**MANAGEMENT’S
        DISCUSSION AND ANALYSIS**
 **For
        the year ended June 30, 2005**
 
 
 This
        discussion and analysis should be read in conjunction with the consolidated
        financial statements for the fiscal years ended June 30, 2005 and June 30,
        2004
        and the notes thereto. The financial statements have been prepared by management
        in accordance with accounting principles generally accepted in Canada (Canadian
        GAAP). These accounting principles differ in certain respects from United
        States
        GAAP. The differences, as they affect our consolidated financial statements,
        are
        set out in Note 12 to the audited consolidated financial statements.
 
 **FORWARD-LOOKING
        STATEMENTS**
 This
        management’s discussion and analysis (MD&A) contains or incorporates by
        reference forward-looking statements. All statements other than statements
        of
        historical fact included or incorporated by reference and that address
        activities, events or developments that we expect or anticipate may or will
        occur in the future are forward-looking statements. While any forward-looking
        statements, and any assumptions upon which they are based, are made in good
        faith and reflect our current judgment regarding the direction of our business;
        actual results may vary, sometimes materially, from any estimates, predictions,
        projections, assumptions or other suggestions of future performance herein.
        Undue reliance should not be placed on these forward-looking statements,
        which
        are based upon our assumptions and are subject to known and unknown risks
        and
        uncertainties and other factors, including those discussed under "Risk and
        Uncertainties" in this MD&A, some of which are beyond our control, which may
        cause actual results, levels of activity and achievements to differ materially
        from those estimated or projected and expressed in or implied by such
        statements. We undertake no obligation to update publicly or revise any
        forward-looking statements contained herein, and such statements are expressly
        qualified by this cautionary statement. See "Risk and
        Uncertainties".
 
 **NATURE
        OF OPERATIONS**
 
 The
        Corporation is a licensing and development company engaged in the
        commercialization of drug products and technologies from original research.
        The
        Corporation evaluates drug projects, technologies and products and the
        prospective markets for them and obtains, as appropriate, a license for the
        further development and marketing of the products.
 
 The
        Corporation expends money on the evaluation, licensing and further development
        of certain drug products and on providing licensing, marketing, clinical
        development and regulatory affairs skills, patent advice and funding to
        facilitate the introduction of the licensed products into the principal
        pharmaceutical markets. This involves taking the products researched and
        developed by others and progressing them through the clinical and regulatory
 processes
        in Canada and elsewhere in order to achieve regulatory approval for their
        sale
        in the markets to which the Corporation has rights.
 
 The
        Corporation will incur expenditures either directly or, pursuant to agreements
        with certain partners, on behalf of joint ventures. These will include: costs
        associated with the conduct of clinical trials; the collection and collation
        of
        data; the organizing of data and market information for each product; the
        development and production of non-confidential and confidential dossiers
        on each
        licensed product and the marketing of the information contained in the dossiers
        to prospective commercialization partners; and the negotiation and completion
        of
        out-licensing arrangements for the licensed products. The Corporation does
        not
        currently intend to establish its own manufacturing or marketing infrastructure
        for the licensed products or any additional products for which licensing
        rights
        are obtained, although the Corporation may participate in ownership of
        manufacturing facilities if appropriate opportunities are available.
 
 **ACQUISITION
        OF DELEX**
 
 In
        May
        2005, the Corporation completed the acquisition of DELEX Therapeutics Inc.
        (“DELEX”) for share consideration of approximately $10 million plus additional
        amounts payable on the achievement of specific milestones. DELEX is a private
        clinical stage biotechnology company developing inhalation delivered fentanyl
        products to treat cancer pain. The acquisition was accounted for using the
        purchase method of accounting.
 
 1
 The
        purchase consideration of approximately $10 million excludes contingent
        consideration based on the achievement of certain milestones related to the
        DELEX technology. The Corporation has issued 2,777,778 common shares to escrow
        pending the achievement of four milestones which include the achievement
        of
        certain regulatory, clinical and licensing goals. On receipt of United States
        regulatory approval to market a product using DELEX’s technology, the
        Corporation will make an additional payment of $4,750,000 in cash or common
        shares, or a combination of both, at its option, to the former DELEX
        shareholders.
 
 The
        purchase price allocation resulted in $5.8 million of identifiable intangible
        assets, represented by patents and in-process research and development
        technology that will be amortized over their useful lives of seven years.
        The
        assets, liabilities, revenue and expenses of DELEX have been included in
        the
        consolidated financial statements of the Corporation from May 2, 2005, the
        completion date of the acquisition.
 
