CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

      The following is a general discussion of certain United States federal
income tax consequences, under current law, generally applicable to a U.S.
Holder (as defined below) of the Company's Common Shares ("Shares"). This
discussion does not address all potentially relevant federal income tax matters
and it does not address consequences peculiar to persons subject to special
provisions of federal income tax law, such as those described below as excluded
from the definition of a U.S. Holder. In addition, this discussion does not
cover any state, local or foreign tax consequences. (See " -- Certain Canadian
Federal Income Tax Consequences" above.)

      The following discussion is based upon the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury Regulations, published Internal Revenue
Service ("IRS") rulings, published administrative positions of the


                                       43
<PAGE>
IRS and court decisions that are currently applicable, any or all of which could
be materially and adversely changed, possibly on a retroactive basis, at any
time. This discussion does not consider the potential effects, both adverse and
beneficial, of any recently proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time. This discussion is for
general information only and it is not intended to be, nor should it be
construed to be, legal or tax advice to any holder or prospective holder of the
Company's Shares and no opinion or representation with respect to the United
States federal income tax consequences to any such holder or prospective holder
is made. Accordingly, holders and prospective holders of the Company's Shares
should consult their own tax advisors about the federal, state, local, and
foreign tax consequences of purchasing, owning and disposing of the Company's
Shares.

     U.S. HOLDERS

      As used herein, a "U.S. Holder" means a holder of the Company's Shares who
is a citizen or individual resident of the United States, a corporation created
or organized in or under the laws of the United States or of any political
subdivision thereof or a trust or estate whose income is taxable in the United
States irrespective of source. This summary does not address the tax
consequences to, and U.S. Holder does not include, persons subject to specific
provisions of federal income tax law, such as tax-exempt organizations,
qualified retirement plans, individual retirement accounts and other
tax-deferred accounts, financial institutions, insurance companies, real estate
investment trusts, regulated investment companies, broker-dealers, nonresident
alien individuals, persons or entities that have a "functional currency" other
than the U.S. dollar, shareholders who hold the Company's Shares as part of a
straddle, hedging or a conversion transaction, and shareholders who acquired
their stock through the exercise of employee stock options or otherwise as
compensation for services. This summary is limited to U.S. Holders who own the
Company's Shares as capital assets. This summary does not address the
consequences to a person or entity holding an interest in a shareholder or the
consequences to a person of the ownership, exercise or disposition of any
options, warrants or other rights to acquire the Company's Shares.

     DISTRIBUTIONS ON THE COMPANY'S SHARES

      U.S. Holders receiving dividend distributions (including constructive
dividends) with respect to the Company's Shares are required to include in gross
income for United States federal income tax purposes the gross amount of such
distributions equal to the U.S. dollar value of such dividends on the date of
receipt (based on the exchange rate on such date) to the extent that the Company
has current or accumulated earnings and profits, without reduction for any
Canadian income tax withheld from such distributions. Such Canadian tax withheld
may be credited, subject to certain limitations, against the U.S. Holder's
United States federal income tax liability or, alternatively, may be deducted in
computing the U.S. Holder's United States federal taxable income by those who
itemize deductions. (See more detailed discussion at " -- Foreign Tax Credit"
below.) To the extent that distributions exceed current or accumulated earnings
and profits of the Company, they will be treated first as a return of capital up
to the U.S. Holder's adjusted basis in the Company's Shares and thereafter as
gain from the sale or exchange of the Company's Shares. Preferential tax rates
for long-term capital gains are applicable to a U.S. Holder which is an
individual, estate or trust. There are currently no preferential tax rates for
long-term capital gains for a U.S. Holder which is a corporation.

      In the case of foreign currency received as a dividend that is not
converted by the recipient into U.S. dollars on the date of receipt, a U.S.
Holder will have a tax basis in the foreign currency equal to its U.S. dollar
value on the date of receipt. Generally any gain or loss recognized upon a
subsequent sale or other disposition of the foreign currency, including the
exchange for U.S. dollars, will be ordinary income or loss.

      Dividends paid on the Company's Shares will not generally be eligible for
the dividends received deduction provided to corporations receiving dividends
from certain United States corporations. A U.S. Holder which is a corporation
may, under certain circumstances, be entitled to a 70% deduction of the United
States source portion of dividends received from the Company (unless the Company
qualifies as a "foreign personal holding company" or a "passive foreign
investment company," as defined below) if such U.S. Holder owns shares
representing at least 10% of the voting power and value of the Company. The
availability of this deduction is subject to several complex limitations which
are beyond the scope of this discussion.


                                       44
<PAGE>
      Dividends paid on the Company's Shares, if any, generally will not be
subject to information reporting and generally will not be subject to U.S.
backup withholding tax. However, dividends paid, and the proceeds of a sale of
the Company's Shares, in the U.S. through a U.S. or U.S. related paying agent
(including a broker) will be subject to U.S. information reporting requirements
and may also be subject to U.S. backup withholding tax, unless the paying agent
is furnished with a duly completed and signed Form W-9 or the U.S. Holder is
otherwise exempt. Any amounts withheld under the U.S. backup withholding tax
rules will be allowed as a refund or a credit against the U.S. Holder's U.S.
federal income tax liability, provided the required information is furnished to
the IRS.

     FOREIGN TAX CREDIT

      A U.S. Holder who pays (or has withheld from distributions) Canadian
income tax with respect to the ownership of the Company's Shares may be
entitled, at the option of the U.S. Holder, to either a deduction or a tax
credit for such foreign tax paid or withheld. Generally, it will be more
advantageous to claim a credit because a credit reduces United States federal
income taxes on a dollar-for-dollar basis, while a deduction merely reduces the
taxpayer's income subject to tax. This election is made on a year-by-year basis
and applies to all foreign taxes paid by (or withheld from) the U.S. Holder
during that year. There are significant and complex limitations which apply to
the credit, among which is the general limitation that the credit cannot exceed
the proportionate share of the U.S. Holder's United States income tax liability
that the U.S. Holder's foreign source taxable income bears to his or its
worldwide taxable income. In the determination of the application of this
limitation, the various items of income and deduction must be classified into
foreign and domestic sources. Complex rules govern this classification process.
In addition, this limitation is calculated separately with respect to specific
classes of income such as "passive income," "high withholding tax interest,"
"financial services income," "shipping income," and certain other
classifications of income. Dividends distributed by the Company will generally
constitute "passive income" or, in the case of certain U.S. Holders, "financial
services income" for these purposes. The availability of the foreign tax credit
and the application of the limitations on the credit are fact specific, and
holders and prospective holders of the Company's Shares should consult their own
tax advisors regarding their individual circumstances.

     DISPOSITION OF COMPANY'S SHARES

      A U.S. Holder will recognize gain or loss upon the sale of the Company's
Shares equal to the difference, if any, between (i) the amount of cash plus the
fair market value of any property received, and (ii) the shareholder's tax basis
in the Company's Shares. This gain or loss will be capital gain or loss if the
Company's Shares are a capital asset in the hands of the U.S. Holder, which will
be a short-term or long-term capital gain or loss depending upon the holding
period of the U.S. Holder. Gains and losses are netted and combined according to
special rules in arriving at the overall capital gain or loss for a particular
tax year. Deductions for net capital losses are subject to significant
limitations. For U.S. Holders which are individuals, any unused portion of such
net capital loss may be carried over to be used in later tax years until such
net capital loss is thereby exhausted. For U.S. Holders that are corporations
(other than corporations subject to Subchapter S of the Code), an unused net
capital loss may be carried back three years from the loss year and carried
forward five years from the loss year to be offset against capital gains until
such net capital loss is thereby exhausted.

     OTHER CONSIDERATIONS

      In the following circumstances, the above sections of this discussion may
not describe the United States federal income tax consequences resulting from
the holding and disposition of the Company's Shares:

     FOREIGN PERSONAL HOLDING COMPANY

      If at any time during a taxable year more than 50% of the total combined
voting power or the total value of the Company's outstanding shares is owned,
directly or indirectly, by five or fewer individuals who are citizens or
residents of the United States and 60% or more of the Company's gross income for
such year was derived from certain passive sources, the Company may be treated
as a "foreign personal holding company." In that event, U.S. Holders that hold
the Company's Shares would be required to include in gross income for such year
their allocable portions of such passive income to the extent the Company does
not actually distribute such income.


