<PAGE>

      As filed with the Securities and Exchange Commission on June 30, 2003

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

                                  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, 2002

                                       OR

[ ]    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              1123 DENTISTRY/PHARMACY BUILDING
 (Jurisdiction of incorporation                  UNIVERSITY OF ALBERTA
       or organization)                    EDMONTON, ALBERTA, CANADA T6G 2N8
                                        (Address of principal executive offices)

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

  Title of each class                       Name of exchange on which registered
  -------------------                       ------------------------------------
         None                                               N/A

    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 June 20, 2003: 45,896,936 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............................       31
Item 7:   Major Shareholders and Related Party Transactions.....................       38
Item 8:   Financial Information.................................................       39
Item 9:   The Offer and Listing.................................................       40
Item 10:  Additional Information................................................       41
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.......................       48
Item 14:  Material Modifications to the Rights of Security Holders and Use
                of Proceeds.....................................................       48
Item 15:  Controls and Procedures...............................................       48
Item 16A: Audit Committee Financial Expert......................................       48
Item 16B: Code of ethics........................................................       48
Item 16C: Principal Accountant Fees and Services................................       48

PART III
Item 17:  Financial Statements..................................................       49
Item 18:  Financial Statements..................................................       49
Item 19:  Exhibits..............................................................       49
</TABLE>

         Unless the context otherwise requires, references herein to the
"Company" or to "AltaRex" are to AltaRex Corp. and its consolidated
subsidiaries. In this annual report, unless otherwise specified, all monetary
amounts are expressed in Canadian dollars ("$" or "Cdn. $").

         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 8 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 and debt 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".

         INCOME STATEMENT DATA:

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                  ------------------------------------------------------------------------
                                      2002           2001           2000           1999           1998
                                  ------------   ------------   ------------   ------------   ------------
                                                           (IN CANADIAN DOLLARS)
<S>                               <C>            <C>            <C>            <C>            <C>
Revenues.......................   $     34,765   $    523,095   $    389,826   $    687,710   $  1,013,742
Expenses
 Research and development......      2,893,435     26,919,785     12,022,218     12,828,617      9,433,681
 General and administrative....      5,610,591      7,405,676      6,091,686      6,802,546      4,695,990
   Settlement costs............             --             --             --      5,074,714             --
                                  ------------   ------------   ------------   ------------   ------------
Loss from operations...........   $ (8,469,261)  $(33,802,366)  $(17,724,078)  $(24,018,167)  $(13,115,929)
                                  ------------   ------------   ------------   ------------   ------------
Net loss.......................   $ (8,469,261)  $(33,802,366)  $(17,724,078)  $(24,018,167)  $(13,115,929)
                                  ============   ============   ============   ============   ============
Net loss per common share......   $      (0.20)  $      (1.21)  $      (1.08)  $      (2.32)  $      (3.18)
                                  ============   ============   ============   ============   ============
</TABLE>

                                        1

<PAGE>

         BALANCE SHEET DATA:

<TABLE>
<CAPTION>
                                                             AS OF DECEMBER 31,
                                  ------------------------------------------------------------------------
                                      2002           2001           2000           1999           1998
                                  ------------   ------------   ------------   ------------   ------------
                                                           (IN CANADIAN DOLLARS)
<S>                               <C>            <C>            <C>            <C>            <C>
Cash and cash equivalents.....    $  3,625,736   $  8,211,313   $  9,665,187   $  2,328,641   $  8,581,688
Short-term investments........              --        856,051      3,591,323      4,878,039      4,241,732
Working capital...............       2,531,327      2,536,765      9,892,448      5,057,620     10,997,161
Total assets..................       4,546,867     10,791,057     14,754,556      8,567,429     15,159,774
Shareholders' equity..........       2,225,345      3,407,306     10,960,790      6,217,956     12,646,840
</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

         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 June 20, 2003, 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. $0.7358 (U.S. $1.00 = Cdn. $1.3590).

<TABLE>
<CAPTION>
                                           PERIOD     AVERAGE
     CALENDAR PERIOD                        END       RATE(1)     HIGH      LOW
     ---------------                       ------     -------    ------    ------
                                             (U.S. DOLLARS PER CANADIAN DOLLAR)
<S>                                        <C>        <C>        <C>       <C>
June 2003  (through June 20, 2003)         0.7358     0.7395     0.7491    0.7263
May 2003                                   0.7292     0.7225     0.7437    0.7031
April 2003                                 0.6975     0.6858     0.6975    0.6737
March 2003                                 0.6805     0.6775     0.6821    0.6709
February 2003                              0.6720     0.6613     0.6720    0.6529
January 2003                               0.6542     0.6487     0.6570    0.6349
</TABLE>

<TABLE>
<CAPTION>
                                           PERIOD     AVERAGE
     CALENDAR PERIOD                        END       RATE(2)     HIGH      LOW
     ---------------                       ------     -------    ------    ------
                                             (U.S. DOLLARS PER CANADIAN DOLLAR)
<S>                                        <C>        <C>        <C>       <C>
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
2002                                       0.6329     0.6368     0.6619    0.6200
</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.

                                        2

<PAGE>

                                  RISK FACTORS

         There are a number of important factors that could cause the Company's
actual results to differ materially from those indicated or implied by
forward-looking statements. The Company believes that the material factors
discussed below could cause or contribute to such material differences.

THE COMPANY WILL NEED TO RAISE ADDITIONAL FUNDS BY THE END OF AUGUST 2003 IN
ORDER TO OPERATE IN THE THIRD QUARTER OF 2003 AND THEREAFTER

         The Company had cash and cash equivalents of approximately $3.6 million
as of December 31, 2002 and $2.6 million as of March 31, 2003. The Company
believes that its available cash and cash equivalents and interest earned
thereon should be sufficient to finance its operations and capital needs through
the end of August 2003. The Company will need to raise additional funds by the
end of August 2003 in order to operate beyond August 2003. The Company is
currently in discussions with third parties regarding the potential sale of the
Company's net operating loss carry forwards (the "NOL Financing"). The Company
expects that the NOL Financing would involve a cash investment in the Company by
the third parties, which would be followed by a spinout to the Company's
shareholders of a subsidiary of the Company containing up to half of the cash
investment and all of the other assets and liabilities of the Company other than
the Company's net operating loss carry forwards. The Company has also sought and
will continue to seek additional funding through public or private equity or
debt financings, through additional collaborative arrangements and through other
strategic alternatives. The Company can provide no assurance that the proposed
NOL Financing or any additional financing will be available on acceptable terms,
on a timely basis, or at all. If the Company cannot reach agreement with the
third parties regarding the NOL Financing, obtain the required approvals to
proceed with the NOL Financing, or otherwise consummate the proposed NOL
Financing by the end of August 2003, it will be forced to cease operations. Even
if the Company consummates the NOL Financing or obtains other funding to sustain
its operations beyond August 2003, the Company will need to continue to seek
additional funding and could be required in the future to delay, reduce the
scope of, or eliminate one or more of its research and development programs or
to significantly scale back operations if it can not obtain additional
financing.

THE COMPANY HAS A HISTORY OF NET LOSSES, AND IT EXPECTS TO CONTINUE TO INCUR
ADDITIONAL NET LOSSES, AND MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY

         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 $104.2 million to December 31, 2002 and $105.6 million as of March
31, 2003. Subject to obtaining the required financing to continue to operate its
business, 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 availability of resources to pursue such
efforts, 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 United
States Food and Drug Administration ("FDA"), the Therapeutic Products Programme
("TPP") of Health Canada, the European Agency for the Evaluation of Medicinal
Products ("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 and cash equivalents and
interest earned thereon should be sufficient to finance its operations and
capital needs through the end of August 2003. Beyond the Company's immediate
need for cash, the Company intends to rely on cash, if any, generated from
licensing revenues,

                                        3

<PAGE>

collaborative agreements and other capital-raising activities which will be
highly dependent on the Company's successful development and 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.

THE COMPANY'S BUSINESS IS DEPENDENT ON THE SUCCESSFUL DEVELOPMENT AND MARKET
ACCEPTANCE OF ITS PRODUCTS

         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 United Therapeutics Corporation ("United Therapeutics"), must
successfully develop, introduce and market its products. In April 2002, the
Company entered into an exclusive license agreement with United Therapeutics for
the development and commercialization of OvaRex(R) MAb, the Company's product
candidate for the treatment of late-stage ovarian cancer, and four other
monoclonal antibodies worldwide, with the major exception of member nations of
the European Union and certain other countries. 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.

THE BIOLOGICS LICENSE APPLICATION FOR OVAREX(R) MAB MAY NOT BE SUBMITTED AT THE
TIME EXPECTED OR AT ALL, AND IF SUBMITTED, MAY NOT BE APPROVED

         The development program for OvaRex(R) MAb has been assumed by United
Therapeutics. The program has been designed to lead to an initial filing with
the FDA of a Biologics License 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,
United Therapeutics and the Company are evaluating the potential use of
alternative manufacturers or sources, including United Therapeutics' 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

                                        4

<PAGE>

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.

PRECLINICAL AND CLINICAL TESTING OF THE COMPANY'S PRODUCTS IS EXPENSIVE AND
TIME-CONSUMING, AND THE RESULTS OF THESE TESTS ARE UNCERTAIN

         Clinical trials of the Company's products are presently being conducted
by United Therapeutics 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.

FAILURE TO OBTAIN REGULATORY APPROVAL IN NORTH AMERICA AND EUROPE WILL PREVENT
THE COMPANY FROM MARKETING ITS PRODUCTS

         The FDA, the TPP, the 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. 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.

                                        5

<PAGE>

         Investigational New Drug Applications ("INDs") have been submitted to
the TPP and FDA for OvaRex(R) MAb and to the FDA for BrevaRex(R) MAb, but have
not been submitted for other products currently under development. The Company
can make no assurance that it, or United Therapeutics, will obtain regulatory
approval to commercialize OvaRex(R) MAb and BrevaRex(R) MAb, or that it, or
United Therapeutics, 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 United Therapeutics has 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.

THE COMPANY IS DEPENDENT ON THE SUCCESS OF ITS STRATEGIC RELATIONSHIPS WITH
UNITED THERAPEUTICS 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 United Therapeutics 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. Under this
agreement, United Therapeutics is responsible for the development of the
Company's intellectual property with respect to the five antibodies, including
the commercialization of the five antibodies in the licensed territory. In
particular, United Therapeutics 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. If United Therapeutics does not devote the resources
necessary or does not advance the clinical development of the products,
particularly OvaRex(R) MAb, the Company will be materially adversely affected.

         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, 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, United Therapeutics is now working
with other vendors to fill OvaRex(R) MAb vials. The Company previously worked
with Lonza Biologics plc 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 United Therapeutics are

                                        6

<PAGE>

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 United Therapeutics 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 United
Therapeutics' 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 United Therapeutics to
further pursue regulatory approval and commercialization of OvaRex(R) MAb. Such
regulatory approval and commercialization is dependent upon the Company's and
United Therapeutics' ability to achieve such improvements in production.

         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.

THE DEVELOPMENT AND COMMERCIALIZATION OF THE COMPANY'S PRODUCTS MAY BE
TERMINATED OR DELAYED, AND THE COSTS OF DEVELOPMENT AND COMMERCIALIZATION MAY
INCREASE, IF THE COMPANY AND ITS STRATEGIC COLLABORATORS ARE UNABLE TO DEVELOP
AND MAINTAIN ARRANGEMENTS WITH THIRD PARTIES TO MANUFACTURE AND SUPPORT THE
DEVELOPMENT AND COMMERCIALIZATION OF THE COMPANY'S PRODUCTS

         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 United Therapeutics 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 United
Therapeutics are unable to contract or manufacture a sufficient supply of
required products and substances on acceptable terms, or the Company or United
Therapeutics 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 United Therapeutics 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.