 **SELECTED
        ANNUAL INFORMATION**
  Year
                    Ended
                  June
                    30, 2005(1)
                
                Year
                    Ended
                  June
                    30, 2004(1)
                
                Year
                    Ended
                  June
                    30, 2003(1)Licensing
                    revenue
                
                $
                748,020
                
                $
                -
                
                $
                -Interest
                    income
                
                
                703,873
                
                
                347,187
                
                
                273,232Expenses:General
                    and administrative
                
                
                6,314,358
                
                
                3,610,848
                
                
                1,936,364Licensing
                    and product development
                
                
                10,981,950
                
                
                5,066,569
                
                
                3,965,385Loss
                    for the period
                
                
                15,859,295
                
                
                7,691,898
                
                
                7,440,675Deficit,
                    beginning of period, as restated(1)
                
                
                44,319,267
                
                
                36,470,665
                
                
                28,969,893Deficit,
                    end of period
                
                $
                60,751,894
                
                $
                44,319,267
                
                $
                36,470,665Basic
                    and diluted loss per common share
                
                $
                0.47
                
                $
                0.36
                
                $
                0.56Total
                    Assets
                
                $
                38,199,891
                
                $
                20,882,792
                
                $
                8,649,842
 (1)
              Canadian
                  GAAP requires the Corporation to expense the fair value of stock
                  options
                  awarded to employees beginning in July 2004 and to apply this policy
                  retroactively. See Critical Accounting Policies and Estimates -
                  Stock-based compensation.
 
 **RESULTS
        OF OPERATIONS**
 
 **Fiscal
        Year Ended June 30, 2005 Compared To Fiscal Year Ended June 30, 2004**
 Revenue
        is from out-licensing and comes from the July 2004 agreement signed with
        Tarcanta Inc. (a subsidiary of Cancervax Corporation) with respect to products
        relating to HER-1 and TGFa and from a January 2005 agreement with Shin Poong
        Pharmaceutical Co., Ltd. to which the Corporation licensed the commercial
        rights
        for tesmilifene for the South Korean market. Interest income in fiscal 2005
        is
        higher than the previous year due mainly to higher average cash balances
        in
        fiscal 2005 as a result of financing activities.
 
 Licensing
        and product development expenses increased this year due to progression of
        the
        tesmilifene Phase III clinical trial, increased out-licensing activity, and
        the
        inclusion of DELEX results for two months. Costs related to the Phase III
        clinical trial in patients with metastatic and recurrent breast cancer totaled
        about $7,250,000, an increase of approximately $4,000,000 over last year.
        Other
        costs related to tesmilifene increased by approximately $1,400,000 this year
        over last. DELEX was acquired on May 2, 2005 and the costs incurred since
        that
        date of approximately $550,000 have been included; they relate to the
        development of the AeroLEFTM technology for treatment of pain. The increased
        activity associated with out-licensing represented an increase in expenses
        over
        last year of approximately $400,000.
 
 2
 General
        and administrative expenses increased in 2005 over 2004 due to higher
        stock-based compensation expense ($1,685,240 versus $510,375 last year),
        increased investor-related expenses (approximately $670,000 over last year)
        and
        the cost of obtaining and maintaining a listing on AMEX (approximately
        $600,000). The Corporation’s stock began trading on AMEX on October 1, 2004.
 
 **Fiscal
        Year Ended June 30, 2004 Compared To Fiscal Year Ended June 30, 2003**
 
 The
        loss
        for the fiscal year ended June 30, 2004 was $7,691,898 compared to $7,440,675
        for the fiscal year ended June 30, 2003. The carrying cost of marketable
        securities was written down by $1,812,158 to market value at June 30, 2003
        and
        the disposal of marketable securities in fiscal 2004 resulted in a gain on
        sale
        of $638,332.
 
 During
        the fiscal year ended June 30, 2004 the Corporation funded licensing and
        product
        development activities totaling $5,066,569, an increase of $1,101,184 from
        the
        prior year. The increase in expenditures related to the Phase III trial of
        tesmilifene in metastatic and recurrent breast cancer was partly offset by
        a
        reduction in expenditures for nimotuzumab and the EGF vaccine. Development
        of
        the EGF vaccine was stopped in the first quarter of fiscal 2003 with
        approximately $260,000 spent in that year as compared with nothing spent
        in
        fiscal 2004. Also, there was approximately $940,000 less spent on nimotuzumab
        in
        fiscal 2004 because less was spent on clinical trials, manufacturing, and
        patents than in fiscal 2003. Offsetting these reductions and reduction in
        other
        development costs were the expenditures totaling approximately $2,900,000
        related to the large Phase III trial of tesmilifene that began in fiscal
        2004.
 