                                       45
<PAGE>
     PASSIVE FOREIGN INVESTMENT COMPANY

      As a foreign corporation with U.S. Holders, the Company could potentially
be treated as a passive foreign investment company ("PFIC"), as defined in
Section 1297 of the Code, depending upon the percentage of the Company's income
which is passive, or the percentage of the Company's assets which is producing
passive income. U.S. Holders owning shares of a PFIC are subject to an
additional tax and to an interest charge based on the value of deferral of tax
for the period during which the shares of the PFIC are owned, in addition to
treatment of gain realized on the disposition of shares of the PFIC as ordinary
income rather than capital gain. However, if the U.S. Holder makes a timely
election to treat a PFIC as a qualified electing fund ("QEF") with respect to
such shareholder's interest therein, the above-described rules generally will
not apply. Instead, the electing U.S. Holder would include annually in his gross
income his pro rata share of the PFIC's ordinary earnings and net capital gain
regardless of whether such income or gain was actually distributed. A U.S.
Holder of a QEF can, however, elect to defer the payment of United States
federal income tax on such income inclusions. In addition, taxpayers owning
(actually or constructively) marketable stock in a PFIC will be permitted to
elect to mark that stock to market annually, rather than be subject to the
excess-distribution regime described above. Amounts included in or deducted from
income under this regime (and actual gains and losses realized upon disposition,
subject to certain limitations) will be treated as ordinary. Special rules apply
to U.S. Holders who own their interests in a PFIC through intermediate entities
or persons.

      The Company believes that it was not a PFIC for its fiscal years ended on
or before December 31, 2001. If in its current or in a subsequent year the
Company concludes that it is a PFIC, it intends to make information available to
enable a U.S. Holder to make a QEF election in that year. There can be no
assurance that the Company's determination concerning PFIC status will not be
challenged by the IRS, or that it will be able to satisfy the record-keeping
requirements which are imposed on QEF's.

     CONTROLLED FOREIGN CORPORATION

      If more than 50% of the voting power of all classes of stock or the total
value of the stock of the Company is owned, directly or indirectly, by citizens
or residents of the United States, United States domestic partnerships and
corporations or estates or trusts other than foreign estates or trusts, each of
whom owns 10% or more of the total combined voting power of all classes of stock
of the Company ("United States shareholder"), the Company could be treated as a
"controlled foreign corporation" ("CFC") under subpart F of the Code. This
classification would effect many complex tax results one of which is the
inclusion of certain income of a CFC in the gross income of its United States
shareholders. The United States generally taxes the United States shareholders
of a CFC currently on their pro rata shares of the subpart F income of the CFC.
In effect, the Code treats those United States shareholders as having received a
current distribution out of the CFC's subpart F income. Such shareholders also
are subject to current U.S. tax on their pro rata shares of the CFC's earnings
invested in U.S. property. The foreign tax credit may reduce the U.S. tax on
these amounts. In addition, under Section 1248 of the Code, gain from the sale
or exchange of stock by a holder of the Company's Shares who is or was a United
States shareholder at any time during the five year period ending with the sale
or exchange is treated as ordinary dividend income to the extent of earnings and
profits of the Company attributable to the stock sold or exchanged. Note that
the overlap between the PFIC and CFC rules is generally eliminated for United
States shareholders of a CFC. Where a foreign corporation is both a PFIC and a
CFC, the foreign corporation is generally treated as a non-PFIC with respect to
United States shareholders of the CFC. Because of the complexity of subpart F,
and because it is not clear that subpart F would apply to the holders of the
Company's Shares, a more detailed review of these rules is outside the scope of
this discussion.

DOCUMENTS ON DISPLAY

      The documents concerning the Company referred to in this annual report may
be inspected at the Company's office in Waltham, Massachusetts. The Company's
Investor Relations and Corporate Communications Department may be reached at
(888) 801-6665. Documents filed with the Securities and Exchange Commission
("SEC"), and future SEC filings by the Company can be read over the Internet at
the SEC's web site at http://www.sec.gov. Documents filed by the Company with
the SEC may also be read and copied at the SEC's public reference facility at
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of its public reference
facilities.


                                       46
<PAGE>
ITEM 11:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      At December 31, 2001 and December 31, 2000, the Company had cash, cash
equivalents and short-term investments of $9.1 million and $13.2 million
respectively. Included in these balances were short-term financial instruments
with a carrying value, including accrued interest, of $0.8 million and $3.6
million, respectively, consisting of obligations of Canadian federal and
provincial governments as well as corporate obligations. These instruments carry
maturities of nine months or less and their carrying value approximates fair
value. These instruments have a weighted average interest rate of 4.2% and 5.3%
at December 31, 2001 and 2000 respectively. The Company purchased such financial
instruments for investment purposes only and not for trading or speculative
purposes.

      The Company's risks relative to these securities are credit risk and
interest rate risk. Regarding credit risk, the Company mitigates such risk by
investing only in federal or provincial government securities or investment
grade corporate obligations in the form of commercial paper or bankers'
acceptances. Regarding interest rate risk, exposure results from changes in
short-term interest rates or early redemption of securities. These risks are
mitigated by the short-term nature of the portfolio.

     FOREIGN CURRENCY EXPOSURE

      The Company currently has a significant portion of its operations in the
United States, including the operation of its United States office and the
ongoing administration of clinical trials and development and production
activities related to the Company's products. Accordingly, a significant portion
of the Company's transactions are denominated in U.S. dollars and the Company
has an exposure risk to foreign exchange rates. The Company partially offsets
this risk by maintaining cash balances and short-term investments denominated in
U.S. currency. At December 31, 2001 the Company had $1.0 million (or 11%) of the
total cash and short-term investments invested in U.S. dollar denominated
financial instruments and cash deposits. Other than as mentioned here, the
Company does not actively engage in hedging or other activities to control the
risk of its foreign currency exposure.

ITEM 12:  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         Not applicable.

                                     PART II

ITEM 13:  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

         Not applicable.

ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

         Not applicable.


                                       47
<PAGE>
                                    PART III

ITEM 17:   FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>                                                                                                  <C>
     INDEX TO THE FINANCIAL STATEMENTS
     Report of Arthur Andersen LLP, Chartered Accountants                                            F-2
     Consolidated balance sheets as at December 31, 2001 and December 31, 2000                       F-3
     Consolidated statements of loss for the years ended December 31, 2001, 2000
         and 1999, and for the period December 1, 1995 to December 31, 2000                          F-4
     Consolidated statements of  shareholders' equity and accumulated deficit for the years ended
         December 31, 2001, 2000, 1999, 1998, 1997, 1996 and 1995                                    F-5
     Consolidated statements of cash flows for the years ended December 31,
         2001, 2000 and 1999, and for the period December 1, 1995 to December 31, 2000               F-6
     Notes to Consolidated Financial Statements
                                                                                                     F-7
</TABLE>

ITEM 18:   FINANCIAL STATEMENTS

         Not applicable.

ITEM 19:   EXHIBITS

      The list of Exhibits filed as part of this annual report are set forth on
the Exhibit Index immediately preceding such Exhibits, and is incorporated
herein by this reference.


                                       48

<PAGE>
                                GLOSSARY OF TERMS

            In this annual report, the following terms have the following
meanings unless the context requires otherwise:

<TABLE>
<S>                                                   <C>
Adjuvant:                                             An immunogenic substance administered with a vaccine to increase the immune
                                                      response.

Antibody:                                             A protein agent developed in response to, and binding specifically with, an
                                                      antigen.

Anti-idiotype                                         Cascade or Network: An in vivo immune response characterized by antibodies to
                                                      antibodies resulting in antigen mimics and secondarily by native antibodies
                                                      reactive to the same antigen as the antibody inducing the cascade.

Antigen:                                              Substance which elicits a specific immune response.

Cell culture-derived material:                        Obtained from the secretion of cells grown in artificial media, often in
                                                      flasks or tanks.

Cellular response:                                    An immune system response mediated by immune cells, often cytotoxic and
                                                      antigen specific.

Chimeric Antibodies:                                  A monoclonal antibody of murine origin modified to replace most murine
                                                      elements with human analogs.

Current Good Manufacturing Practices or cGMP:         Government promulgated guidelines governing the manufacture of human and
                                                      animal drugs and biologicals.

Chemotherapy or chemotherapeutic:                     Generally, the use of drugs in the treatment of disease. Specifically the use
                                                      of cytotoxic drugs to treat cancer.

Cytotoxic T-cells:                                    Immune system cells capable of killing other cells.

Dendritic Cell Assay:                                 Proprietary laboratory assay system developed at AltaRex Corp. to
                                                      differentially evaluate the ability of monoclonal antibody therapeutic
                                                      candidates to alter how a target antigen is recognized, processed, and
                                                      responded to by the immune system.

Epitope:                                              Specific region on an antigen which is recognized by a specific antibody or
                                                      T-cell.

European Agency for the Evaluation of Medicinal       The agency responsible for drug product approval in the European Economic
Products or EMEA:                                     Community.

First line chemotherapy (in ovarian cancer):          The administration of one or more of a combination of chemotherapeutic agent
                                                      usually consisting of a platinum-based drug and paclitaxel.