THE COMPANY FACES SUBSTANTIAL COMPETITION, WHICH MAY RESULT IN OTHERS
DISCOVERING, DEVELOPING OR COMMERCIALIZING COMPETING PRODUCTS BEFORE OR MORE
SUCCESSFULLY THAN THE COMPANY DOES

         Technological competition in the pharmaceutical industry is intense.
There are many companies and institutions, both public and private, including
pharmaceutical companies, chemical companies, specialized

                                        7

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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.

IF THE COMPANY IS NOT ABLE TO OBTAIN OR MAINTAIN PATENT PROTECTION FOR ITS
PRODUCTS, OR KEEP ITS TRADE SECRETS CONFIDENTIAL, ITS TECHNOLOGY AND INFORMATION
MAY BE USED BY OTHERS TO COMPETE AGAINST IT

         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
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.

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THE COMPANY MAY NOT BE ABLE TO MANAGE ITS BUSINESS EFFECTIVELY IF IT IS UNABLE
TO ATTRACT AND RETAIN KEY PERSONNEL AND CONSULTANTS

         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.

THE COMPANY COULD BE EXPOSED TO SIGNIFICANT LIABILITY CLAIMS IF IT IS UNABLE TO
OBTAIN INSURANCE AT ACCEPTABLE COSTS AND ADEQUATE LEVELS OR OTHERWISE PROTECT
ITSELF AGAINST PRODUCT LIABILITY CLAIMS

         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.

VOLATILITY OF THE COMPANY'S COMMON SHARE PRICE COULD CAUSE YOU TO LOSE ALL OR
PART OF YOUR INVESTMENT

         Market prices for securities of biotechnology companies generally, and
of the Company's 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. Since January 1, 2002 the
sale price per share of the Company's Common Shares as reported on the Toronto
Stock Exchange has ranged from a high of $3.35 per share to a low of $0.20 per
share.

PROVISIONS IN THE COMPANY'S CHARTER DOCUMENTS AND PROVISIONS OF ALBERTA LAW MAY
PREVENT A CHANGE IN CONTROL OR MANAGEMENT THAT SHAREHOLDERS MAY CONSIDER
DESIRABLE.

         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.

                                        9

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THE COMPANY PREVIOUSLY USED ARTHUR ANDERSEN LLP AS ITS INDEPENDENT AUDITORS

         The Company's consolidated financial statements as of and for the
fiscal years ended December 31, 2000 and December 31, 2001 were audited by
Arthur Andersen LLP, independent accountants. On August 31, 2002, Arthur
Andersen ceased practicing before the SEC. Therefore, Arthur Andersen did not
participate in the preparation of this annual report, did not reissue its audit
report with respect to the financial statements included in this annual report
and did not consent to the inclusion of its audit report in this annual report.
As a result, holders of the Company's securities, and investors evaluating
offers and purchasing securities may have no effective remedy against Arthur
Andersen in connection with a material misstatement or omission in the financial
statements to which its audit report relates. In addition, even if such holders
or investors were able to assert such a claim, because it has ceased operations,
Arthur Andersen may fail or otherwise have insufficient assets to satisfy claims
made by such persons that might arise under federal securities laws or otherwise
with respect to Arthur Andersen's audit report.

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 1123 Dentistry/Pharmacy
Building, University of Alberta, Edmonton, Alberta, Canada T6G 2N8, and its
telephone number is (780) 944-9993.

         The Company's business is the research, development and
commercialization of biopharmaceutical products that modulate the immune system
for the treatment of certain cancers and other diseases. Substantially all of
the Company's products are subject to regulation by the TPP in Canada, the FDA
in the United States, the EMEA in Europe and similar agencies in other
countries. To date, none of the Company's products have been approved by
regulatory agencies for sale.

         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, the Company 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.

         On April 17, 2002, the Company entered into a license agreement with a
subsidiary of United Therapeutics for the development of OvaRex(R) MAb and four
other monoclonal antibodies. Under the terms of this agreement, United
Therapeutics, through its subsidiary, received exclusive rights for development
and commercialization of the five antibody products worldwide, with the
exception of rights retained by the Company to member nations of the European
Union and certain other countries. United Therapeutics is now developing
OvaRex(R) MAb in the licensed territories. As a result of the license agreement,
personnel formerly employed by the Company and involved in the clinical
development, manufacturing and regulatory aspects of the OvaRex(R) MAb
development program became employees of United Therapeutics. In addition, United
Therapeutics reimbursed the Company for $2.5 million in costs incurred in the
development of the licensed products prior to

                                       10

<PAGE>

April 17, 2002, and will pay to the Company development milestone payments and
royalty fees from product sales. In connection with the license agreement,
United Therapeutics purchased 9,133,380 Common Shares of the Company for gross
proceeds to the Company of approximately $7.2 million and also purchased a
debenture in the principal amount of $674,463.

         The Company has been working closely with United Therapeutics on
conducting experiments in support of the licensed antibodies. In January 2003,
United Therapeutics announced a phase III U.S. program consisting of two trials
of 177 patients each comprising a population having shown clinical benefit in a
previously reported phase IIb trial. The focus of the Company's research and
development has been, and subject to the availability of additional cash
resources, will be to expand the applications of the Company's technology
outside the field of cancer and to continue the Company's support of United
Therapeutics' preclinical development of licensed monoclonal antibodies.

         The Company believes that its available cash and cash equivalents and
interest earned thereon should be sufficient to finance its operations and
capital needs through the end of August 2003. The Company will need to raise
additional funds by the end of August 2003 in order to operate beyond August
2003. The Company is currently in discussions with third parties regarding the
NOL Financing. The Company expects that the NOL Financing would involve a cash
investment in the Company by the third parties, which would be followed by a
spinout to the Company's shareholders of a subsidiary of the Company containing
up to half of the cash investment and all of the other assets and liabilities of
the Company other than the Company's net operating loss carry forwards. The
Company has also sought and will continue to seek additional funding through
public or private equity or debt financings, through additional collaborative
arrangements and through other strategic alternatives. The Company can provide
no assurance that the proposed NOL Financing or any additional financing will be
available on acceptable terms, on a timely basis, or at all. If the Company
cannot reach agreement with the third parties regarding the NOL Financing,
obtain the required approvals to proceed with the NOL Financing, or otherwise
consummate the proposed NOL Financing by the end of August 2003, it will be
forced to cease operations.

         On May 15, 2003, Richard E. Bagley resigned as President and Chief
Executive Officer and Director of the Company. The Company appointed Dr. Antoine
A. Noujaim as President and Chief Executive Officer and Vice-Chairman of the
Board of Directors of the Company and Robin Salmon as its Chief Financial
Officer. In connection with the changes in management, the Company initiated a
restructuring program to prioritize its initiatives and reduce its operating
costs. As part of this program, the Company relocated its executive and
administrative offices to Edmonton, Alberta, reduced the number of full-time
employees of the Company, and closed its Waltham, Massachusetts office.

BUSINESS STRATEGY

    Subject to obtaining the financing to continue operations, the key elements
of the Company's strategy are to:

    -    Focus on securing a northern European collaboration for OvaRex(R)MAb
         and the Company's other products;

    -    Strategically interface United Therapeutics' 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.

                                       11

<PAGE>

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).

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

                                       12

<PAGE>

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;

         -    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. United Therapeutics is conducting
ongoing product development in its licensed territories, pursuant to the License
Agreement, and the Company's 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.

                                       13

<PAGE>

         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. 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-

                                       14

<PAGE>

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.

         See "Item 3: Key Information - Risk Factors - The Company is Dependent
on the Success of its Strategic Relationships with United Therapeutics and Other
Third Parties".

    CLINICAL DEVELOPMENT OF OVAREX(R) MAB

         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. 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. 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. United Therapeutics
will determine the timeline for OvaRex(R) MAb regulatory submission for their
licensed territories and the Company for the remaining territories.

         ONGOING UNITED THERAPEUTICS CLINICAL TRIALS

         United Therapeutics has initiated an OvaRex(R) MAb phase III pivotal
trial program to treat advanced ovarian cancer. Each of United Therapeutics' two
identical trials will be conducted in the United States in Stage III/IV ovarian
patients who have successfully completed primary treatment of surgery and
chemotherapy. Treatment will continue until disease relapse, a time period where
there are no approved treatment options. Consequently, the studies will be
double-blind, placebo-controlled and will each enroll 177 patients randomized
2:1 active versus placebo. Patient enrollment has commenced and the Company
expects that United Therapeutics will have fully enrolled these trials within
the next 15 months with results by mid-2005. OvaRex(R) MAb has been granted
Orphan Drug status in the United States and Europe and Fast Track designation in
the U.S.

         COMPLETED CLINICAL TRIALS

         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.

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

         Based on the 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.

                                       15

<PAGE>

         In January 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 United Therapeutics for its territories and by the Company and its other
collaborators in 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

                                       16

<PAGE>

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.

         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.

         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.

    BREVAREX(R) MAB

         The Company also has a cancer therapeutic in development 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
United Therapeutics 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 effects, whether there is any current or conventional
therapy, the size of the target population, and the nature of the proposed
treatment.

                                       18

<PAGE>

         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").

         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,

                                       19

<PAGE>

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.

         Applications for Orphan Drug designation in Europe are 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. The Company received Orphan Drug status for OvaRex(R) MAb in
Europe in 2002.

    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

         The Company's current strategic relationships with collaborators are
described below.

    UNITED THERAPEUTICS CORPORATION

         On April 17, 2002, the Company entered into a license agreement with a
subsidiary of United Therapeutics 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 United Therapeutics an
exclusive, non-transferable (except in limited circumstances) royalty bearing
license (the "License") throughout the world (other than the member nations

                                       20

<PAGE>

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").

         United Therapeutics has agreed to use commercially reasonable efforts
to develop, market and commercialize such products in the licensed territory
utilizing the Licensed Technology as United Therapeutics determines are
commercially feasible, including the conduct of related research, development
and pre-clinical and clinical trials and obtaining all necessary regulatory
approvals. United Therapeutics is solely responsible for the development of the
Licensed Technology, including the commercialization of the five antibodies in
the licensed territory. In particular, United Therapeutics 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
United Therapeutics a right of first refusal to any other technology developed
by the Company for application in the field of cancer.

         As part of the license agreement, United Therapeutics purchased 4.9
million Common Shares of the Company, resulting in gross proceeds to the Company
of approximately $3.9 million. In addition, United Therapeutics purchased a
convertible debenture from the Company for approximately $80,000 that was
converted by United Therapeutics into 100,000 Common Shares of the Company on
August 21, 2002. The Company also issued to United Therapeutics a warrant, which
United Therapeutics subsequently exercised, to purchase an additional 3.25
million Common Shares of the Company for an aggregate purchase price of
approximately $2.6 million. Further, United Therapeutics exercised its right to
purchase a second convertible debenture from the Company in the principal amount
of approximately $1.4 million.

    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 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.

                                       21

<PAGE>

    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.

    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 "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.

                                       22

<PAGE>

    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.

    -    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.

                                       23

<PAGE>

PROPRIETARY PROTECTION

         The Company relies upon patent protection and trademarks 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.

    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 15 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.

    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.

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. 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>
Jeffrey Schlom, Ph.D.            National Cancer Institute at the
                                 National Institutes of Health, USA
Aldo Serafini, M.D.              University of Miami, USA
Dean Mann, M.D., Ph.D.           University of Maryland, USA
Hans Wigzell, M.D., D.Sc.        Karolinska Institute, Sweden
</TABLE>

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. United Therapeutics is also
currently working with Abbott Laboratories in the production of OvaRex(R) MAb
for use in clinical trials. The Company is currently evaluating whether it will
continue working with Abbott Laboratories, rely on United Therapeutics, or
select an alternative commercial manufacturer for production of OvaRex(R) MAb
for research and development and clinical trial purposes.