 The
        general and administrative expenses for the fiscal year ended June 30, 2004
        totaled $3,610,848, compared to $1,936,364 for the prior year. The major
        increases occurred in travel, legal & audit, and investor-related expenses
        as a result of increased public reporting requirements and activities relating
        to increasing exposure to the US capital markets and pursuing the listing
        of our
        securities on a US stock exchange
 
 
 **SUMMARY
        OF QUARTERLY RESULTS**
  **AS
                  PREVIOUSLY REPORTED**
              
              **RESTATED**Revenue
              
              Net
                  Loss(1)
              
              Basic
                  and diluted loss
                per
                  Common Share(1)
              
              Net
                  Loss(1)
              
              Basic
                  and diluted loss
                per
                  Common Share(1)June
                  30, 2005
              
              $
              258,787
              
              $
              6,482,670
              
              $
              0.18March
                  31, 2005
              
              $
              203,108
              
              $
              4,277,762
              
              $
              0.12December
                  31, 2004
              
              $
              521,524
              
              $
              2,830,164
              
              $
              0.08September
                  30, 2004
              
              $
              468,474
              
              $
              2,268,699
              
              $
              0.08June
                  30, 2004
              
              $
              121,983
              
              $
              3,139,056
              
              $
              0.10
              
              $
              3,316,194
              
              $
              0.12March
                  31, 2004
              
              $
              120,441
              
              $
              2,107,232
              
              $
              0.09
              
              $
              2,264,464
              
              $
              0.10December
                  31, 2003
              
              $
              53,156
              
              $
              1,099,260
              
              $
              0.06
              
              $
              1,275,168
              
              $
              0.07September
                  30, 2003
              
              $
              51,607
              
              $
              779,826
              
              $
              0.04
              
              $
              836,072
              
              $
              0.05
 
 (1)
          Canadian GAAP requires the Corporation to expense the fair value of stock
          options awarded to employees beginning in July 2004 and to apply this policy
          retroactively. Accordingly, the net loss and loss per share above have
          been
          restated. See “Critical Accounting Policies and Estimates - Stock-based
          compensation.”
  3
 **Fourth
        Quarter -- Three Month Period Ended June 30, 2005 Compared To The Three Month
        Period Ended June 30, 2004**
 
 Out-licensing
        revenue for the quarter ended June 30, 2005 was $51,693 (zero in 2004). Interest
        income was $207,094 for the quarter as compared to $121,984 for the same
        quarter
        last year principally due to higher average cash balances this year than
        last.
 
 Total
        expenditures for the quarter ended June 30, 2005 were $6,852,405 compared
        to
        $3,408,633 for the same period last year. Licensing and product development
        expenses were $4,541,695 for the quarter compared to $1,932,423 for the same
        quarter a year ago. This year includes an increase in expenditures for
        tesmilifene of approximately $2,330,000 principally for the Phase III clinical
        trial in metastatic and recurrent breast cancer that commenced in March 2004.
        General and administrative expenses for the quarter were $2,310,709 up from
        $1,476,210 for the same period in the prior year, principally due to increased
        investor-related expenses and the cost of maintaining the listing on AMEX.
        The
        Corporation’s stock began trading on AMEX on October 1, 2004.
 
 Net
        loss
        for the three months ended June 30, 2005 was $6,482,670, up from $3,316,194
        for
        the same period last year because of the increase in product development
        expenditures.
 
 **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 Since
        inception, the Corporation has financed the evaluation, licensing and further
        development of its licensed products as well as the evaluation of prospective
        products principally through equity issuances. Since the Corporation does
        not
        have net earnings from its operations, the Corporation's long-term liquidity
        depends on its ability to out-license its products or to access the capital
        markets, and both of these will depend substantially on results of the product
        development programs.
 
 The
        Corporation's cash requirements will be affected by the progress of its clinical
        trials, the development of its regulatory submissions (alone or together
        with
        partners), the achievement of commercialization agreements, the costs associated
        with obtaining and protecting the patents for the licensed products, and
        the
        availability of funding for part of the process from investors and prospective
        commercialization partners.
 
 In
        June
        2002, the Corporation raised $11.5 million ($15 million gross) through the
        issuance of 3,750,000 Class B Preferred Shares, Series 1. This public offering
        resulted in these Class B Preferred Shares being listed on the TSX and AIM.
        On
        June 12, 2003 all the preferred shares were converted to common shares. On
        that
        date, all the common shares became listed on the TSX and AIM.
 