Gene:                                                 The basic unit of heredity. Genes are nucleic acid sequences encoding specific
                                                      proteins that occupy a specific location on a chromosome and are
                                                      self-producing, submicroscopic structures capable under certain circumstances
                                                      of giving rise to a new character.

Humanized Antibodies:                                 A monoclonal antibody produced through one of several methods to replace
</TABLE>

                                       49
<PAGE>
<TABLE>
<S>                                                   <C>
                                                      all murine elements with human analogs (see also Chimeric Antibody).

Humoral response:                                     An immune response mediated by antibodies in the blood.

Immunogenicity:                                       The degree to which an antigen is capable of eliciting an immune response.

Immunotherapy:                                        A therapeutic approach to treat diseases by modifying the immune response
                                                      against the disease.

Immunological tolerance:                              Characteristic state in which the immune system is rendered unresponsive to an
                                                      antigen that, under other conditions, would provoke an immune response.

Investigational New Drug Application or IND:          An application to the FDA or other regulatory bodies, which is submitted for
                                                      approval prior to beginning clinical trials.

Intravenous  infusion:                                Administration of a medication directly into a vein.

In vitro:                                             Studies or phenomena which take place outside the body.

In vivo:                                              Studies or phenomena which take place in the body.

Master Cell Bank or MCB:                              A well characterized stock containing specific hybridoma cells that are used
                                                      in the manufacture of antibodies.

Master Working Cell Bank:                             "Manufacturer's" or "Master" Working Cell Bank, often referred to as the
                                                      "Working Cell Bank" (WCB): a bank derived from the Master Cell Bank which acts
                                                      as the starting source for (antibody) bioproduction.

Monoclonal antibody MAb:                              Antibody produced by hybridoma cells, which is homogeneous in structure and
                                                      specificity.

MUC1:                                                 A mucinous antigen associated with breast and other cancers.

Multi-epitopic response:                              Immune response to an antigen that is directed to multiple regions on the
                                                      antigen recognized by antibodies or T-cells.

Multiple myeloma:                                     A haematologic malignancy or blood cancer related to leukemia and lymphoma
                                                      characterized by over-production of abnormal plasma cells in the bone marrow.

Murine:                                               Of mouse origin.

New Drug Application or NDA:                          A document submitted to the FDA or other regulatory bodies containing all the
                                                      pre-clinical and clinical data collected on a drug to obtain approval for
                                                      marketing.

New Drug Submission or NDS:                           A document submitted to the TPP which is the Canadian counterpart to the NDA.

Potentially pivotal:                                  A term used to describe clinical trials that would form the basis for a
                                                      submission seeking marketing approval from regulatory authorities if the
                                                      statistical goals of the trial are met.

Primary endpoint:                                     The primary clinical outcome which forms the a priori basis of the statistical
                                                      hypothesis (including sample size estimation) of a well controlled clinical
                                                      trial. A fully successful study confirms a treatment effect of the
</TABLE>

                                       50
<PAGE>
<TABLE>
<S>                                                   <C>
                                                      magnitude sufficient to provide a statistically significant demonstration of
                                                      the "primary end point" for regulatory approval of a product.

PSA:                                                  An antigen associated with prostate cancer.

Rapporteur:                                           Using a centralized procedure for product approval in the European Union via
                                                      EMEA, EMEA assigns rapporteurs (two representative countries) to act as
                                                      liaison for the applicant.

Sera:                                                 The fluid component of blood after separation of cellular components.

Secondary endpoint:                                   Secondary clinical or biological outcomes that can be assessed in analysis of
                                                      a clinical trial. Although supportive and potentially important, these
                                                      endpoints are not the a priori primary experimental question proposed for a
                                                      clinical protocol.

Second-line chemotherapy (in ovarian cancer):         Any one of a combination of drugs consisting of Paclitaxel, Etoposide, CAP
                                                      (cyclophosphamide, adriamycin, cis-platin) or HCAP (hexamethylmelamine and
                                                      CAP) or other drugs administered into patients, who are either partial or
                                                      non-responders to first line chemotherapy.

Surrogate endpoint:                                   A laboratory or physical sign that is used in clinical trials as a substitute
                                                      for a clinically meaningful endpoint that is a direct measure of how a patient
                                                      feels, functions, or survives and that is reasonably likely to predict the
                                                      effect of therapy.

Surrogate marker:                                     A laboratory measurement of biological activity within the body that
                                                      indirectly indicates the effect of treatment on disease state.

T-cell:                                               A form of immune cell that mediates humoral and cellular immune responses.

Therapeutic Products Programme or TPP of Health       The government department responsible for supervising the drug development and
Canada.                                               approval process in Canada

Tumor:                                                An abnormal proliferation of malignant cells.

Tumor antigen or tumor associated antigen or TAA:     An antigen that is predominantly expressed in tumor tissues and may be
                                                      released into the blood stream in association with the tumor.

Tumor marker:                                         A biological product (protein or other) that is expressed on tumor cells and
                                                      secreted usually into the serum, such that presence or activity of the tumor
                                                      can be measured indirectly through measurement of the marker.

United States Food and Drug Administration or         The regulatory body that oversees the drug development and approval process in
FDA:                                                  the United States.
</TABLE>

                                       51
<PAGE>
                                   SIGNATURES

            The registrant hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.

                                   ALTAREX CORP.

                                   By:   /s/ Richard E. Bagley
                                         --------------------------------------
                                         Richard E. Bagley
                                         President and Chief Executive Officer
Waltham, Massachusetts
June 6, 2002

                                       52
<PAGE>
                                                                       EXHIBIT A

                                  ALTAREX CORP.
                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----

Report of Arthur Andersen LLP, Chartered Accountants.......................  F-2
Consolidated Balance Sheets................................................  F-3
Consolidated  Statements of Loss...........................................  F-4
Consolidated Statements of Shareholders' Equity............................  F-5
Consolidated Statements of Cash Flows......................................  F-6
Notes to Consolidated Financial Statements.................................  F-7


                                      F-1
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

AUDITORS' REPORT

To the Shareholders of

ALTAREX CORP.

We have audited the consolidated balance sheets of AltaRex Corp. (an Alberta
corporation in the development stage) as of December 31, 2001 and 2000 and the
consolidated statements of loss, shareholders' equity and cash flows for each of
the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of AltaRex Corp. as of December 31,
2001 and 2000 and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2001 in accordance with
Canadian generally accepted accounting principles.

In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Company's ability to continue as a going concern, such as those described in
Note 1 to the financial statements. Our report to the directors dated February
12, 2002 is expressed in accordance with Canadian reporting standards which do
not permit a reference to such events and conditions in the auditor's report
when these are adequately disclosed in the financial statements.

                             /s/ Arthur Andersen LLP

                          (signed) Arthur Andersen LLP
                              Chartered Accountants

Boston, Massachusetts
February 12, 2002
(except with respect to
the matters discussed in
Note 9, as to which the
date is April 18, 2002)


                                      F-2
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             As of December 31,
                                                                -----------------------------------------
                                                                    2001                         2000
                                                                ------------                 ------------
<S>                                                             <C>                          <C>
(IN CANADIAN DOLLARS)
ASSETS
CURRENT ASSETS
Cash and cash equivalents ......................                $  8,211,313                 $  9,665,187
Short-term investments .........................                     856,051                    3,591,323
Accounts and other receivables .................                      91,474                       75,223
Prepaid expenses ...............................                     761,678                      354,481
                                                                ------------                 ------------
                                                                   9,920,516                   13,686,214
DEPOSITS AND OTHER ASSETS ......................                     235,671                      578,227
CAPITAL ASSETS .................................                     634,870                      490,115
                                                                ------------                 ------------
                                                                $ 10,791,057                 $ 14,754,556
                                                                ============                 ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES

Accounts payable and accrued liabilities .......                $  7,383,751                 $  3,793,766
                                                                ------------                 ------------
            TOTAL LIABILITIES ..................                   7,383,751                    3,793,766

COMMITMENTS AND CONTINGENCIES (NOTE 5)
SHAREHOLDERS' EQUITY

Share capital ..................................                  99,143,441                   72,894,559
Accumulated deficit during the development stage                 (95,736,135)                 (61,933,769)
                                                                ------------                 ------------
            TOTAL SHAREHOLDERS' EQUITY .........                   3,407,306                   10,960,790
                                                                ------------                 ------------
                                                                $ 10,791,057                 $ 14,754,556
                                                                ============                 ============
</TABLE>


On behalf of the Board:

     /s/ Antoine A. Noujaim                           /s/ Richard E. Bagley
------------------------------                    ------------------------------
(Signed) Antoine A. Noujaim                         (Signed) Richard E. Bagley
Director                                                      Director



                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                      F-3
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