                                       24

<PAGE>

HUMAN RESOURCES

         As of June 20, 2003, the Company has four employees, all of whom are
located at the Company's executive offices in Edmonton, Alberta. Of these four
employees, two hold PhD's and one of the four is working in research and product
development.

         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 United Therapeutics, in 2002, 14
employees of the Company became employees of Unither Pharmaceuticals, Inc., a
subsidiary of United Therapeutics ("Unither Pharmaceuticals").

         In connection with the Company's recent changes in management and
relocation of its executive and administrative offices to Edmonton, Alberta,
nine employees ceased to be employed by the Company.

LEASED PROPERTIES

         The Company's executive offices and research and development facility
are located at 1123 Dentistry Pharmacy Building, University of Alberta,
Edmonton, Alberta T6G 2N8. The Company leases the above premises.

         The Company subleases its Canadian facilities from Virexx Research Inc.
See "Item 7: Major Shareholders and Related Party Transactions". The sublease
is for a term of one year, terminating on July 31, 2003. The Company expects to
renew its sublease of its Canadian facilities. The Company is seeking
to sublease the property previously used for its former United States offices.
The United States lease expires in August 2004. The total lease costs under
leases for the Company's lab and office space were approximately $257,000 for
the fiscal year ended December 31, 2002.

                                       25

<PAGE>

ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

         The following discussion and analysis explains trends in the Company's
financial condition and results of operations for the years ended December 31,
2002, 2001 and 2000. This discussion and analysis should be read in conjunction
with the Company's financial statements and 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 that modulate the immune system
for the treatment of certain cancers and other diseases. Substantially all of
the Company's products are subject to regulation by the TPP in Canada, the FDA
in the United States, the EMEA in Europe and similar agencies in other
countries. To date, none of the Company's products have been approved by
regulatory agencies for sale.

         Through its 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, 2002, the Company has incurred cumulative losses of
$104.2 million. This includes annual losses of $8.5 million, $33.8 million,
$17.7 million, $24.0 million, $13.1 million, and $4.7 million for the years
ended December 31, 2002, 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. The Company 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.
Until revenues are generated, the Company is dependent upon its existing limited
cash resources, interest income and its ability to obtain external financing
from equity offerings, debt financings and collaborative research and
development alliances to finance its operations. At December 31, 2002, the
Company's accumulated deficit was $104,205,396. (See "Item 3: Key Information --
Risk Factors")

         The Company is also highly dependent on the success of its license
agreement with United Therapeutics. On April 17, 2002, the Company entered into
a license agreement with a subsidiary of United Therapeutics for the development
of OvaRex(R) MAb and four other monoclonal antibodies. Under the terms of this
agreement, United Therapeutics, through its subsidiary, received exclusive
rights for development and commercialization of the five antibody products
worldwide, with the exception of rights retained by the Company to member
nations of the European Union and certain other countries. United Therapeutics
is now developing OvaRex(R) MAb in the licensed territories. As a result of the
license agreement, personnel formerly employed by the Company and involved in
the clinical development, manufacturing and regulatory aspects of the OvaRex(R)
MAb development program became employees of United Therapeutics. In addition,
United Therapeutics reimbursed the Company for $2.5 million in costs incurred in
the development of the licensed products prior to April 17, 2002, and will pay
to the Company development milestone payments and royalty fees from product
sales. In connection with the license agreement, United Therapeutics purchased
9,133,380 Common Shares of the Company for gross proceeds to the Company of
approximately $7.2 million and also purchased a debenture in the principal
amount of $674,463.

         The Company has been working closely with United Therapeutics on
conducting experiments in support of the licensed antibodies. In January 2003,
United Therapeutics announced a phase III U.S. program consisting of two trials
of 177 patients each comprising a population having shown clinical benefit in a
previously reported phase IIb trial. The focus of the Company's research and
development has been, and subject to the availability of additional cash
resources, will be to expand the applications of the Company's technology
outside the field of cancer and to continue the Company's support of United
Therapeutics' preclinical development of licensed monoclonal antibodies.

         The Company believes that its available cash and cash equivalents and
interest earned thereon should be sufficient to finance its operations and
capital needs through the end of August 2003. The Company will need to raise
additional funds by the end of August 2003 in order to operate beyond August
2003. The Company is currently in discussions with third parties regarding the
NOL Financing. The Company expects that the NOL Financing would

                                       26

<PAGE>

involve a cash investment in the Company by the third parties, which would be
followed by a spinout to the Company's shareholders of a subsidiary of the
Company containing up to half of the cash investment and all of the other assets
and liabilities of the Company other than the Company's net operating loss carry
forwards. The Company has also sought and will continue to seek additional
funding through public or private equity or debt financings, through additional
collaborative arrangements and through other strategic alternatives. The Company
can provide no assurance that the proposed NOL Financing or any additional
financing will be available on acceptable terms, on a timely basis, or at all.
If the Company cannot reach agreement with the third parties regarding the NOL
Financing, obtain the required approvals to proceed with the NOL Financing, or
otherwise consummate the proposed NOL Financing by the end of August 2003, it
will be forced to cease operations.

         On May 15, 2003, Richard E. Bagley resigned as President and Chief
Executive Officer and Director of the Company. The Company appointed Dr. Antoine
A. Noujaim as President and Chief Executive Officer and Vice-Chairman of the
Board of Directors of the Company and Robin Salmon as its Chief Financial
Officer. In connection with the changes in management, the Company initiated a
restructuring program to prioritize its initiatives and reduce its operating
costs. As part of this program, the Company relocated its executive and
administrative offices to Edmonton, Alberta, reduced the number of full-time
employees of the Company, and closed its Waltham, Massachusetts office.

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 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.

CRITICAL ACCOUNTING POLICIES

         This management's discussion and analysis of financial condition and
results of operations is based on the Company's consolidated financial
statements, which 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 to the
consolidated financial statements. 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. The Company's
significant accounting policies are more fully described in Note 2 to the
Company's consolidated financial statements.

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

    Revenue

         Revenue for the year ended December 31, 2002 totaled $35,000, as
compared to $0.5 million for the year ended December 31, 2001. Revenue in each
period consisted solely of interest income. The decrease in 2002 was due to
lower average levels of cash and short-term investments in 2002 as compared to
2001.

                                       27

<PAGE>

    Expenses

         Expenses for the year ended December 31, 2002 decreased by $25.8
million, to $8.5 million for the year ended December 31, 2002 from $34.3 million
for the year ended December 31, 2001. This decrease was largely due to lower
research and development expenses, which decreased by $24.0 million, to $2.9
million for the year ended December 31, 2002 from $26.9 million for the year
ended December 31, 2001. This decrease in research and development expenses
primarily reflects the effect of the United Therapeutics license, United
Therapeutics' assumption of ongoing development responsibilities and associated
expenses to complete the development and scale-up of the manufacturing of cell
culture based OvaRex(R) MAb and clinical trial costs related OvaRex(R) MAb,
United Therapeutics' hiring of certain former personnel of the Company and an
offsetting reimbursement to the Company of $2.5 million of costs incurred by the
Company prior to April 17, 2002, the effective date of the license. The Company
expects that its research and development expenses will decrease in 2003 in
light of the Company's current capital situation and the effect of United
Therapeutics' assumption of ongoing development responsibilities and associated
expenses relating to OvaRex(R) MAb. Subject to obtaining additional resources,
the Company expects to focus its research and development efforts on conducting
a limited number of experiments in support of the antibodies licensed to United
Therapeutics and a limited number of experiments with the Company's antibodies
outside the cancer field.

         General and administrative expenses decreased by $1.8 million, to $5.6
million for the year ended December 31, 2002 from $7.4 million for the year
ended December 31, 2001, due to a decrease of $0.6 million in professional fees
paid in the management of the Company's intellectual property portfolio and
general corporate matters, a decrease of $0.6 million in payroll expense as a
result of the lower number of employees of the Company in 2002, as well as a
decrease of $0.6 million in facility-related costs and other corporate costs,
all as a result of United Therapeutics' assumption of ongoing development
responsibilities and associated expenses and hiring of former personnel of the
Company in connection with the April 17, 2002 license described above.

         As a result of the United Therapeutics license agreement, the Company
anticipates that research and development expenses, and supporting general and
administrative expenses, will continue to decrease significantly in 2003. The
actual levels of research and development and general and administrative
expenditures by the Company will depend primarily on the cash resources
available to the Company. These levels will also depend on 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 and the extent to which
the Company enters into arrangements with corporate collaborators for ongoing
research and development activities. See "Liquidity and Capital Resources".

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

    Revenue

         Revenue for the year ended December 31, 2001 totaled $0.5 million, as
compared to $0.4 million for the year ended December 31, 2000. Revenue in each
period consisted solely of interest income. The increase in 2001 was due to
higher average levels of cash and short-term investments in 2001 as compared to
2000.

    Expenses

         Expenses for the year ended December 31, 2001 increased by $16.2
million, to $34.3 million for the year ended December 31, 2001 from $18.1
million for the year ended December 31, 2000. This increase was largely due to
higher research and development expenses, which increased by $14.9 million, to
$26.9 million for the year ended December 31, 2001 from $12.0 million for the
year ended December 31, 2000. This increase in research and development expenses
was primarily due to an increase of $10.6 million in manufacturing development
costs as the Company worked with Abbott Laboratories and others to complete
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 related to a 102
patient OvaRex(R) 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).

                                       28

<PAGE>

         General and administrative expenses increased by $1.3 million, to $7.4
million for the year ended December 31, 2001 from $6.1 million for the year
ended December 31, 2000 due to additional professional fees paid in the
management of the Company's intellectual property portfolio and other corporate
matters, as well as an increase in office expenses due to the occupancy of new
office space in the United States in October 2000.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         At December 31, 2002, the Company had cash and cash equivalents of $3.6
million. The Company's principal risks relative to its cash and cash equivalents
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

         Prior to the relocation of its executive and administrative offices to
Edmonton, Alberta in May 2003, the Company had a significant portion of its
operations in the United States, including the operation of its former office in
the United States and the ongoing administration of development and research
activities related to the Company's products. A significant portion of the
Company's transactions continue to be denominated in U.S. dollars and,
accordingly, 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, 2002 the Company had
$3.5 million (or 98%) 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 and cash equivalents totaled $3.6 million at December 31, 2002 and
$2.6 million at March 31, 2003. From its inception through December 31, 2002,
the Company has financed its operations primarily through private placements and
public offerings of equity securities amounting to approximately $107.1 million
in aggregate net proceeds to the Company. In addition, the Company has had
interest income on invested balances amounting to an aggregate of $3.5 million,
as well as $0.8 million in proceeds received under research contracts. The
Company currently has no contributing cash flows from operations. As a result,
the Company relies on external sources of financing such as the issuance of
equity or debt securities and interest income and payments under the license
agreement with United Therapeutics.

         The Company's net cash used in operating activities amounted to $13.4
million, $29.8 million, and $16.4 million for the years ended December 31, 2002,
2001 and 2000, respectively, and resulted primarily from its net operating
losses. The Company's investing activities resulted in a net provision of cash
of $0.8 million, $2.2 million and $1.2 million, respectively, for the years
ended December 31, 2002, 2001 and 2000.

         Accounts payable and accrued liabilities decreased by approximately
$5.7 million to $1.7 million at December 31, 2002 from $7.4 million at December
31, 2001. This decrease resulted primarily from the payment of some of those
liabilities and and the assumption by United Therapeutics of responsibility for
the ongoing development and associated expenses relating to the development and
scale-up of the manufacturing of cell culture based OvaRex(R) MAb and clinical
trial costs related OvaRex(R) MAb.