 On
        December 15, 2003 the Corporation completed the sale of 10,895,658 special
        warrants for total gross proceeds of $19,067,402 (net $16,077,287) by means
        of a
        private placement financing.
 
 On
        September 30, 2004, the Corporation completed a bought deal public offering
        of
        6,601,588 units at a price of $3.15 per unit for total gross proceeds of
        $20,795,002 (net $18,972,307). Each unit consisted of one common share and
        one-half of one common share purchase warrant. Each whole purchase warrant
        entitles the holder thereof to purchase one additional common share of the
        Corporation at a price of $3.75 at any time up to 36 months following the
        closing. As part of the compensation for their services, the Corporation
        issued
        warrants to the underwriters entitling the holders to purchase 462,211 units
        at
        the offering price for a period of 36 months after the date of issue.
 
 On
        September 29, 2004 the Corporation's registration statement on Form 20-F
        was
        declared effective by the Securities and Exchange Commission thereby registering
        the Corporation's common shares in the United States. The Corporation's common
        shares began trading on the American Stock Exchange on October 1, 2004. On
        November 2, 2004 the Corporation filed a continuous registration statement
        on
        Form F-1 (and have kept it current) to register the sale, from time to time,
        by
        certain US shareholders of certain securities issued to US purchasers in
        connection with the December 2003 and September 2004 financings .
 
 4
 As
        a
        consequence of the May 2005 share acquisition of DELEX, the Corporation acquired
        $10.4 million in net assets that included cash, net of DELEX debentures paid
        at
        closing, of $3.8 million and additional working capital of $.6
        million..
 
 As
        at
        June 30, 2005 the Corporation had cash and short-term deposits totaling
        $30,568,845 and payables and accrued liabilities totaling $3,825,615 compared
        to
        $20,387,858 and $1,163,711 respectively at June 30, 2004.
 
 As
        of
        June 30, 2005, the only determinable future payments were those related to
        operating lease obligations, which payments are set forth below.
  Contractual
                  Obligations
              Total
              Less
                  Than 1 Year
              1-3
                  Years
              3-5
                  Years
              More
                  Than 5 YearsOperating
                  Leases
                (Expires:
                  January 2008)
              $195,896
              $101,700
              $94,196
              —
              —
 
 In
        addition, as of June 30, 2005, the Corporation was party to certain licensing
        agreements that require the Corporation to pay a proportion of any fees that
        the
        Corporation may receive from sublicensees. The amounts of such fees are not
        known.
 
 On
        March
        10, 2004, the Corporation entered into a Clinical Research Services Agreement
        with Pharm-Olam International, Ltd. ("POI") to conduct a Phase III clinical
        trial with tesmilifene in metastatic and recurrent breast cancer. POI in
        turn is
        contracted with others to perform services and to recruit and treat patients.
        The contract with POI is payable over the term of the trial and payments
        due are
        dependent on the number of patients recruited, number of countries trials
        are
        conducted in, the length of time over which the clinical trials are to be
        conducted and the time for completion of all Phase III clinical trials. The
        Corporation is liable for certain payments of clinical services costs, data
        management costs and pass through costs.
 
 In
        December 2004, the Corporation entered into a similar contract relating to
        a
        pharmacokenetic clinical trial of tesmilifene, involving 30 patients at two
        sites, at an expected cost of £194,527 ($448,000). Either party may cancel the
        contract with 30 days’ notice; in which case, the Corporation would pay for the
        cost to date plus a penalty equal to 10% of the remainder of the contract
        price.
 
 In
        June
        2005, the Corporation entered into a similar contract relating to a
        pharmacokenetic clinical trial of tesmilifene, involving 30 patients at two
        sites, at an expected cost of £344,000 ($756,000). Either party may cancel the
        contract with 30 days’ notice; in which case, the Corporation would pay for the
        cost to date plus a penalty equal to 10% of the remainder of the contract
        price.
 
 The
        Corporation has entered into contracts for pre-clinical and other studies
        totaling approximately $935,000 of which approximately $230,000 had been
        paid to
        June 30, 2005.
 
 The
        Corporation plans to continue the clinical development of tesmilifene and
        nimotuzumab . There are also ongoing activities directed at licensing commercial
        rights for tesmilifene and nimotuzumab. The Corporation anticipates that
        it has
        sufficient cash to support its current development program to beyond December
        2006.
 
 **TREND
        INFORMATION**
 
 It
        is
        important to note that historical patterns of expenditures cannot be taken
        as an
        indication of future expenditures. The amount and timing of expenditures
        and
        therefore liquidity and capital resources vary substantially from period
        to
        period depending on the pre-clinical and clinical studies being undertaken
        at
        any one time and the availability of funding from investors and prospective
        commercial partners.
 