                         CONSOLIDATED STATEMENTS OF LOSS

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,                           DEC. 1, 1995
                                                ---------------------------------------------------------        - DEC. 31, 2001
                                                    2001                  2000                  1999               (UNAUDITED)
                                                -------------         -------------         -------------         -------------
<S>                                             <C>                   <C>                   <C>                   <C>
(IN CANADIAN DOLLARS)
REVENUES
Research contracts .....................        $          --         $          --         $      65,000         $     810,000
Sale of research materials .............                   --                    --                    --                71,869
Interest income ........................              523,095               389,826               622,710             3,464,117
                                                -------------         -------------         -------------         -------------
                                                      523,095               389,826               687,710             4,345,986
EXPENSES
Research and development ...............           26,919,785            12,022,218            12,828,617            67,866,051
General and administrative .............            7,405,676             6,091,686             6,802,546            27,141,356
Settlement costs (Note 7) ..............                   --                    --             5,074,714             5,074,714
                                                -------------         -------------         -------------         -------------
                                                   34,325,461            18,113,904            24,705,877           100,082,121
                                                -------------         -------------         -------------         -------------
NET LOSS FOR THE PERIOD ................        $ (33,802,366)        $ (17,724,078)        $ (24,018,167)        $ (95,736,135)
                                                =============         =============         =============         =============
NET LOSS PER COMMON SHARE ..............        $       (1.21)        $       (1.08)        $       (2.32)
                                                =============         =============         =============
Weighted average number of common shares           27,962,625            16,433,031            10,347,434
                                                =============         =============         =============
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                      F-4
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

                           CONSOLIDATED STATEMENTS OF
                              SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                      ACCUMULATED
                                                                                                  DEFICIT DURING THE      TOTAL
                                                                             COMMON SHARES            DEVELOPMENT     SHAREHOLDERS'
                                                                         SHARES         AMOUNT           STAGE           EQUITY
                                                                       ----------    ------------    ------------     ------------
<S>                                                                    <C>           <C>          <C>                 <C>
(In Canadian dollars)
Balance, December 1, 1995 .......................................         292,333    $         --    $         --     $         --
Issue of shares .................................................           6,250              --              --               --
Initial capitalization of Company ...............................              --       1,000,000              --        1,000,000
Net loss ........................................................              --              --        (225,899)        (225,899)
                                                                       ----------    ------------    ------------     ------------
BALANCE, DECEMBER 31, 1995 ......................................         298,583       1,000,000        (225,899)         774,101
Private placement of shares of AltaRex Inc. .....................              --         175,200              --          175,200
Issue of shares of AltaRex Inc. in settlement of interest payable              --          12,066              --           12,066
Shares issued in private placement of unit sales ................         374,375       2,310,424              --        2,310,424
Shares issued to acquire AltaRex Inc. ...........................       1,881,250               1              --                1
Exercise of Special Warrants ....................................         199,375       1,210,000              --        1,210,000
Issuance of common shares in public offering ....................       1,025,000      25,036,466              --       25,036,466
Exercise of stock options .......................................          29,233          76,014              --           76,014
Exercise of warrants ............................................          10,825         103,920              --          103,920
Net loss ........................................................              --              --      (2,172,059)      (2,172,059)
                                                                       ----------    ------------    ------------     ------------
BALANCE, DECEMBER 31, 1996 ......................................       3,818,641      29,924,091      (2,397,958)      27,526,133
Exercise of stock options .......................................          23,750         170,931              --          170,931
Exercise of warrants ............................................         278,262       2,689,342              --        2,689,342
Net loss ........................................................              --              --      (4,677,637)      (4,677,637)
                                                                       ----------    ------------    ------------     ------------
BALANCE, DECEMBER 31, 1997 ......................................       4,120,653      32,784,364      (7,075,595)      25,708,769
Exercise of stock options .......................................           7,500          54,000              --           54,000
Net loss ........................................................              --              --     (13,115,929)     (13,115,929)
                                                                       ----------    ------------    ------------     ------------
BALANCE, DECEMBER 31, 1998 ......................................       4,128,153      32,838,364     (20,191,524)      12,646,840
Issuance of common shares in public offering ....................       9,775,000      17,589,283              --       17,589,283
Net loss ........................................................              --              --     (24,018,167)     (24,018,167)
                                                                       ----------    ------------    ------------     ------------
BALANCE, DECEMBER 31, 1999 ......................................      13,903,153      50,427,647     (44,209,691)       6,217,956
Exercise of Special Warrants ....................................       1,421,889       5,443,617              --        5,443,617
Issuance of common shares in public offering ....................       2,644,982       7,945,779              --        7,945,779
Issuance of common shares in private placements .................       3,559,989       8,048,100              --        8,048,100
Exercise of stock options .......................................         502,187       1,029,416              --        1,029,416
Net loss ........................................................              --              --     (17,724,078)     (17,724,078)
                                                                       ----------    ------------    ------------     ------------
BALANCE, DECEMBER 31, 2000 ......................................      22,032,200      72,894,559     (61,933,769)      10,960,790
Issuance of common shares in public offering ....................       4,402,211       7,232,091              --        7,232,091
Issuance of common shares as payment for services ...............          29,145          56,832              --           56,832
Exercise of Special Warrants ....................................       3,000,000       7,823,322              --        7,823,322
Exercise of Special Units .......................................       7,200,000      11,136,637              --       11,136,637
Net loss ........................................................              --              --     (33,802,366)     (33,802,366)
                                                                       ----------    ------------    ------------     ------------
BALANCE, DECEMBER 31, 2001 ......................................      36,663,556    $ 99,143,441    $(95,736,135)    $  3,407,306
                                                                       ==========    ============    ============     ============
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                      F-5
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)




                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31,            Dec. 1, 1995 -
                                                                            2001           2000           1999       Dec. 31, 2001
                                                                        ------------   ------------   ------------   -------------
(IN CANADIAN DOLLARS)                                                                                                 (UNAUDITED)
<S>                                                                     <C>            <C>            <C>            <C>
NET CASH USED IN OPERATING ACTIVITIES
Net loss .............................................................  $(33,802,366)  $(17,724,078)  $(24,018,167)  $(95,736,135)
Adjustments to reconcile net loss to net cash used in operating
   activities:
   Depreciation and amortization .....................................       384,813        496,945        565,218      2,499,464
   Amortization of deferred lease credit .............................            --        (21,691)       (78,920)      (333,486)
   Non-cash compensation expense .....................................        56,832             --             --         56,832
   Interest expense satisfied through issuance of common shares ......
                                                                                  --             --             --         12,066
   Net changes in non-cash working capital balances ..................     3,509,093        882,171        291,491      6,304,655
                                                                        ------------   ------------   ------------   ------------
                                                                         (29,851,628)   (16,366,653)   (23,240,378)   (87,196,604)
                                                                        ------------   ------------   ------------   ------------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

Purchase of capital assets ...........................................      (529,568)       (86,714)      (154,026)    (2,810,575)
Maturities and purchases of short-term investments ...................     2,735,272      1,286,716       (636,307)      (856,051)
Acquisition of AltaRex Corp. .........................................            --             --             --        (30,250)
                                                                        ------------   ------------   ------------   ------------
                                                                           2,205,704      1,200,002       (790,333)    (3,696,876)
                                                                        ------------   ------------   ------------   ------------
CASH PROVIDED BY FINANCING ACTIVITIES

Issuance of common shares, net .......................................    26,192,050     22,466,912     17,589,283     99,104,793
Deferred finance costs ...............................................            --             --        118,477             --
Employee relocation loans ............................................            --         36,285         69,904             --
                                                                        ------------   ------------   ------------   ------------
                                                                          26,192,050     22,503,197     17,777,664     99,104,793
                                                                        ------------   ------------   ------------   ------------
NET  (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ................    (1,453,874)     7,336,546     (6,253,047)     8,211,313
Cash and cash equivalents, beginning of period .......................     9,665,187      2,328,641      8,581,688             --
                                                                        ------------   ------------   ------------   ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD .............................  $  8,211,313   $  9,665,187   $  2,328,641   $  8,211,313
                                                                        ============   ============   ============   ============
Supplemental disclosure of noncash investing and financing activities:
   Leasehold improvements financed with deferred lease credit ........  $         --   $         --   $         --   $    666,641

</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                      F-6
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

1.  BASIS OF PRESENTATION

DESCRIPTION OF BUSINESS

AltaRex Corp. (the Company), incorporated under the Business Corporations Act
(Alberta), is a development-stage biotechnology company that is engaged in the
research and development of biopharmaceutical products for the therapy of
cancer.