         As part of the United Therapeutics license agreement, United
Therapeutics purchased 4.9 million Common Shares of the Company, resulting in
gross proceeds to the Company of approximately $3.9 million. In addition, United
Therapeutics purchased a convertible debenture from the Company for
approximately $80,000 that was converted by United Therapeutics into 100,000
Common Shares of the Company on August 21, 2002. The Company also issued to
United Therapeutics a warrant, which United Therapeutics subsequently exercised,
to purchase an additional 3.25 million Common Shares of the Company for an
aggregate purchase price of approximately

                                       29

<PAGE>

$2.6 million. Further, United Therapeutics exercised its right to purchase a
second convertible debenture from the Company in the principal amount of
approximately $1.4 million.

         The Company believes that its available cash and cash equivalents and
interest earned thereon should be sufficient to finance its operations and
capital needs through the end of August 2003. The Company will need to raise
additional funds by the end of August 2003 in order to operate beyond August
2003. The Company is currently in discussions with third parties regarding the
NOL Financing. The Company expects that the NOL Financing would involve a cash
investment in the Company by the third parties, which would be followed by a
spinout to the Company's shareholders of a subsidiary of the Company containing
up to half of the cash investment and all of the other assets and liabilities of
the Company other than the Company's net operating loss carry forwards. The
Company has also sought and will continue to seek additional funding through
public or private equity or debt financings, through additional collaborative
arrangements and through other strategic alternatives. The Company can provide
no assurance that the proposed NOL Financing or any additional financing will be
available on acceptable terms, on a timely basis, or at all. If the Company
cannot reach agreement with the third parties regarding the NOL Financing,
obtain the required approvals to proceed with the NOL Financing, or otherwise
consummate the proposed NOL Financing by the end of August 2003, it will be
forced to cease operations. Even if the Company consummates the NOL Financing or
obtains other funding to sustain its operations beyond August 2003, the Company
will need to continue to seek additional funding and could be required in the
future to delay, reduce the scope of, or eliminate one or more of its research
and development programs or to significantly scale back operations if it can not
obtain additional financing.

         The Company's future funding needs would 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 had capital expenditures of approximately $4,000 for the
year ended December 31, 2002. In fiscal year 2003, capital expenditures should
not exceed $30,000 and will be funded from existing cash resources.

     Contractual Obligations

         The following table summarizes the Company's significant contractual
obligations at December 31, 2002:

<TABLE>
<CAPTION>
                                                                 PAYMENTS DUE BY PERIOD
                                                                 ----------------------
                                                     LESS THAN 1 YEAR      1 - 3 YEARS       TOTAL
<S>                                                  <C>                   <C>             <C>
Lease obligations.................................       $114,000           $  57,000      $  171,000
Employment agreements/Severance obligations.......        738,000                   -         738,000
Long-term debt....................................              -             674,763         674,763
                                                         --------           ---------      ----------
Total obligations.................................       $852,000           $ 731,763      $1,583,763
                                                         ========           =========      ==========
</TABLE>

         The Company is a party to employment agreements and severance
agreements with a number of its employees. Under the terms of these agreements,
the Company would owe these employees $738,000 upon a change in control of the
Company.

         The Company's long-term debt consists of a note payable for $674,763
issued to United Therapeutics which is secured by the Company's intellectual
property. Interest on this note is due quarterly and accrues at a rate of 6% per
annum. The unpaid principal and interest on this note is due in full in August
2005. This note is convertible into Common Shares of the Company at a price of
U.S.$0.50 per share at any time at the option of United Therapeutics.

         The Company intends to seek to sublease its office space in the United
States to reduce the lease obligations payments of $142,000 due under the lease.

                                       30

<PAGE>

ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND OFFICERS

         Following are the Directors and Executive Officers of the Company. In
May 2003, Dr. Antoine A. Noujaim and Robin Salmon were appointed President,
Chief Executive Officer and Vice Chairman of the Board of Directors of the
Company and Chief Financial Officer of the Company, respectively. At the same
time, in connection with the Company's changes in management and relocation,
Richard E. Bagley resigned as President, Chief Executive Officer and Director of
the Company and Robert A. Newman ceased to be employed by the Company as Vice
President, Business Operations of the Company. William R. McMahan and Robert H.
Uhl will not stand for re-election as Directors of the Company at the Company's
2003 annual meeting of shareholders.

<TABLE>
<CAPTION>
          NAME                                   POSITION(S)
          ----                                   -----------
<S>                                 <C>
Dr. Antoine A. Noujaim              President, Chief Executive Officer and
                                    Vice Chairman of the Board
Jacques R. Lapointe(1)              Chairman of the Board
Bruce D. Brydon(2)                  Director
William R. McMahan(1)(2)            Director
Robin Salmon                        Chief Financial Officer
Robert H. Uhl(2)                    Director
</TABLE>

(1) Member of the Compensation Committee

(2) Member of the Audit Committee

         Dr. Antoine A. Noujaim. Dr. Noujaim rejoined the Company in May 2003 as
its President and Chief Executive Officer and Vice Chairman of the Board. Dr.
Noujaim founded the Company in 1995 and served as its Chairman and Chief
Scientific Officer until July 2002. Dr. Noujaim also serves as President and
Chief Executive Officer of Virexx Research Inc., a privately-owned biotechnology
company engaged in the research and development of biopharmaceutical products
for the treatment of Hepatitis B, chronic Hepatitis C and resultant liver
cancers. Dr. Noujaim has served as President and Chief Executive Officer of
Virexx Research Inc. since September 2001.

         Jacques R. Lapointe. Mr. Lapointe has been a Director of the Company
since May 2001 and was appointed Chairman in July 2002. Mr. Lapointe has more
than 30 years of leadership and operational experience with global biotechnology
and pharmaceutical organizations. 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, a
biotechnology company, from 1997 to 2001, and served as a Director of that
company from 1995 to 2002. Mr. Brydon was President and Chief Executive Officer
of Biovail Corporation from 1995 to 1997.

         William R. McMahan. Mr. McMahan has been a Director of the Company
since July 1996. Mr. McMahan has been a private businessman since 2002. Mr.
McMahan previously served as President of Oxbow Capital Corporation and Oxbow
Investments Inc. from 1993 to 2002 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.

         Robin Salmon. Mr. Salmon joined the Company as its Chief Financial
Officer in May 2003. Since September 2001, Mr. Salmon has also served as Chief
Financial Officer of Virexx Research, Inc., a privately-owned biotechnology
company engaged in the research and development of biopharmaceutical products
for the treatment

                                       31

<PAGE>

of Hepatitis B, chronic Hepatitis C and resultant liver cancers. Mr. Salmon was
a partner of KPMG, an independent public accounting firm, from 1981 until his
retirement from the practice in 2000.

         Robert H. Uhl. Mr. Uhl has been a Director of the Company since April
2001. Mr. Uhl has served as Senior Research Analyst, Specialty Pharmaceuticals
for Wells Fargo Securities since April 2003. Mr. Uhl was Senior Vice President
and Director of Research of Leerink Swann & Company from 1998 to 2002.
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.

COMPENSATION

    COMPENSATION OF EXECUTIVE OFFICERS

         The following table sets forth the compensation paid to each member of
the Company's management during the last full financial year (the "Named
Executive Officers") for each of the fiscal years ended December 31, 2002, 2001
and 2000. In May 2003, Dr. Noujaim rejoined the Company as President and Chief
Executive Officer, and Robin Salmon joined the Company as Chief Financial
Officer. Dr. Noujaim and Mr. Salmon are the only Named Executive Officers who
remain employed by the Company. Dr. Noujaim and Mr. Salmon have each agreed to
perform their duties as President and Chief Executive Officer and Chief
Financial Officer, respectively, without payment of cash compensation by 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       ($)(9)        BONUS ($)       GRANTED (#)          ($)(10)
------------------                              ----      -------        ---------      -------------       ------------
<S>                                             <C>       <C>            <C>            <C>                 <C>
RICHARD E. BAGLEY(1)                            2002      424,980             --          325,000              11,612
    Former President and Chief                  2001      418,905             --          350,000              10,202
    Executive Officer                           2000      401,054             --          402,500              14,934

EDWARD M. FITZGERALD(2)                         2002      131,986             --               --               3,400
    Former Senior Vice President, Chief         2001      318,368             --          100,000               8,583
    Financial Officer and Secretary             2000      304,801             --          183,750              10,249

DR. CHRISTOPHER F. NICODEMUS(3)                 2002      131,721             --               --               3,974
    Former Senior Vice President, Clinical      2001      343,502             --          100,000               8,440
    Research and Development                    2000      328,864             --          186,250              10,872

PETER C. GONZE(4)                               2002      116,014             --               --               3,480
    Former Senior Vice President,               2001      302,542             --          150,000               8,818
    Operations                                  2000      294,185             --          100,000               8,951

DR. JAMES L. LEVIN(5)                           2002      122,101             --               --               4,206
    Former Vice President, Manufacturing        2001      287,027         37,580           40,000               8,538
    and Development                             2000      121,853             --           62,500               1,617

MARLENE R. BOOTH(6)                             2002      269,108             --               --               8,619
    Former Vice President, Regulatory           2001      287,027         33,882           60,000               8,538
    Affairs and Project Management              2000      207,945         33,356           25,000               7,690

DR. ANTOINE A. NOUJAIM(7)                       2002      133,585             --          325,000               4,415
    President and Chief Executive Officer       2001      220,000             --          300,000              12,620
    and Former Chief Scientific Officer         2000      220,000             --          112,500              12,620

ROBERT A. NEWMAN(8)                             2002      236,050         38,745          225,000               7,682
    Former Vice President, Business             2001      232,725             --           40,000               2,283
    Operations                                  2000      221,652             --           56,250              16,693
</TABLE>

                                       32

<PAGE>

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. Mr. Bagley resigned as
        President and Chief Executive Officer of the Company in May 2003.

    (2) Mr. Fitzgerald resigned as Senior Vice President, Chief Financial
        Officer and Secretary of the Company in May 2002.

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

    (4) Mr. Gonze resigned as Senior Vice President, Operations of the Company
        in May 2002.

    (5) Dr. Levin joined the Company in July 2000. Dr. Levin resigned as Vice
        President, Manufacturing and Development of the Company in June 2002.

    (6) Ms. Booth left the position of Vice President, Regulatory Affairs and
        Project Management of the Company in May 2002.

    (7) Dr. Noujaim resigned as Chief Scientific Officer of the Company in July
        2002. In May 2003, Dr. Noujaim rejoined the Company as its President and
        Chief Executive Officer. Dr. Noujaim will not be paid any cash
        compensation by the Company in connection with his duties as President
        and Chief Executive Officer of the Company.

    (8) In connection with the Company's changes in management and relocation,
        Mr. Newman ceased to be employed by the Company in May 2003.

    (9) None of Mr. Bagley, Mr. Fitzgerald, Dr. Nicodemus, Mr. Gonze or Mr.
        Newman received an increase in annual compensation in 2001 or 2002. 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.

    (10)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 Messrs. Bagley and Newman during the financial year of
the Company ended December 31, 2002. The Company did not grant options to any of
the other Named Executive Officers in 2002.

         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..........    325,000         22.8%        $ 0.47            $ 0.47        June 19, 2012
Robert A. Newman...........    200,000         14.0%        $ 0.47            $ 0.47        June 19, 2012
Robert A. Newman...........     25,000          1.8%        $ 0.37            $ 0.37         December 11,
                                                                                                2012
</TABLE>

                                       33

<PAGE>

         The following table details information with respect to all options of
the Company held by the Named Executive Officers and outstanding on December 31,
2002. None of the Named Executive Officers exercised options in 2002.