GOING-CONCERN MATTERS

The accompanying consolidated financial statements have been prepared on a
going-concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
consolidated financial statements, during the years ended December 31, 2001,
2000 and 1999, the Company incurred losses of $33,802,366, $17,724,078, and
$24,018,167, respectively and has accumulated deficit during the development
stage of $95,736,135. As further discussed in Note 9, in April 2002, the Company
sold 4.9 million of its common shares to United Therapeutics for gross proceeds
of approximately $3,900,000 (US$2,450,000). In addition, the Company has issued
United Therapeutics a warrant to purchase an additional 3.5 million common
shares for gross proceeds of approximately $2,590,000 (US$1,625,000) and has
granted to United Therapeutics a right to purchase a convertible debenture (the
"second debenture") in the principal amount of approximately $1,390,000
(US$875,000). The right to exercise the warrant and purchase the second
debenture expires on August 20, 2002. In management's opinion, the Company
believes that its available cash, cash equivalents and short-term investments
and interest earned thereon, including the United Therapeutics purchase of
common shares and assuming the exercise of the warrant and the purchase of the
second debenture, should be sufficient to finance its operations and capital
needs into 2003. However, as there is no assurance that United Therapeutics will
exercise the warrant or purchase the second debenture, there is substantial
doubt of the Company's ability to continue as a going concern into 2003.

The consolidated financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent upon its ability to (a) obtain additional financing as may
be required and (b) ultimately attain profitability. The Company is pursuing
additional financing through public or private equity or debt instruments or
through collaborative arrangements with potential collaborators.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared by management in accordance with
accounting principles generally accepted in Canada, which do not differ
materially from those established in the United States, except as disclosed in
Note 8. The preparation of financial statements in accordance with such
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting periods. Actual results could
differ from those estimates.

CONSOLIDATION OF SUBSIDIARIES

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, AltaRex US, Corp. All significant intercompany
balances have been eliminated in consolidation.

REVENUE RECOGNITION

Research material sales are recognized as revenue when materials are delivered.

Revenue from research contracts, which includes government funding of research
projects, is recognized as the services are performed based on costs incurred
or, for those contracts that provide for milestone payments, as milestones are
achieved. Amounts received in advance of services to be performed are recorded
as unearned revenue.


                                      F-7
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CASH AND CASH EQUIVALENTS

Cash equivalents are stated at cost, which approximates fair value. The Company
considers highly liquid investments with original maturities of ninety days or
less to be cash equivalents and includes money market accounts and commercial
paper that are readily convertible to cash.

SHORT-TERM INVESTMENTS

Short-term investments consist of investments with original maturities between
three and twelve months. These investments consist of government and commercial
instruments and are carried at cost plus accrued interest, which approximates
their fair market value. At December 31, 2001, short-term investments have
maturity periods averaging 3.3 months (December 31, 2000 - 1.8 months) and
weighted average interest rates approximating 4.2% (December 31, 2000 -- 5.3%).

DEPOSITS AND OTHER ASSETS

Deposits and other assets primarily consist of down payments on service
contracts. These payments are deferred and expensed as services are provided
under the terms of the contract.

CAPITAL ASSETS

Capital assets are stated at cost, net of investment tax credits, accumulated
amortization and depreciation. Depreciation and amortization are provided at
rates which are designed to allocate the cost of the assets, on a straight-line
basis, over their estimated useful lives as follows:

Scientific equipment..............................    5 years
Computer software and equipment...................    3 years
Office equipment..................................    5 years
Leasehold improvements............................    3 - 5 years, term of lease

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
                                                      DECEMBER 31, 2001                               DECEMBER 31, 2000
                                             ----------------------------------              ----------------------------------
                                                                     ACCUMULATED                                     ACCUMULATED
                                                                    DEPRECIATION/                                   DEPRECIATION/
                                                COST                AMORTIZATION                COST                AMORTIZATION
                                             ----------              ----------              ----------              ----------
<S>                                          <C>                     <C>                     <C>                     <C>
Scientific equipment ..........              $1,420,125              $1,145,541              $1,199,908              $1,022,921
Computer software and equipment                 581,142                 462,539                 499,961                 363,332
Office equipment ..............                 559,673                 387,837                 438,184                 292,054
Leasehold improvements ........                 201,979                 132,132                  95,298                  64,929
                                             ----------              ----------              ----------              ----------
                                             $2,762,919              $2,128,049              $2,233,351              $1,743,236
                                             ----------              ----------              ----------              ----------
Net book value ................                          $  634,870                                      $  490,115
                                                         ==========                                      ==========
</TABLE>

RESEARCH AND DEVELOPMENT COSTS

Research costs are expensed in the period incurred. Development costs are
expensed in the period incurred unless the Company believes a development
project meets generally accepted accounting principles for deferral and
amortization. No development costs have been deferred to date.


                                      F-8
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FOREIGN CURRENCY TRANSLATION

Monetary assets and liabilities in foreign currencies are translated into
Canadian dollars at the rate of exchange at the period end; transactions during
the period are translated at the rate of exchange in effect at the date of the
transaction. Statements of operations amounts are translated at average exchange
rates prevailing during each accounting period. Gains and losses arising from
these translation adjustments are included in the consolidated statements of
loss.

INVESTMENT TAX CREDITS

The Company is permitted to offset Canadian federal income taxes payable with
unapplied investment tax credits which are based on the cost of carrying on
qualifying research and development activities and the cost of qualifying new
equipment (see Note 4).

Refundable investment tax credits received by the Company relating to the
acquisition of assets are deducted from the cost of the related asset.
Refundable investment tax credits received by the Company relating to current
expenses have been included in the determination of net loss as a reduction of
research and development costs.

INCOME TAXES

Effective January 1, 2000, the Company adopted the liability method of
accounting for its income taxes. Under this method, future tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates. This
change did not have a material effect on the Company's consolidated financial
position or results of operations.

Prior to January 1, 2000, income taxes were provided on a deferred tax
allocation basis whereby the provision for income taxes is determined on the
basis of income and expenses included on the statement of income or loss rather
than the related amounts reported in the income tax returns of the Company.
Deferred income taxes relate primarily to differences between the amount of
depreciation and amortization recorded for accounting purposes and capital cost
allowance claimed for income tax purposes. Due to the fact that the Company has
incurred losses since inception, no income tax provision or benefit has been
recorded.

CONCENTRATION OF CREDIT RISK

The Company has no significant off-balance-sheet concentrations of credit risk
such as foreign exchange contracts, option contracts or other hedging
arrangements. Financial instruments that potentially subject the Company to
concentrations of credit risk are principally cash and cash equivalents,
short-term investments, accounts and other receivables and accounts payable.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments consist principally of cash and cash equivalents,
short-term investments, accounts and other receivables and accounts payable. The
estimated fair value of these instruments approximates their carrying value.

NET LOSS PER SHARE

Effective January 1, 2001, the Company adopted the provisions of Section 3500 of
the Handbook of the Canadian Institute of Chartered Accountants, with respect to
earnings per share. The new standard requires that the "treasury stock" method
rather than the "imputed earnings" approach be used to determine the dilutive
effect of instruments such as warrants and options. Under the treasury stock
method, earnings per share are computed as if the instruments were exercised at
the beginning of the period (or the time of issuance, if later) and the funds
obtained were used to purchase common stock at the average market price during
the period. The new accounting policy has


                                      F-9
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

been applied retroactively and had no impact on the reported results of
operations for any current or prior period reported herein.

Basic and diluted net loss per share are the same, as outstanding common stock
options and warrants are antidilutive as the Company has recorded a net loss for
all periods presented. Options and warrants to purchase a total of 12,565,954
common shares as of December 31, 2001 have been excluded from the computation of
diluted weighted average shares outstanding (December 31, 2000 - 2,699,287 and
December 31, 1999 -- 1,504,201).

3.  SHARE CAPITAL

AUTHORIZED AND OUTSTANDING

The authorized share capital of the Company consists of an unlimited number of
common shares and an unlimited number of preferred shares. The preferred shares
may be issued in one or more series and the directors are authorized to fix the
number of shares in each series and to determine the designation, rights,
privileges, restrictions and conditions attached to the shares of each series.

On November 21, 2000, the Company effected a one-for-four consolidation of its
common shares. All share and per share amounts in these consolidated financial
statements and notes have been adjusted to reflect this share consolidation as
of the earliest date presented.

On May 7 and June 1, 1999, the Company issued a total of 9,775,000 common shares
in a public offering for net proceeds of $17,589,283 after related issue
expenses of $1,960,717. In connection with this transaction, the Company granted
options to the agents of this issue to purchase 488,750 common shares at the
issue price of $2.00 per share for a period of two years as additional
compensation. These options were exercised in full in March 2000. In February
2000, the Company issued 1,421,889 special warrants resulting in net proceeds of
$5,443,617 after related issue expenses of $585,181. Each special warrant was
converted into one common share in April 2000. In August 2000, the Company
issued 2,644,982 common shares in a public offering for net proceeds of
$7,945,779 after related issue expenses of $1,047,221. In connection with this
transaction, the Company granted options to the agents of this issue to purchase
185,149 common shares at the issue price of $3.40 per share for periods of two
or three years as additional compensation. Also in August, the Company issued
37,262 common shares in two private placements for aggregate net proceeds of
$298,100. In December 2000, the Company issued 3,522,727 common shares in a
private placement for proceeds of $7,750,000.

In February 2001, the Company issued 4,402,211 common shares in a public
offering for net proceeds of $7,232,091, after related issue expense of
$1,130,431. In connection with this transaction, the Company granted warrants to
the agents of this issue to purchase 274,000 common shares at the issue price of
$1.90 per share for a period of three years as additional compensation. In June
2001, the Company issued 3,000,000 special warrants for net proceeds of
$7,823,322 after related issue expenses of $560,954. Each special warrant was
converted into one common share in July 2001. In October 2001, the Company
issued 7,200,000 special units for net proceeds of $11,136,637 after related
issue expenses of $1,463,363. Each special unit was converted into one common
share and one warrant in November 2001. Each warrant entitles the holder to
acquire one common share at an exercise price of $2.00 per share for a period of
24 months. In connection with this transaction, the Company granted warrants to
the agent to purchase up to a total of 720,000 common shares at a price of $2.00
per share for a period of five years as additional compensation.

As of December 31, 2001, no common shares of the Company were being held in
escrow for regulatory purposes. A total of 9,562 common shares were released
from escrow in 2000.

WARRANTS AND STOCK OPTION PLAN

The following table summarizes the common shares reserved for issuance and
outstanding options under the Company's stock option plan as of the dates
indicated:


                                      F-10
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

3.  SHARE CAPITAL (CONTINUED)

<TABLE>
<CAPTION>
                                                                      OPTIONS OUTSTANDING FOR:
-----------------------------------------------------------------------------------------------------------------------------------
                              SHARES RESERVED FOR       DIRECTORS, OFFICERS &                                 OPTIONS AVAILABLE FOR
DATE                               ISSUANCE                   EMPLOYEES                  CONSULTANTS                  GRANT
-----------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                       <C>                              <C>                  <C>
December 31, 1999............      1,045,000                    965,870                     39,166                      8,713
December 31, 2000............      2,875,000                  2,456,638                     57,500                    316,175
December 31, 2001............      5,500,000                  4,009,305                    177,500                  1,268,508
</TABLE>

The following schedule details the warrants and stock options granted,
exercised, expired and cancelled.

<TABLE>
<CAPTION>
                                                               SHARES ISSUABLE ON EXERCISE OF
                                                         -----------------------------------------
                                                           STOCK                      WARRANTS AND                  EXERCISE PRICE
                                                          OPTIONS                     OTHER OPTIONS                    PER SHARE
                                                         ---------                     -----------                   -------------
<S>                                                      <C>                           <C>                           <C>
BALANCE, DECEMBER 31, 1997 ........                        244,708                         331,328                   $7.20 - 48.00
      Granted .....................                        430,916                              --                    2.12 - 12.00
      Exercised ...................                         (7,500)                             --                            7.20
      Cancelled ...................                       (100,438)                             --                    4.60 - 23.60
      Expired .....................                             --                        (320,913)                   7.20 - 12.00
                                                         ---------                     -----------                   -------------
BALANCE, DECEMBER 31, 1998 ........                        567,686                          10,415                    2.12 - 48.00
      Granted .....................                        467,350                         488,750                     1.84 - 4.12
      Cancelled ...................                        (30,000)                             --                    7.20 - 23.60
                                                         ---------                     -----------                   -------------
BALANCE, DECEMBER 31, 1999 ........                      1,005,036                         499,165                    1.84 - 48.00
      Granted .....................                      1,619,498                       1,607,036                     1.40 - 5.96
      Exercised ...................                        (13,439)                     (1,910,637)                    2.00 - 8.72
      Cancelled ...................                        (96,957)                             --                    3.60 - 14.72
      Expired .....................                             --                         (10,415)                          48.00
                                                         ---------                     -----------                   -------------
BALANCE, DECEMBER 31, 2000 ........                      2,514,138                         185,149                    1.40 - 24.00
      Granted .....................                      1,920,000                      18,394,000                     1.90 - 3.70
      Exercised ...................                             --                     (10,200,000)                    2.00 - 2.80
      Cancelled ...................                       (247,333)                             --                     1.41 - 5.96
                                                         ---------                     -----------                   -------------
BALANCE, DECEMBER  31, 2001 .......                      4,186,805                       8,379,149                   $1.40 - 24.00
                                                         =========                     ===========                   =============
</TABLE>

The following table summarizes information relating to currently outstanding and
exercisable options as of December 31, 2001.

<TABLE>
<CAPTION>
                                                          OUTSTANDING                                      EXERCISABLE
                                    ------------------------------------------------------        ------------------------------
                                                        WEIGHTED AVERAGE
                                                        CONTRACTUAL LIFE    WEIGHTED AVERAGE                       WEIGHTED AVERAGE
RANGE OF EXERCISE PRICE             NUMBER OF SHARES         (YEARS)         EXERCISE PRICE     NUMBER OF SHARES    EXERCISE PRICE
--------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                 <C>                 <C>                 <C>                <C>
     $1.40 -- 2.22                         872,500                 7.6         $      1.65           605,832         $      1.55
      2.80 -- 4.16                       2,310,598                 8.8                3.30         1,995,861                3.40
      4.60 -- 5.96                         614,500                 8.1                5.93           233,991                5.88
      7.20 -- 8.72                         150,249                 5.1                7.62           150,249                7.62
     12.00 -- 14.72                        233,125                 6.1               12.31           233,125               12.31
     23.60 -- 24.00                          5,833                 5.1               23.83             5,833               23.83
                                         ---------                             -----------         ---------         -----------
                                         4,186,805                             $      4.11         3,224,891         $      4.11
                                         =========                             ===========         =========         ===========
</TABLE>


                                      F-11
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

3.  SHARE CAPITAL (CONTINUED)

The following warrants and options to purchase common shares are outstanding at
December 31, 2001.

<TABLE>
<CAPTION>
         SHARES ISSUABLE ON
            EXERCISE OF
-----------------------------------
                          WARRANTS
   STOCK                 AND OTHER        EXERCISE PRICE                 YEAR OF
  OPTIONS                 OPTIONS            PER SHARE                   EXPIRY
--------------------------------------------------------------------------------
<S>                      <C>              <C>                            <C>
       --                   76,234                $ 3.40                  2002
       --                7,200,000                  2.00                  2003
       --                  108,915                  3.40                  2003
  120,000                  274,000         1.90 --  3.70                  2004
       --                  720,000                  2.00                  2006
  108,499                       --                  7.20                  2006
    2,500                       --                 23.60                  2006
   26,875                       --        13.20 -- 14.72                  2007
    3,333                       --                 24.00                  2007
   87,500                       --         2.12 --  3.64                  2008
   18,750                       --         4.60 --  5.60                  2008
  248,000                       --         8.72 -- 12.00                  2008
  495,437                       --         1.40 --  3.60                  2009
  382,911                       --                  4.12                  2009
   53,750                       --                  1.41                  2010
   62,500                       --                  3.84                  2010
  280,000                       --         4.04 --  4.16                  2010
  595,750                       --                  5.96                  2010
1,701,000                       --         1.95 --  3.13                  2011
---------                ---------
4,186,805                8,379,149
=========                =========
</TABLE>

4.  INCOME TAX

The Company is eligible for scientific research and development investment tax
credits which may be applied against federal taxes payable. The accumulated
non-refundable investment tax credits as of December 31, 2001 is approximately
$3,361,000 (December 31, 2000 -- $3,115,000).

As of December 31, 2001, the Company has scientific research and experimental
development expenditures for tax purposes of approximately $14,531,000 (December
31, 2000 -- $13,430,000) which may be carried forward indefinitely and utilized
by reducing income for income tax purposes. As of December 31, 2001, the Company
has approximately $84,900,000 (December 31, 2000 -- $51,200,000) of non-capital
losses available to be applied to taxable income in future years. These losses
expire between 2002 and 2007.

As of January 1, 2000, Canadian GAAP requires recognition of future tax assets
and liabilities for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Under this method,
future tax assets and liabilities are determined based on the difference between
the financial statement and tax bases of assets and liabilities using enacted
tax rates. In addition, a future tax asset, net of a valuation allowance, would
be recorded to recognize the future benefit of loss carryforwards when the
realization of the benefit is determined to be more likely than not. Future tax
assets at December 31, 2001 consist primarily of net operating loss
carryforwards and other temporary differences.