<TABLE>
<CAPTION>
                                                                                        VALUE OF UNEXERCISED
                                                            UNEXERCISED OPTIONS AT      IN-THE-MONEY OPTIONS
                                                               DECEMBER 31, 2002        AT DECEMBER 31, 2002
                                                                 EXERCISABLE/               EXERCISABLE/
NAME                                                           UNEXERCISABLE (#)         UNEXERCISABLE ($)
----                                                        ----------------------      --------------------
<S>                                                         <C>                         <C>
Richard E. Bagley...................................         1,295,729 / 245,833              -- / --
Edward M. Fitzgerald................................           320,937 /      --              -- / --
Dr. Christopher F. Nicodemus........................           296,041 /      --              -- / --
Marlene R. Booth....................................            97,500 /      --              -- / --
Dr. James L. Levin..................................            60,883 /      --              -- / --
Peter C. Gonze......................................           218,750 /      --              -- / --
Robert A. Newman....................................           205,808 /      --              -- / --
Dr. Antoine A. Noujaim..............................                -- /      --              -- / --
Robin Salmon........................................                -- /      --              -- / --
</TABLE>

    EMPLOYMENT AGREEMENTS

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

    -   Pursuant to a Severance Agreement, dated May 22, 2003, between Mr.
        Bagley and the Company, Mr. Bagley resigned as President, Chief
        Executive Officer and Director of the Company effective in May 2003. The
        agreement provides for, among other things, the payment of U.S. $67,000
        to Mr. Bagley upon his resignation and a further U.S. $202,500 to be
        paid to Mr. Bagley in bi-monthly installments over a period of 12 months
        beginning on the date of his resignation.

    -   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 in May 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
        in May 2002 and joined Unither Pharmaceuticals.

    -   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 in May 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. Dr.
        Levin resigned in June 2002 and joined Unither Pharmaceuticals.

    -   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 in May 2002 and joined Unither
        Pharmaceuticals.

    -   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. In connection with the Company's changes in management and
        relocation, Mr. Newman ceased to be employed by the Company in May 2003.

                                       34

<PAGE>

    COMPENSATION OF DIRECTORS

         Each non-employee director of the Company receives a fee of U.S.
$10,000 per annum. Further, all directors are eligible to receive stock options
and are entitled to receive reimbursement of their reasonable out-of-pocket
disbursements incurred on the business of the Company. In the aggregate, a total
of $99,125 in fees was paid to members of the Board of Directors during the
period from January 1, 2002 to December 31, 2002.

BOARD PRACTICES

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

         None of the directors have service contracts with the Company providing
for benefits upon termination of employment.

    AUDIT COMMITTEE

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

         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 2002, 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 Messrs. Jacques R. Lapointe and
William R. McMahan. Mr. Lapointe is the Chairman 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 Named Executive Officers as of June 20, 2003:

<TABLE>
<CAPTION>
                                                                                       PERCENTAGE OF
                                                                  NUMBER OF             OUTSTANDING
NAME                                                            COMMON SHARES        COMMON SHARES(%)
----                                                            -------------        ----------------
<S>                                                             <C>                  <C>
Dr. Antoine A. Noujaim.................................           1,500,000                3.3
Jacques R. Lapointe(1).................................             220,000                  *
Bruce D. Brydon(2).....................................              60,000                  *
William R. McMahan(3)..................................             112,500                  *
Robin Salmon...........................................              20,000                  *
Robert H. Uhl(4).......................................              60,000                  *
Richard E. Bagley(5)...................................           1,828,165                4.0
Marlene R. Booth.......................................                   -                  *
Edward M. Fitzgerald(6)................................             459,687                  *
Peter C. Gonze.........................................              96,368                  *
Dr. James L. Levin.....................................                   -                  *
Robert A. Newman(7)....................................             349,808                  *
Dr. Christopher F. Nicodemus...........................              51,325                  *
</TABLE>

* Less than 1%

 (1) Includes 160,000 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of June 20, 2003.

 (2) Comprised entirely of shares issuable upon the exercise of options that
     are currently exercisable or exercisable within 60 days of June 20, 2003.

 (3) Includes 82,500 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of June 20, 2003.

 (4) Comprised entirely of shares issuable upon the exercise of options that
     are currently exercisable or exercisable within 60 days of June 20, 2003.

 (5) Includes 1,542,562 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of June 20, 2003.

 (6) Includes 382,187 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of June 20, 2003.

 (7) Includes 349,558 shares issuable upon the exercise of options that are
     currently exercisable or exercisable within 60 days of June 20, 2003.

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

                                       36

<PAGE>

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 June 20, 2003, there were outstanding options to purchase a total of
3,282,078 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
                                                 5,000       May 21, 1998              $   8.72       May 21, 2008
                                                 5,000       February 17, 2000         $   5.96       February 17, 2010
                                                40,000       April 10, 2001            $   1.95       April 10, 2011
                                                50,000       May 24, 2001              $   3.13       May 24, 2011
                                               160,000       June 19, 2002             $   0.47       June 19, 2012
                                               100,000       July 18, 2002             $   0.38       July 18, 2012

Executive Officers....................           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
                                               328,224       July 8, 1999              $   4.12       July 8, 2009
                                               225,000       December 22, 1999         $   1.40       December 22, 2009
                                               283,333       February 17, 2000         $   5.96       February 17, 2010
                                                72,917       June 1, 2000              $   4.16       June 1, 2010
                                               490,000       May 24, 2001              $   3.13       May 24, 2011
                                               525,000       June 19, 2002             $   0.47       June 19, 2012
                                                25,000       December 11, 2002         $   0.37       December 11, 2012

Employees.............................          12,374       July 26, 1996             $   7.20       July 26, 2006
                                                 2,500       December 31, 1996         $  23.60       December 31, 2006
                                                17,500       May 21, 1998              $   8.72       May 21, 2008
                                                 6,250       August 4, 1998            $   4.60       August 4, 2008
                                                 1,979       August 19, 1999           $   3.60       August 19, 2009
                                                29,584       February 17, 2000         $   5.96       February 17, 2010
                                                34,167       June 1, 2000              $   4.16       June 1, 2010
                                                16,667       July 12, 2000             $   4.04       July 12, 2010
                                                76,500       May 24, 2001              $   3.13       May 24, 2011
                                                47,500       September 5, 2001         $   2.80       September 5, 2011
                                               245,000       June 19, 2002             $   0.47       June 19, 2012
                                                25,000       December 11, 2002         $   0.37       December 11, 2012
                                                15,000       January 12, 2003          $   0.37       January 12, 2013
</TABLE>

                                       37

<PAGE>

ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

         To the knowledge of the directors or officers of the Company, as of
June 20, 2003, 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 (8.5% 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 Therapeutics which beneficially owns 9,133,380 Common Shares of the
Company (19.9% 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 June 20, 2003, the current directors
and officers of the Company as a group own, directly or indirectly, or exercise
control or direction over a total of 1,876,603 Common Shares representing
approximately 4.1% of the issued and outstanding Common Shares.

         As of June 20, 2003, 35.3% of the Common Shares outstanding are held by
18 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, 2002, 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:

    -    In April 2002, the Company and United Therapeutics entered into a
         subscription agreement (the "Subscription Agreement"), pursuant to
         which United Therapeutics 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
         Therapeutics a debenture in the principal amount of U.S. $50,000,
         which was converted by United Therapeutics into 100,000 Common Shares
         at a price of U.S. $0.50 per share. The Company has also issued to
         United Therapeutics a warrant to purchase 3,250,000 Common Shares at a
         price of U.S. $0.50 per share, which was exercised in full by United
         Therapeutics in August 2002. Also in August 2002, United Therapeutics
         exercised its right, pursuant to the Subscription Agreement, to
         purchase a second debenture in the principal amount of U.S. $875,000.
         Upon issuance of the second debenture, U.S. $441,690 of the principal
         amount of the second debenture automatically converted into 883,380
         Common Shares. A note payable for U.S. $433,310, secured by the
         Company's intellectual property, was issued in exchange for the
         remaining proceeds. Interest is due on the note quarterly and accrues
         at a rate of 6% per annum. The unpaid principal and interest on the
         note is due in full in August 2005. The note is convertible into
         Common Shares at a price of U.S. $0.50 per share at any time at the
         option of United Therapeutics. See "Item 4: Information on the Company
         -- Strategic Alliances and License Agreements -- United Therapeutics
         Corporation."

    -    Pursuant to a Severance Agreement, dated May 22, 2003, between Richard
         E. Bagley and the Company, Mr. Bagley resigned as President, Chief
         Executive Officer and Director of the Company in May 2003. The
         agreement provides for, among other things, the payment of U.S.
         $67,000 to Mr. Bagley upon his resignation and an additional U.S.
         $202,500 to be paid to Mr. Bagley in bi-monthly installments over a
         period of 12 months beginning on the date of his resignation, subject
         to acceleration upon the occurrence of specified events.

                                       38

<PAGE>

    -    Pursuant to a Lease Assignment Agreement and a Sublease Agreement,
         each dated July 12, 2002, between the Company and Virexx Research
         Inc., the Company assigned its lease for its Canadian facilities to
         Virexx Research Inc. and agreed to sublease its Canadian facilities
         from Virexx Research Inc. for $3,922 per month. The sublease agreement
         expires on July 31, 2003. Under a separate agreement which expires in
         July 2003, Virexx Research Inc. rents certain equipment from the
         Company for a monthly fee of $500. Dr. Noujaim and Mr. Salmon are the
         President and Chief Executive Officer and the Chief Financial Officer,
         respectively, of Virexx Research Inc.

    -    In April 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. In June 2003, pursuant to
         an agreement between ICN and Dr. Noujaim, ICN agreed to not to pursue
         its claims against the Company in exchange for payment of U.S.
         $275,000, which was paid by Dr. Noujaim. In connection with this
         agreement, the Company and Dr. Noujaim entered into an agreement
         pursuant to which the Company agreed to pay Dr. Noujaim U.S. $275,000,
         reimburse him for all related costs and expenses and indemnify him from
         any and all claims arising out of his agreement with ICN. Pursuant to
         the agreement, the Company issued Dr. Noujaim a promissory note in the
         principal amount of U.S. $275,000, which is secured by all of the
         Company's personal property. Interest accrues on the note at a rate of
         10% per annum. Principal and interest on the note are payable on
         demand.

ITEM 8: FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

         The following financial statements, together with the reports of the
Company's independent auditors thereon, are filed as part of this annual report
as Exhibit A hereto:

<TABLE>
<CAPTION>
                                                                                                 PAGE
<S>                                                                                              <C>
INDEX TO THE FINANCIAL STATEMENTS

Report of Vitale, Caturano & Company..........................................................   F-2
Report of Arthur Andersen LLP, Chartered Accountants..........................................   F-3
Consolidated balance sheets as at December 31, 2002 and December 31, 2001.....................   F-4
Consolidated statements of loss for the years ended December 31, 2002, 2001 and 2000,
    and for the period December 1, 1995 to December 31, 2002..................................   F-5
Consolidated statements of shareholders' equity for the years ended December 31, 2002,
    2001, 2000, 1999, 1998, 1997, 1996 and 1995...............................................   F-6
Consolidated statements of cash flows for the years ended December 31, 2002, 2001 and
    1999, and for the period December 1, 1995 to December 31, 2002............................   F-7
Notes to Consolidated Financial Statements....................................................   F-8
</TABLE>

CHANGE IN AUDITORS

         Arthur Andersen LLP, the former auditors of the Company, were first
appointed as auditors in 1999. On June 30, 2002, Arthur Andersen LLP resigned as
the Company's auditors in connection with its cessation of operations in the
Commonwealth of Massachusetts. On August 7, 2002, the Board of Directors of the
Company appointed Vitale, Caturano & Company as the new auditors of the Company
to fill the vacancy created by the resignation of Arthur Andersen LLP.

         During the Company's two most recent fiscal years and any subsequent
interim period, there have been no reportable disagreements between the Company
and Arthur Andersen LLP on any matter of accounting principles or practice,
financial statement disclosure or auditing scope or procedure, which
disagreement(s) if not resolved to the satisfaction of Arthur Andersen LLP,
would have caused it to make a reference to the subject matter of the
disagreement(s) in connection with its report, nor have there been any adverse
or qualified opinions or denials of opinions contained in any auditor's reports
on any interim or annual financial statements given to the Company by Arthur
Andersen LLP. There have been no consultations between the Corporation and
Vitale, Caturano & Company regarding the application of accounting principles to
a specified transaction (either proposed or completed) or the type of audit
opinion that might be rendered on the Company's financial statements. The change
in auditors was made with the approval of the Audit Committee and the Board of
Directors of the Company.

LEGAL PROCEEDINGS

         The Company is not currently involved in any material legal
proceedings.

                                       39

<PAGE>

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.

         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, 1998, 1999, 2000, 2001 and 2002.

<TABLE>
<CAPTION>
                                HIGH     LOW
                                ----    -----
                                CDN.$   CDN.$
<S>                             <C>     <C>
FISCAL YEAR ENDING
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
December 31, 2002               3.35    0.26
</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, 2001 and December 31, 2002.

<TABLE>
<CAPTION>
                                HIGH     LOW
                                ----    -----
                                CDN.$   CDN.$
<S>                             <C>     <C>
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

2002
First quarter                   3.35    0.63
Second quarter                  0.98    0.30
Third quarter                   0.50    0.26
Fourth quarter                  0.49    0.26
</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
January 2003                          0.41    0.33
February 2003                         0.38    0.30
March 2003                            0.35    0.26
April 2003                            0.31    0.20
May 2003                              0.40    0.22
June 2003 (through June 20, 2003)     0.62    0.37
</TABLE>

                                       40

<PAGE>

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 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, subscription and debenture purchase
agreements and related agreements dated April 17, 2002 between the Company and
United Therapeutics referred to under "Item 4: Information on the Company --
Strategic Alliances and License Agreements -- United Therapeutics Corporation"
and the severance agreement dated May 22, 2003 between the Company and Richard
E. Bagley, pursuant to which Mr. Bagley resigned as President and Chief
Executive Officer and as a Director of the Company in May 2003, referred to
under "Item 6: Directors, Senior Management and Employees - Compensation -
Employment Agreements."

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").

                                       41
<PAGE>

         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 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.

                                       42
<PAGE>

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-
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.

                                       43
<PAGE>

     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 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

                                       44
<PAGE>

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.

         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:

                                       45
<PAGE>

         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.

         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, 2002. 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.

                                       46
<PAGE>

DOCUMENTS ON DISPLAY

    The documents concerning the Company referred to in this annual report may
be inspected at the Company's office in Edmonton, Alberta, Canada. 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.

ITEM 11:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         At December 31, 2002, the Company had cash and cash equivalents of $3.6
million. The Company's principal risks relative to its cash and cash equivalents
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

         Prior to the relocation of its executive and administrative offices to
Edmonton, Alberta in May 2003, the Company had a significant portion of its
operations in the United States, including the operation of its former office in
the United States and the ongoing administration of development and research
activities related to the Company's products. A significant portion of the
Company's transactions continue to be denominated in U.S. dollars and,
accordingly, 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, 2002 the Company had
$3.5 million (or 98%) 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.

                                       47
<PAGE>

                                     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.

ITEM 15: CONTROLS AND PROCEDURES

         (a)      Evaluation of disclosure controls and procedures. Based on
their evaluation of the Company's disclosure controls and procedures (as defined
in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as
of a date within 90 days of the filing date of this Annual Report on Form 20-F,
the Company's Chief Executive Officer and Chief Financial Officer have concluded
that the Company's disclosure controls and procedures are designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms and are
operating in an effective manner.

         (b)      Changes in internal controls. There were no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their most recent
evaluation.

ITEM 16A:  AUDIT COMMITTEE FINANCIAL EXPERT

         Not applicable.

ITEM 16B:  CODE OF ETHICS

         Not applicable.

ITEM 16C:  PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Not applicable.

                                       48
<PAGE>

                                    PART III

ITEM 17:  FINANCIAL STATEMENTS

         The following financial statements, together with the reports of the
Company's independent auditors thereon, are filed as part of this annual report
on Form 20-F.

<TABLE>
<CAPTION>
                                                                                                PAGE
                                                                                                ----
<S>                                                                                             <C>
INDEX TO THE FINANCIAL STATEMENTS
Report of Vitale, Caturano & Company.........................................................    F-2
Report of Arthur Andersen LLP, Chartered Accountants.........................................    F-3
Consolidated balance sheets as at December 31, 2002 and December 31, 2001....................    F-4
Consolidated statements of loss for the years ended December 31, 2002, 2001 and 2000,
     and for the period December 1, 1995 to December 31, 2002................................    F-5
Consolidated statements of shareholders' equity for the years ended December 31, 2002,
     2001, 2000, 1999, 1998, 1997, 1996 and 1995.............................................    F-6
Consolidated statements of cash flows for the years ended December 31, 2002, 2001 and
     2000, and for the period December 1, 1995 to December 31, 2002..........................    F-7
Notes to Consolidated Financial Statements...................................................    F-8
</TABLE>

         Under United States securities regulations, issuers are generally
required to obtain a current written consent from the independent accountants
that audited their financial statements in order to incorporate the
corresponding audit reports by reference into a registration statement filed
with the United States Securities and Exchange Commission. While Arthur Andersen
LLP provided a consent with respect to the financial statements referred to
above in connection with the filing of the Company's annual report on Form 20-F
for the fiscal year ended December 31, 2001, Arthur Andersen LLP has ceased to
practice before the United States Securities and Exchange Commission and is
therefore not in a position to provide the updated consent which would normally
be required to incorporate their audit report by reference into the Company's
registration statements. However, in reliance on Rule 437a promulgated under the
Securities Act of 1933, as amended, the Company has dispensed with the
requirement to file the consent of Arthur Andersen LLP. Because Arthur Andersen
LLP has not consented to the incorporation by reference of their report in this
Form 20-F, you will not be able to recover against Arthur Andersen LLP under
Section 11 of the Securities Act of 1933, as amended, for any untrue statements
of a material fact contained in the financial statements audited by Arthur
Andersen LLP incorporated by reference or any omissions to state a material fact
required to be stated therein.

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.

                                       49
<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/ Dr. Antoine A. Noujaim
                                       ----------------------------------------
                                        Dr. Antoine A. Noujaim
                                        President and Chief Executive Officer

Edmonton, Alberta
June 30, 2003

                                       50
<PAGE>

                                 CERTIFICATIONS

I, Antoine A. Noujaim, certify that:

1.       I have reviewed this annual report on Form 20-F of AltaRex Corp.;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a.       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

         b.       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

         c.       presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

         a.       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b.       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether or not there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date: June 30, 2003                            /s/ Dr. Antoine A. Noujaim
                                               ---------------------------------
                                               Dr. Antoine A. Noujaim
                                               Chief Executive Officer

                                       51
<PAGE>

I, Robin Salmon, certify that:

1.       I have reviewed this annual report on Form 20-F of AltaRex Corp.;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a.       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

         b.       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

         c.       presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

         a.       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b.       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether or not there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date: June 30, 2003                            /s/ Robin Salmon
                                               ---------------------------------
                                               Robin Salmon
                                               Chief Financial Officer

                                       52
<PAGE>

                                                                       EXHIBIT A

                                  ALTAREX CORP.
                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                               PAGE
                                                                                               ----
<S>                                                                                            <C>
Report of Vitale, Caturano & Company......................................................     F-2
Report of Arthur Andersen LLP, Chartered Accountants......................................     F-3
Consolidated Balance Sheets...............................................................     F-4
Consolidated Statements of Loss...........................................................     F-5
Consolidated Statements of Shareholders' Equity...........................................     F-6
Consolidated Statements of Cash Flows.....................................................     F-7
Notes to Consolidated Financial Statements................................................     F-8
</TABLE>

                                      F-1
<PAGE>

AUDITORS' REPORT TO THE SHAREHOLDERS OF
ALTAREX CORP.

         We have audited the consolidated balance sheet of AltaRex Corp. (an
Alberta corporation in the development stage) as of December 31, 2002 and the
consolidated statements of loss, shareholders' equity and cash flows for the
year ended December 31, 2002. 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 audit.

         We conducted our audit 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, 2002 and the results of its operations and its cash flows for the year ended
December 31, 2002 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 14, 2003 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/ Vitale, Caturano & Co.
                                               (SIGNED) VITALE CATURANO & CO.

Boston, Massachusetts
February 14, 2003

                                      F-2
<PAGE>

THE FOLLOWING REPORT OF INDEPENDENT PUBLIC ACCOUNTS IS A COPY OF THE PREVIOUSLY
ISSUED ARTHUR ANDERSEN LLP REPORT. ARTHUR ANDERSEN LLP HAS NOT REISSUED THIS
REPORT.

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 the
consolidated statements of loss, shareholders' equity and cash flows for each of
the two 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 two 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, Chartered Accountants
                             (SIGNED) ARTHUR ANDERSEN LLP, CHARTERED ACCOUNTANTS

Boston, Massachusetts
February 12, 2002

                                      F-3
<PAGE>

Consolidated balance sheets

<TABLE>
<CAPTION>
                                                                AS OF DECEMBER 31,
                                                                ------------------
                                                             2002               2001
<S>                                                      <C>                <C>
(IN CANADIAN DOLLARS)
ASSETS
CURRENT ASSETS
Cash and cash equivalents ..........................     $   3,625,736      $   8,211,313
Short-term investments .............................                 -            856,051
Accounts and other receivables .....................           211,010             91,474
Prepaid expenses ...................................           341,340            761,678
                                                         -------------      -------------

           TOTAL CURRENT ASSETS ....................         4,178,086          9,920,516
DEPOSITS AND OTHER ASSETS ..........................            42,935            235,671
CAPITAL ASSETS .....................................           325,846            634,870
                                                         -------------      -------------

   TOTAL ASSETS ....................................     $   4,546,867      $  10,791,057
                                                         =============      =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities ...........     $   1,646,759      $   7,383,751
                                                         -------------      -------------

           TOTAL CURRENT LIABILITIES ...............         1,646,759          7,383,751
DEBT ...............................................           674,763                  -
COMMITMENTS AND CONTINGENCIES (NOTE 5)
SHAREHOLDERS' EQUITY
Share capital ......................................       106,430,741         99,143,441
Accumulated deficit during the development stage ...      (104,205,396)       (95,736,135)
                                                         -------------      -------------
   TOTAL SHAREHOLDERS' EQUITY ......................         2,225,345          3,407,306
                                                         -------------      -------------

                                                         $   4,546,867      $  10,791,057
                                                         =============      =============
</TABLE>

On behalf of the Board:

           /s/ Jacques R. Lapointe                       /s/ Richard E. Bagley
         (SIGNED) JACQUES R. LAPOINTE                 (SIGNED) RICHARD E. BAGLEY
                   DIRECTOR                                    DIRECTOR

                                       F-4

<PAGE>

Consolidated statements of loss

<TABLE>
<CAPTION>
                                                                                                          DEC. 1, 1995-
                                                             YEAR ENDED DECEMBER 31,                      DEC. 31, 2002
                                                             -----------------------                      -------------
                                                      2002               2001               2000           (UNAUDITED)
<S>                                              <C>                <C>                <C>                <C>
(IN CANADIAN DOLLARS)
REVENUES
Research contracts .........................     $           -      $           -      $           -      $     810,000
Sale of research materials .................                 -                  -                  -             71,869
Interest income ............................            34,765            523,095            389,826          3,498,882
                                                 -------------      -------------      -------------      -------------