                                      F-12
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

4.  INCOME TAX (CONTINUED)

Due to the uncertainty surrounding the Company's ability to utilize its
carryforwards, no recognition has been given in these financial statements to
the potential tax benefits which may result from these carry forward amounts or
future tax assets. At December 31, 2001, valuation allowance of $41,600,000
(December 31, 2000 -- $32,100,000) has been recorded by the Company.

5.  COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases office and research facilities. Lease costs for its
facilities totaled approximately $526,000, $474,000 and $353,000 for the years
ended December 31, 2001, 2000 and 1999, respectively. During 2000, the Company
entered into a new lease arrangement for its facilities in the United States,
which will expire in August 2002. In January 2001, the Company sublet a portion
of this facility with an estimated annual rental fee of approximately $262,000.
As of December 31, 2001, the Company is committed to annual minimum basic rent
payments for 2002 of approximately $325,000.

LICENSE AND OTHER AGREEMENTS

On December 1, 1995, the Company acquired from Biomira Inc. ("Biomira") an
exclusive world-wide right and license to a certain antibody, its cell bank,
related data, records and proprietary rights (the "Technology") for a
non-refundable cash fee of $150,000, which was charged to research and
development expenses. In 1999, in connection with the settlement of litigation
between the Company and Biomira (see Note 7), the license agreement was amended
and restated. As amended, the license agreement requires the Company to use its
best efforts to commercialize the Technology, to spend certain minimum amounts
to develop the Technology and to pay royalties to Biomira upon commercialization
of products developed from the Technology. The term of the agreement extends to
the later of the ten-year anniversary of first commercialization of a product or
the expiration date of certain patent rights included in the Technology. At the
end of the term of the agreement, the Company will have a world-wide, exclusive,
fully paid up right and license to use the Technology for certain applications.
The Company and Biomira have the right to terminate the agreement upon
forty-five days notice if the other party defaults in the performance,
observance or fulfillment of any of its obligations under the agreement.

The Company is party to an agreement with the Alberta Heritage Foundation for
Medical Research to jointly fund clinical trials, with the Company controlling,
through ownership or licensing, all of the technology. Total funding available
of $500,000 was received and recorded as revenue in 1997. The Company is
required to repay this funding and a royalty equivalent to the amount actually
received, from the commercial success of the resulting products and technology,
at a rate of the lesser of 5% of gross sales or $100,000 per annum. The maximum
total payments by the Company under this agreement are $1,000,000. In addition,
the Company granted warrants in connection with this agreement, which entitled
the holder to obtain 10,416 common shares. These warrants expired on February
29, 2000.

The Company had contracted certain research projects to a third party consultant
for a three-year period which ended March 31, 2000. Under this agreement, the
Company will pay royalties to the consultant upon successful commercialization
of a prostate cancer immunotherapeutic product developed under this
collaboration. As of December 31, 2001, the Company has not paid any royalties
under this agreement and research fees paid to the consultant over the term of
the contract were approximately $775,000.

6.  SEGMENT DISCLOSURE

The Company has considered the reporting requirements of the Canadian Institute
of Chartered Accountants on segment disclosures. The Company has determined that
it manages its operations as one reportable segment of a biotechnology company
engaged in the research and development of biopharmaceutical products for the
therapy of cancer. All of the Company's revenues related to research contracts
and sales of materials were generated in Canada. The Company's capital assets
are located in Canada with the exception of approximately $526,000 as of
December 31, 2001 ($222,000 as of December 31, 2000) located in the United
States.


                                      F-13
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

7.  LEGAL MATTERS

In September 1999, the Company reached a settlement of certain litigation with
Biomira, Inc. The litigation related to claims by Biomira of ownership of an
invention disclosed in an international patent application filed by the Company.
The settlement provides for:

-    The assignment to the Company of any interest Biomira might have in the
     patent application that was the subject of the lawsuit filed by Biomira,

-    The payment by the Company, on behalf of Biomira, of a $4.2 million
     liability of Biomira to Industry Canada, an agency of the Canadian
     government, under a 1991 contribution agreement which, in part, funded
     research related to the Technology licensed by Biomira to the Company, and
     termination of the contribution agreement,

-    The agreement by the Company to pay up to $250,000 to an agency of the
     government of the Province of Alberta upon successful commercialization of
     OvaRex(R) MAb, also related to funding provided to Biomira in support of
     the Technology, and

-    The amendment and restatement of the license agreement between the parties
     (see Note 5).

The Company incurred total costs related to this litigation and settlement,
including the settlement payment and legal fees, of $5,074,714 in 1999.

8.   RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED
     STATES

These financial statements have been prepared in accordance with accounting
principles generally accepted in Canada (Canadian GAAP) which conform in all
material respects to those accounting principles generally accepted in the
United States (U.S. GAAP), except as follows:

     (a)  Accounting for stock-based compensation

For U.S. GAAP purposes, the Company would account for stock-based compensation
to employees in accordance with Accounting Principles Board (APB) Opinion No.
25. For U.S. GAAP purposes, no compensation expense would be recognized on the
Company's stock options and warrants granted, if the exercise price of these
instruments equal the fair value of the Company's stock as at the date of the
grant. Stock-based compensation to non-employees would be recorded at the fair
value of the options and warrants granted.

The compensation expense related to the fair value of stock based compensation
to non-employees and the value of options issued to employees at less than fair
value on the grant date or other appropriate measurement date would be amortized
over the appropriate vesting periods. For Canadian GAAP purposes, no
compensation expense or deferral would be recognized in such circumstances.

As of December 31, 2001, the unamortized compensation benefit that the Company
would record as additional compensation expense in future periods amounts to
$10,000 (December 31, 2000 -- $449,000 and December 31, 1999 -- $12,000).

Additionally, during 2001 and 2000 the Company issued 994,000 and 185,149
options, respectively, to agents of its offerings of common shares. The
compensation related to these issuances of $1,431,000 and $378,000,
respectively, would be recognized as a reduction in the net proceeds of the
offering and an increase in share capital for the value of the options.
Accordingly, there would be no net effect on the share capital of the Company.


                                      F-14
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

8.   RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED
     STATES (CONTINUED)

Beginning January 1, 2002, Section 3870 of the Handbook of the Canadian
Institute of Chartered Accountants requires the Company to account for
stock-based compensation on a basis similar to U.S. GAAP.

     (b)  Reverse take-over costs

For Canadian GAAP purposes, costs incurred in connection with the Company's
reverse take-over are presented as a charge against share capital. For U.S. GAAP
purposes, these costs totaling $495,000 would be charged to expense.
Accordingly, net loss for the year ended December 31, 1996 and share capital for
each of the periods presented would increase by $495,000.

     (c)  Comprehensive income (loss)

For U.S. GAAP purposes, the Company would adopt the disclosure requirements of
Statement of Financial Accounting Standards No. 130 (SFAS 130). SFAS 130
requires the presentation of comprehensive income (loss) and its components.
Comprehensive income (loss) includes all changes in equity during a period
except shareholder transactions. For the periods presented, comprehensive income
(loss) would equal net loss determined for U.S. GAAP purposes as set out in the
following table.

The following table reconciles the net loss as reported on the statements of
loss to the net loss that would have been reported had the financial statements
been prepared in accordance with U.S. GAAP.

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                  --------------------------------------------------------           DEC. 1, 1995
                                                      2001                  2000                  1999             - DEC. 31, 2001
                                                  ------------          ------------          ------------          ------------
<S>                                               <C>                   <C>                   <C>                   <C>
Net loss per Canadian GAAP ..................     $ 33,802,366          $ 17,724,078          $ 24,018,167          $ 95,736,135

Adjustment for stock-based compensation .....          630,000             1,049,000                17,000             2,064,000

Adjustments of reverse take-over costs ......               --                    --                    --               495,000
                                                  ------------          ------------          ------------          ------------

Net loss per U.S. GAAP ......................     $ 34,432,366          $ 18,773,078          $ 24,035,167          $ 98,295,135
                                                  ============          ============          ============          ============

Basic and diluted net loss per share,
       U.S. GAAP ............................     $      (1.23)         $      (1.14)         $      (2.32)
                                                  ============          ============          ============
Basic and diluted weighted-average
        number of common shares .............       27,962,625            16,433,031            10,347,434
                                                  ============          ============          ============
</TABLE>

The following summarizes balance sheet items with material variations under U.S.
GAAP.

<TABLE>
<CAPTION>
                                        DECEMBER 31, 2001      DECEMBER 31, 2000
                                        ----------------------------------------
<S>                                     <C>                    <C>
Share capital.........................      $96,584,441            $74,823,559

Accumulated deficit...................       98,295,135             63,862,769
</TABLE>

     (d)  Auditors' Report

Under U.S. generally accepted auditing standards, the auditors' report would be
modified to express uncertainty as to the Company's ability to continue as a
going concern. As discussed in Note 1, the Company's ability to continue as a
going concern is dependent upon its ability to obtain additional financing
during 2002 due to insufficient working capital resources to fund its operations
for the year. The financial statements would not include any adjustments that
might result from the outcome of this uncertainty.