                                                        34,765            523,095            389,826          4,380,751
EXPENSES
Research and development ...................         2,893,435         26,919,785         12,022,218         70,759,486
General and administrative .................         5,610,591          7,405,676          6,091,686         32,751,947
Settlement costs (Note 7) ..................                 -                  -                  -          5,074,714
                                                 -------------      -------------      -------------      -------------

                                                     8,504,026         34,325,461         18,113,904        108,586,147
                                                 -------------      -------------      -------------      -------------

NET LOSS FOR THE PERIOD ....................     $  (8,469,261)     $ (33,802,366)     $ (17,724,078)     $(104,205,396)
                                                 =============      =============      =============      =============

NET LOSS PER COMMON SHARE ..................     $       (0.20)     $       (1.21)     $       (1.08)
Weighted average number of common shares ...        41,821,767         27,962,625         16,433,031
</TABLE>

                                      F-5
<PAGE>

Consolidated statements of shareholders' equity

<TABLE>
<CAPTION>
                                                                      COMMON SHARES           ACCUMULATED DEFICIT      TOTAL
                                                                      -------------               DURING THE        SHAREHOLDERS'
                                                                  SHARES         AMOUNT        DEVELOPMENT 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 ......                 -            12,066                  -             12,066
   interest payable
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
Issuance cost from special units ......................                 -           (11,927)                 -            (11,927)
Issuance of common shares in private placement ........         4,900,000         3,803,627                  -          3,803,627
Conversion of debentures issued to United .............           983,380           767,392                  -            767,392
Exercise of warrants ..................................           100,000           200,000                  -            200,000
Exercise of warrants by United ........................         3,250,000         2,528,208                  -          2,528,208
Net loss ..............................................                 -                 -         (8,469,261)        (8,469,261)
                                                               ----------     -------------      -------------      -------------

BALANCE, DECEMBER 31, 2002 ............................        45,896,936     $ 106,430,741      $(104,205,396)     $   2,225,345
                                                               ==========     =============      =============      =============
</TABLE>

                                      F-6
<PAGE>

Consolidated statements of cash flows

<TABLE>
<CAPTION>
                                                                                                                  DEC. 1, 1995-
                                                                    YEAR ENDED DECEMBER 31,                       DEC. 31, 2002
                                                                    -----------------------                       -------------
                                                             2002               2001               2000            (UNAUDITED)
<S>                                                      <C>                <C>                <C>                <C>
(IN CANADIAN DOLLARS)
NET CASH USED IN OPERATING ACTIVITIES
Net loss ...........................................     $  (8,469,261)     $ (33,802,366)     $ (17,724,078)     $(104,205,396)
Adjustments to reconcile net loss to net cash
   used in operating activities:
   Depreciation and amortization ...................           304,733            384,813            496,945          2,804,197
   Amortization of deferred lease credit ...........                 -                  -            (21,691)          (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 .....................................        (5,243,454)         3,509,093            882,171          1,061,198
                                                         -------------      -------------      -------------      -------------

                                                           (13,407,982)       (29,851,628)       (16,366,653)      (100,604,589)
                                                         -------------      -------------      -------------      -------------

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Purchase of capital assets, net ....................             4,291           (529,568)           (86,714)        (2,806,284)
Maturities and purchases of short-term
   Investments, net ................................           856,051          2,735,272          1,286,716                  -
Acquisition of AltaRex Corp. .......................                 -                  -                  -            (30,250)
                                                         -------------      -------------      -------------      -------------

                                                               860,342          2,205,704          1,200,002         (2,836,534)
                                                         -------------      -------------      -------------      -------------

CASH PROVIDED BY FINANCING ACTIVITIES
Issuance of common shares, net .....................         4,492,289         26,192,050         22,466,912        103,597,082
Issuance costs from special units ..................           (11,927)                 -                  -            (11,927)
Issuance of convertible debt .......................           753,493                  -                  -            753,493
Exercise of warrants ...............................         2,728,208                  -                  -          2,728,208
Employee relocation loans ..........................                 -                  -             36,285                  -
                                                         -------------      -------------      -------------      -------------

                                                             7,962,063         26,192,050         22,503,197        107,066,856
                                                         -------------      -------------      -------------      -------------

NET (DECREASE) INCREASE IN CASH AND CASH
   EQUIVALENTS .....................................        (4,585,577)        (1,453,874)         7,336,546          3,625,736
Cash and cash equivalents, beginning of period .....         8,211,313          9,665,187          2,328,641                  -
                                                         -------------      -------------      -------------      -------------

CASH AND CASH EQUIVALENTS, END OF PERIOD ...........     $   3,625,736      $   8,211,313      $   9,665,187      $   3,625,736
                                                         =============      =============      =============      =============

Supplemental disclosure of noncash investing
   and financing activities:
   Cash paid for interest ..........................     $      17,197      $           -      $           -      $      17,197
   Leasehold improvements financed with deferred
      lease credit .................................     $           -      $           -      $           -      $     666,641
   Conversion of debt to common shares .............     $     753,493      $           -      $           -      $     753,493
</TABLE>

                                      F-7
<PAGE>

Notes to consolidated financial statements December 31, 2002 and 2001 (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, development, and commercialization of biopharmaceutical
products for the treatment of cancer and other diseases.

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, 2002,
2001 and 2000, the Company incurred losses of $8,469,261, $33,802,366 and
$17,724,078, respectively and has accumulated deficit during the development
stage of $104,205,396. As further discussed in Note 9, in April 2002, the
Company sold 4.9 million of its common shares to United Therapeutics Corporation
("United Therapeutics") for gross proceeds of approximately $3,900,000
(US$2,450,000). In addition, the Company issued United Therapeutics a warrant to
purchase an additional 3.25 million common shares for gross proceeds of
approximately $2,528,000 (US$1,625,000) and had granted to United Therapeutics a
right to purchase a convertible debenture (the "second debenture") in the
principal amount of approximately $1,360,000 (US$875,000). In August 2002,
United Therapeutics exercised the warrant and purchased the second debenture,
resulting in total proceeds to the Company of approximately $3.9 million. In
management's opinion, the Company believes that its available cash and cash
equivalents and interest earned thereon, should be sufficient to finance its
operations and capital needs into the third quarter of 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 partners.

         The Company's ability to access the capital markets or to enlist
strategic partners 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, or
at all. If the Company cannot obtain additional funding, it will cease
operations. Even if the Company obtains additional financing, 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.

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.

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.

USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities

                                      F-8
<PAGE>

and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

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.

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 and weighted average
interest rates approximating 4.2%.

DEPOSITS AND OTHER ASSETS

         Deposits and other assets primarily consist of down payments on service
contracts and deposits on leases. 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:

<TABLE>
<S>                                                               <C>
Scientific equipment...........................................   5 years
Computer software and equipment................................   3 years
Office equipment...............................................   5 years
Leasehold improvements.........................................   3-5 years, term of lease
</TABLE>

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
                                            DECEMBER 31, 2002            DECEMBER 31, 2001
                                            -----------------            -----------------
                                                       ACCUMULATED                   ACCUMULATED
                                                      DEPRECIATION/                 DEPRECIATION/
                                           COST       AMORTIZATION       COST       AMORTIZATION
                                           ----       -------------      ----       -------------
<S>                                     <C>            <C>            <C>            <C>
Scientific equipment ..............     $1,346,116     $1,205,784     $1,420,125     $1,145,541
Computer software and equipment ...        577,425        497,625        581,142        462,539
Office equipment ..................        548,082        445,938        559,673        387,837
Leasehold improvements ............        201,979        198,409        201,979        132,132
                                        ----------     ----------     ----------     ----------

                                        $2,673,602     $2,347,756     $2,762,919     $2,128,049
                                        ----------     ----------     ----------     ----------

Net book value ....................             $  325,846                   $  634,870
                                                ----------                   ----------
</TABLE>

                                      F-9
<PAGE>

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.

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 which was insignificant for the year 2002 (see
Note 4).

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, and accounts and other receivables.

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.

                                      F-10
<PAGE>

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 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
12,171,284 common shares as of December 31, 2002 have been excluded from the
computation of diluted weighted average shares outstanding (December 31, 2001 --
12,565,954 and December 31, 2000 -- 2,699,287).

STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS

         On January 1, 2002, the Company adopted the recommendations in Handbook
Section 3870 ("Section 3870"), Stock-Based Compensation and Other Stock-Based
Payments, issued by The Canadian Institute of Chartered Accountants. The new
recommendations are generally applicable only to awards granted after the date
of adoption. The adoption of the new recommendations did not impact the
financial statements.

         Stock options and warrants awarded to non-employees are accounted for
using the fair value method. No compensation expense for stock options granted
to employees is recognized if the exercise price of these stock options equals
the price of the Company's common shares on the date of grant. However pro forma
disclosure of net loss and net loss per share is provided as if these awards
were accounted for using the fair value method by using the Black-Scholes
pricing model. Consideration paid on the exercise of stock options and warrants
is credited to share capital.

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.

                                      F-11
<PAGE>

         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 entitled 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.

         In April 2002, the Company issued 4,900,000 common shares to United
Therapeutics in a private placement for net proceeds of $3,803,627. In addition,
the Company issued a $78,730 (US$50,000) convertible debenture (the "first
debenture") to United Therapeutics that was converted into 100,000 common shares
on August 21, 2002. The Company also issued United Therapeutics a warrant (the
"warrant") which was exercised by United Therapeutics into an additional 3.25
million common shares of the Company for gross proceeds to the Company of
approximately $2,528,000 (US$1,625,000). Further, the Company granted to United
Therapeutics a right to purchase a second debenture (the "second debenture") in
the principal amount of approximately $1,360,000 (US$875,000). United
Therapeutics exercised the warrant in full and purchased the second debenture on
August 15, 2002 resulting in total gross proceeds to the Company of
approximately $3.9 million. Upon issuance of the second debenture, $688,662
(US$441,960) of the principal amount of the second debenture was automatically
converted into 883,380 common shares of the Company.

         As of December 31, 2002, 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:

<TABLE>
<CAPTION>
                                                                       OPTIONS OUTSTANDING FOR:
                                                                       ------------------------
                DATE                   SHARES RESERVED FOR      DIRECTORS, OFFICERS &       CONSULTANTS      OPTIONS AVAILABLE FOR
                                             ISSUANCE                 EMPLOYEES                                      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
December 31, 2002..................         5,500,000                3,790,869                177,500             1,489,458
</TABLE>

                                      F-12
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                     SHARES ISSUABLE
                                                                                     ON EXERCISE OF
                                                                                     --------------

                                                                            STOCK OPTIONS      WARRANTS AND       EXERCISE PRICE
                                                                                              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
   Granted..............................................................       1,428,750          3,250,000         0.37 -  0.87
   Exercised............................................................               -         (3,350,000)        0.78 -  2.00
   Cancelled............................................................      (1,647,186)           (76,234)               3.400
                                                                              ----------        -----------        -------------

BALANCE, DECEMBER 31, 2002..............................................       3,968,369          8,202,915        $0.37 - 24.00
                                                                              ==========        ===========        =============
</TABLE>

         The following table summarizes information relating to currently
outstanding and exercisable options as of December 31, 2002.