                                      F-15
<PAGE>
ALTAREX CORP.
(A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2001 AND 2000 (IN CANADIAN DOLLARS)

9.  SUBSEQUENT EVENTS

On April 17, 2002, the Company entered into a license agreement with a
subsidiary of United Therapeutics Corporation for the development of five
monoclonal antibodies, including OvaRex(R) MAb, the Company's lead product in
late stage development for ovarian cancer. Under the terms of the agreement, the
United Therapeutics subsidiary received exclusive rights for development and
commercialization of the products worldwide, with the exception of rights
retained by the Company to European Union and certain other countries. United
Therapeutics will be responsible for the costs of clinical trials, manufacturing
and other development expenses for each product and will pay development
milestone payments and royalties from product sales to the Company.

As part of this transaction, United Therapeutics has purchased 4.9 million
common shares of the Company, at a premium of ten percent to a predetermined
five-day market average, for gross proceeds to the Company of approximately
$3,900,000 (US$2,450,000). In addition, the Company has issued a nominal $80,000
(US$50,000) convertible debenture (the "first debenture") to United Therapeutics
that is convertible into 100,000 common shares on August 21, 2002 and is secured
by the intellectual property of the Company. The Company has also issued United
Therapeutics a warrant (the "warrant") which is exercisable at the option of
United Therapeutics into an additional 3.25 million common shares of the Company
for proceeds to the Company of approximately $2,590,000 (US$1,625,000). Further,
the Company has granted to United Therapeutics a right to purchase a second
debenture (the "second debenture") in the principal amount of approximately
$1,390,000 (US$875,000). Subject to shareholder approval, US$441,960 of the
principal amount of the second debenture will convert into 883,380 common shares
of the Company. The right to exercise the warrant and purchase the second
debenture will expire on August 20, 2002. Assuming the exercise of the warrant
and conversion of the second debenture, United Therapeutics would own
approximately 19.9% of the then current outstanding common shares of the
Company. United Therapeutics has also received rights to purchase 19.9% of the
securities issued by the Company in certain future financings of the Company. If
United Therapeutics fails to exercise the warrant or purchase the second
debenture on or before August 25, 2002, then United's rights under the license
agreement may be terminated by the Company.

On March 5, 2002, the Company issued 185.7 special warrants to a group of
investors, as part of a private placement offering of up to 1,000 special
warrants. This offering anticipated maximum proceeds to the Company of
C$7,000,000 and the issuance of a maximum of 8,250,000 common shares of the
Company. The Company filed a preliminary prospectus dated March 5, 2002 in
connection with this offering. In light of the United Therapeutics transaction
described above and after discussion with securities regulatory authorities,
this offering was cancelled.


                                      F-16
<PAGE>
                                  EXHIBIT INDEX

<TABLE>
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EXHIBIT
NUMBER                                        DOCUMENT DESCRIPTION
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1.1(1)                              The Articles of the Company dated November
                                    18, 1993 as amended by Articles of
                                    Amendment, dated June 25, 1996 and November
                                    28, 1996.

1.2(1)                              Articles of Amalgamation of the Company
                                    dated May 31, 1997 as amended by Articles of
                                    Amendment, dated June 27, 1997.

1.3(1)                              The Bylaws of the Company, dated March 1,
                                    1995.

1.4(1)                              Asset Purchase Agreement dated November 24,
                                    1995 among AltaRex Inc., Biomira Research
                                    Inc. and Biomira Inc.*

1.5(1)                              The Share Purchase Agreement.

1.6(2)                              Settlement Agreement by and among Biomira
                                    Inc. and AltaRex Corp., dated September 3,
                                    1999.

1.7(1)                              Letter Agreement dated February 20, 1996
                                    between AltaRex Corp. and Merck Frosst
                                    Canada Inc.

1.8(2)                              Amended and Restated License Agreement
                                    between Biomira Inc. and AltaRex Corp.,
                                    dated September 3, 1999.*

1.9(2)                              Patent License Agreement between AltaRex
                                    Corp. and the National Institute of Health,
                                    the Centers for Disease Control and
                                    Prevention and the Food and Drug
                                    Administration, dated September 21, 1999.*

1.10(1)                             License Agreement dated November 24, 1995
                                    between Biomira Inc. and AltaRex Corp.*

1.11(1)                             Assignment of Patent Agreement dated April
                                    4, 1996 between Biomira Inc. and AltaRex
                                    Corp.

1.12(1)                             Employment Contracts dated January 1, 1996,
                                    between AltaRex Corp. and Dr. Antoine
                                    Noujaim.

1.13(2)                             Stock Option Plan.

1.15(1)                             Assignment of Letter Agreement dated
                                    February 20, 1996 between AltaRex Corp. and
                                    Merck Frosst Canada Inc.

1.16(3)                             Sublease Agreement by and between Tufts
                                    Associated Health Plans, Inc. and AltaRex
                                    U.S. Corp., dated April 15, 2000.

1.17(4)                             Employment Arrangement dated February 18,
                                    1998 and amended as of March 30, 1998
                                    between AltaRex Corp. and Richard E. Bagley.

1.18(3)                             Amendments to Employment Arrangement between
                                    AltaRex Corp. and Richard E. Bagley, dated
                                    June 1, 1999 and December 22, 1999.
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1.19(3)                             Amendments to Employment Contract between
                                    AltaRex Corp. and Dr. Antoine Noujaim, dated
                                    June 3, 1999 and December 22, 1999.

1.20(3)                             Employment Contract between AltaRex Corp.
                                    and Dr. Christopher Nicodemus, dated
                                    December 16, 1998, as amended on June 1,
                                    1999 and December 22, 1999.

1.21(3)                             Employment Contract between AltaRex Corp.
                                    and Edward M. Fitzgerald dated September 14,
                                    1998, as amended on June 1, 1999 and
                                    December 22, 1999.

1.22(3)                             Employment Contract between AltaRex Corp.
                                    and Peter C. Gonze, dated January 24, 2000.

1.23(5)                             Sublease Agreement dated August 21, 2000
                                    between Anadys Pharmaceuticals, Inc. and
                                    AltaRex US, Corp.

1.24(6)                             Memorandum of Understanding between AltaRex
                                    Corp. and Dompe Farmaceutici S.p.A., dated
                                    November 15, 2000.**

1.25(6)                             Development and Supply Agreement dated May
                                    1, 2001 between Abbott Laboratories and
                                    AltaRex US, Corp.

1.26(5)                             List of Subsidiaries of AltaRex Corp.

1.27***                             Subscription and Debenture Agreement dated
                                    April 17, 2002 between United Therapeutics
                                    Corporation and AltaRex Corp.

1.28***                             Registration Rights Agreement dated April
                                    17, 2002 between United Therapeutics
                                    Corporation and AltaRex Corp.

1.29***                             Exclusive License Agreement dated April 17,
                                    2002 between Unither Pharmaceuticals, Inc.
                                    and AltaRex Corp.**

1.30***                             Employment Contract between AltaRex Corp.
                                    and Robert A. Newman, dated March 25, 1998,
                                    as amended June 9, 1998 and June 19, 1998.

1.31***                             Employment Contract between AltaRex Corp.
                                    and Marlene R. Booth, dated May 4, 1999.

1.32***                             Employment Contract between AltaRex Corp.
                                    and James L. Levin, dated June 27, 2000.

23.1***                             Consent of Arthur Andersen LLP.

99.1***                             Letter to Commission Pursuant to Temporary
                                    Note 3T

(1)  Incorporated herein by reference from the Exhibits to the Company's
     Registration Statement on Form 20-F.

(2)  Incorporated herein by reference from the Exhibits to the Company's Amended
     Annual Report on Form 20-F/A for the year ended December 31, 1999.

(3)  Incorporated herein by reference from the Exhibits to the Company's Annual
     Report on Form 20-F for the year ended December 31, 1999.

(4)  Incorporated herein by reference from the Exhibits to the Company's Annual
     Report on Form 20-F for the year ended December 31, 1997.

(5)  Incorporated herein by reference from the Exhibits to the Company's Annual
     Report on Form 20-F for the year ended December 31, 2000.
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(6)  Incorporated herein by reference from the Exhibits to the Company's Amended
     Annual Report on Form 20-F/A for the year ended December 31, 2000.

*    Confidential treatment granted as to certain portions of this Exhibit. The
     confidential redacted information has been filed separately with the
     Securities and Exchange Commission.

**   Confidential treatment has been requested as to certain portions of this
     Exhibit. The confidential redacted information has been filed separately
     with the Securities and Exchange Commission.

***  Filed herewith.