<TABLE>
<CAPTION>
                                        OUTSTANDING                                      EXERCISABLE
                                        -----------                                      -----------

   RANGE OF          NUMBER OF        WEIGHTED AVERAGE       WEIGHTED AVERAGE     NUMBER OF      WEIGHTED AVERAGE
EXERCISE PRICE         SHARES     CONTRACTUAL LIFE (YEARS)    EXERCISE PRICE        SHARES        EXERCISE PRICE
<S>                  <C>          <C>                        <C>                  <C>            <C>
$ 0.37 -  2.12       1,576,667              8.4                  $ 0.82           1,005,417          $ 1.02
  2.19 -  4.12       1,526,994              7.7                    3.39           1,495,328            3.40
  4.16 -  5.96         584,251              7.2                    5.49             460,500            5.48
  7.20 -  8.72          41,499              4.7                    8.18              41,499            8.18
 12.00 - 14.72         233,125              5.1                   12.31             233,125           12.31
 23.60 - 24.00           5,833              4.1                   23.83               5,833           23.83
                     3,968,369                                   $ 3.28           3,241,702          $ 3.70
</TABLE>

                                      F-13
<PAGE>

         The following warrants and options to purchase common shares are
outstanding at December 31, 2002.

<TABLE>
<CAPTION>
      SHARES ISSUABLE
       ON EXERCISE OF
      ---------------
STOCK OPTIONS   WARRANTS AND     EXERCISE PRICE       YEAR OF
               OTHER OPTIONS        PER SHARE         EXPIRY
<S>            <C>               <C>                  <C>
          -      7,100,000       $        2.00         2003
          -        108,915                3.40         2003
    120,000        274,000        1.95 -  3.70         2004
          -        720,000                2.00         2006
     14,749              -                7.20         2006
     26,875              -       13.20 - 14.72         2007
      5,833              -       23.60 - 24.00         2007
     87,500              -        2.12 -  3.64         2008
     18,750              -        4.60 -  5.60         2008
    233,000              -        8.72 - 12.00         2008
    346,229              -        1.40 -  3.60         2009
    364,682              -                4.12         2009
     20,833              -                3.84         2010
    157,502              -        4.04 -  4.16         2010
    424,666              -                5.96         2010
  1,059,000              -        1.95 -  3.13         2011
  1,088,750              -        0.37 -  0.87         2012
  3,968,369      8,202,915
</TABLE>

         If the fair value method, as described in Note 2, had been used to
measure and recognize stock-based compensation, the Company's net loss and net
loss per share for the year ended December 31, 2002 would have been as follows:

<TABLE>
<S>                                               <C>
Net loss--as reported:                            $ 8,469,261
Net loss--pro forma:                              $ 8,752,908
Net loss per share--as reported:                  $     (0.20)
Net loss per share--pro forma:                    $     (0.21)
</TABLE>

         The pro forma amounts exclude the effect of stock options granted prior
to January 1, 2002. The fair value of each stock option grant was estimated on
the date of grant using the Black-Scholes option pricing model with the
following assumptions: risk-free interest rate of 3.97%, dividend yield of 0%,
expected life of 7 years and volatility of 108.3%.

         The weighted average fair value of stock options granted during the
year ended December 31, 2002 was $0.40.

4.    INCOME TAX

         The Company is eligible for scientific research and development
investment tax credits which may be applied against taxes payable. The
accumulated non-refundable investment tax credits as of December 31, 2002 is
approximately $3,400,000 (December 31, 2001 -- $3,361,000).

         As of December 31, 2002, the Company has scientific research and
experimental development expenditures for tax purposes of approximately
$14,531,000 (December 31, 2001 -- $14,531,000) which may be carried forward
indefinitely and utilized by reducing income for income tax purposes. As of
December 31, 2002, the Company has

                                      F-14
<PAGE>

approximately $91,304,000 (December 31, 2001 -- $84,900,000) of non-capital
losses available to be applied to taxable income in future years. These losses
expire between 2003 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, 2002 consist primarily of net
operating loss carryforwards and other temporary differences.

         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, 2002, valuation allowance of $44,100,000
(December 31, 2001 -- $41,600,000) 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 $257,000, $526,000 and $474,000 for the years
ended December 31, 2002, 2001 and 2000, respectively. During 2002, the Company
entered into a new lease agreement for its facilities in the United States,
which will expire in August 2004. During 2002, the Company was reimbursed for
part of its rent as a result of the license agreement with United Therapeutics.
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, 2002, the
Company is committed to annual minimum basic rent payments of approximately
$114,000 for 2003 and $57,000 for 2004.

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 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 and will begin on once there are commercial sales. 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, 2002, 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.

                                      F-15
<PAGE>

         The Company entered into a License Agreement with a subsidiary of
United Therapeutics 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 Therapeutic subsidiary
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. United 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.

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 treatment 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 $306,000 as of December 31, 2002 ($526,000 as of December 31,
2001) located in the United States.

7.    LEGAL MATTERS AND PROCEEDINGS

         The Company is typically involved in certain legal matters, which arise
in the normal course of business.

         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.

         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. That lawsuit has since been removed to Federal
Court, also in Orange County, California.

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

                                      F-16
<PAGE>

expense would be recognized on the Company's stock options and warrants granted,
if the exercise price of these instruments was equal to 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, 2002, the Company has no unamortized compensation
benefit to record as additional compensation expense in future periods. As of
December 31, 2001 and 2000, compensation expense was $10,000 and $449,000,
respectively.

         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.

         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>
                                                                             YEAR ENDED DECEMBER 31,
                                                                             -----------------------
                                                                    2002             2001              2000            DEC. 1, 1995-
                                                                                                                       DEC. 31, 2002
<S>                                                               <C>              <C>               <C>               <C>
Net loss per Canadian GAAP...............................         $8,469,261       $33,802,366       $17,724,078        $104,205,396
Adjustment for stock-based compensation..................             10,000           630,000         1,049,000           2,074,000
Adjustments of reverse take-over costs...................                  -                 -                 -             495,000
                                                                  ----------       -----------       -----------        ------------

Net loss per U.S. GAAP...................................         $8,479,261       $34,432,366       $18,773,078        $106,774,396
                                                                  ==========       ===========       ===========        ============

Basic and diluted net loss per share, U.S. GAAP..........         $    (0.20)      $     (1.23)      $     (1.14)
                                                                  ----------       -----------       -----------
Basic and diluted weighted-average number of
  common shares..........................................         41,821,767        27,962,625        16,433,031
</TABLE>

                                      F-17
<PAGE>

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

<TABLE>
<CAPTION>
                                                                        DECEMBER 31, 2002   DECEMBER 31, 2001
                                                                        -----------------   -----------------
<S>                                                                     <C>                 <C>
Share capital......................................................        $103,861,741        $96,584,441
Accumulated deficit................................................         106,774,396         98,295,135
</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 2003 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.

9.    LICENSE AGREEMENT AND DEBT

         On April 17, 2002, the Company entered into the License Agreement with
a subsidiary of United Therapeutics 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
Therapeutic subsidiary 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.
United 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 reimbursed the
Company, in accordance with the License Agreement, for approximately $2.5
million of costs related to the licensed technology, which have been reflected
as a reduction to research and development expenses. These costs reimbursed by
United Therapeutics were expenses to the Company in 2001 and 2002. Accounts and
other receivables at December 31, 2002 consists primarily of amounts billed to
United Therapeutics for 2002 reimbursable costs and received subsequent to
year-end.

         As part of this transaction, United Therapeutics purchased 4.9 million
common shares of the Company for gross proceeds to the Company of approximately
$3,900,000 (US$2,450,000). In addition, the Company issued a nominal $78,730
(US$50,000) convertible debenture (the "first debenture") to United Therapeutics
that was converted into 100,000 common shares on August 21, 2002. The Company
also issued United Therapeutics a warrant (the "warrant") which was exercised at
the option of United Therapeutics into an additional 3.25 million common shares
of the Company for proceeds to the Company of approximately $2,528,000
(US$1,625,000). Further, the Company granted to United Therapeutics a right to
purchase a second debenture (the "second debenture") in the principal amount of
approximately $1,360,000 (US$875,000). United Therapeutics exercised the warrant
in full and purchased the second debenture on August 15, 2002 resulting in total
proceeds to the Company of approximately $3.9 million. Upon issuance of the
second debenture, $688,662 (US$441,960) of the principal amount of the second
debenture automatically converted into 883,380 common shares of the Company.

         In total, United Therapeutics purchased 9,133,380 common shares and a
debenture in the principal amount of $674,763. The 9,133,380 common shares
purchased by United Therapeutics represent approximately 19.9% of the 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.

         On August 15, 2002, United Therapeutics purchased the second debenture
in the principal amount of approximately $1,360,000 (US$875,000) of which
$688,662 (US$441,960) automatically converted into 883,380 common shares of the
Company. A note payable (the "Note Payable") was issued in exchange for the
remaining proceeds received for $674,763 (US$433,310) and is secured by the
Company's intellectual property. Interest is due on the Note Payable quarterly
and accrues at 6% per annum. The unpaid principal and interest on the Note
Payable is due in full in August 2005. The Note Payable is convertible into
common shares of the Company at a price of US$0.50 per share at any time at the
option of United.

                                      F-18
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                                DOCUMENT DESCRIPTION
------                                                --------------------
<S>              <C>
 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(2)         Stock Option Plan.

 1.13(1)         Assignment of Letter Agreement dated February 20, 1996 between AltaRex Corp. and Merck Frosst
                 Canada Inc.

 1.14(4)         Employment Arrangement dated February 18, 1998 and amended as of March 30, 1998 between
                 AltaRex Corp. and Richard E. Bagley.

 1.15(3)         Amendments to Employment Arrangement between AltaRex Corp. and Richard E. Bagley, dated June
                 1, 1999 and December 22, 1999.

 1.16(3)         Employment Contract between AltaRex Corp. and Dr. Christopher Nicodemus, dated December 16,
                 1998, as amended on June 1, 1999 and December 22, 1999.

 1.17(3)         Employment Contract between AltaRex Corp. and Edward M. Fitzgerald dated September 14, 1998,
                 as amended on June 1, 1999 and December 22, 1999.

 1.18(3)         Employment Contract between AltaRex Corp. and Peter C. Gonze, dated January 24, 2000.

 1.19(6)         Memorandum of Understanding between AltaRex Corp. and Dompe Farmaceutici S.p.A., dated
                 November 15, 2000.*

 1.20(6)         Development and Supply Agreement dated May 1, 2001 between Abbott Laboratories and AltaRex US,
                 Corp.

 1.21(5)         List of Subsidiaries of AltaRex Corp.

 1.22(7)         Subscription and Debenture Agreement dated April 17, 2002 between United Therapeutics
                 Corporation and AltaRex Corp.

 1.23(7)         Registration Rights Agreement dated April 17, 2002 between United Therapeutics Corporation and
                 AltaRex Corp.

 1.24(7)         Exclusive License Agreement dated April 17, 2002 between Unither Pharmaceuticals, Inc. and
                 AltaRex Corp.*

 1.25(7)         Employment Contract between AltaRex Corp. and Robert A. Newman, dated March 25, 1998, as
                 amended June 9, 1998 and June 19, 1998.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                                DOCUMENT DESCRIPTION
------                                                --------------------
<S>              <C>
 1.26(7)         Employment Contract between AltaRex Corp. and Marlene R. Booth, dated May 4, 1999.

 1.27(7)         Employment Contract between AltaRex Corp. and James L. Levin, dated June 27, 2000.

 1.28**          Sublease Agreement, dated July 12, 2002, between Virexx Research Inc. and AltaRex Corp.

 1.29**          Severance Agreement, dated May 22, 2003, by and between Richard E. Bagley and AltaRex Corp.

23.1**           Consent of Vitale, Caturano & Company, P.C.

99.1**           Statement Pursuant to 18 U.S.C. Section 1350.

99.2**           Statement Pursuant to 18 U.S.C. Section 1350.
</TABLE>

(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.

(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.

(7) Incorporated herein by reference from the Exhibits to the Company's Annual
    Report on Form 20-F for the year ended December 31, 2001.

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

**  Filed herewith.