 Other
        than as discussed above, the Corporation is not aware of any material trends
        related to the Corporation's business of product development, patents and
        licensing.
 
 5
 **RISKS
        AND UNCERTAINTIES** ****
 
 Prospective
        purchasers should give careful consideration to the risk factors contained
        under
“Risk Factors” in the Prospectus dated February 12, 2004. These risk factors
        include: (i) the Corporation being in an early stage of development; (ii)
        the
        Corporation’s lack of revenue and history of losses; (iii) risks of pre-clinical
        and clinical testing; (iv) the inability of the Corporation to obtain, protect
        and use patents and other proprietary rights; (v) the Corporation’s dependence
        on collaborative partners; (vi) the uncertain ability of the Corporation
        to keep
        abreast of rapid technological change; (vii) the inability of the Corporation
        to
        succeed against competition; (viii) the Corporation’s lack of manufacturing
        experience; (ix) the Corporation’s reliance on key personnel; (x) product
        liability and the Corporation’s ability to maintain insurance; (xi) the
        Corporation’s possible inability to maintain licenses; (xii) the Corporation’s
        reliance on licensors; (xiii) governmental regulation including risks associated
        with obtaining regulatory approval for drug products; (xiv) risks associated
        with doing business in certain countries; (xv) the need for future capital
        and
        the uncertainty of additional funding; (xvi) possible volatility of the share
        price; and (xvii) international taxation.
 
 **OFF-BALANCE
        SHEET ARRANGEMENTS**
 
 The
        Corporation has certain arrangements with its subsidiaries that have an effect
        or may have a future effect on the Corporation's financial condition, revenues
        or expenses, results of operations, liquidity, capital expenditures or capital
        resources in that there is no assurance that funds advanced to these
        subsidiaries will be reimbursed. The arrangements are described in notes
        1, 7
        and 13 of the financial statements. The Corporation has recorded 100% of
        the
        results of operations and cash flows of these entities.
 
 **CRITICAL
        ACCOUNTING POLICIES AND ESTIMATES**
 
 The
        preparation of financial statements in conformity with GAAP requires management
        to make estimates and assumptions that affect the reported amounts of assets
        and
        liabilities and disclosures of contingent assets and liabilities at the date
        of
        the financial statements, and the reported amount of revenue and expenses
        during
        the reporting period. Significant accounting policies and methods used in
        preparation of the financial statements are described in note 1 to the
        Consolidated Financial Statements. Significant policies and estimates affect:
        revenue recognition; intangible assets; research and development costs; the
        consolidation of variable interest entities; stock-based compensation; and
        the
        income tax valuation allowance.
 
 *Revenue
        recognition*
 Revenue
        from licensing agreements is recognized when persuasive evidence of an
        arrangement exists, delivery has occurred or services have been rendered,
        the
        amount is determinable and collectibility is reasonably assured. Contingent
        revenue attributable to the achievement of milestones is recognized only
        on the
        achievement of the milestone. Non-refundable up-front fees for access to
        the
        Corporation’s proprietary technology are deferred and recognized on a systematic
        basis over the term of the related collaboration.
 
 *Intangible
        assets*
 The
        Corporation’s identifiable intangible assets consist of patents and in-process
        research and development technologies acquired on the acquisition of DELEX
        in
        May 2005. The intangible assets are amortized on a straight-line basis over
        the
        estimated useful life of the technology of seven years. The carrying value
        of
        the intangible assets is reviewed annually to determine if there has been
        an
        impairment in their value.
 
 *Research
        and development costs*
 The
        Corporation does not engage in scientific research but does incur significant
        product development costs. Only development costs that meet strict criteria
        related to technical, marketing and financial feasibility would be capitalized
        under Canadian GAAP. To date, no costs have met such criteria and, accordingly,
        all development costs have been expensed as they have been incurred.
 
 6
 *Variable
        interest entities*
 The
        Corporation has majority interests in joint ventures that are funded entirely
        by
        the Corporation. These joint ventures are classified as variable interest
        entities since the Corporation maintains a controlling financial interest.
        The
        Corporation has recorded 100% of the results of operations and cash flows
        of
        these entities since their inception.
 
 *Stock-based
        compensation*
 In
        fiscal
        2005, the Corporation adopted the fair value-based method of accounting for
        stock-based compensation and retroactively applied this method to all employee
        stock options granted on or after July 1, 2002, and restated prior periods.
        The
        effect of retroactively adopting the fair value-based method was to increase
        general and administrative expenses and the loss for the year by $480,524
        and
        $58,855 for the years ended June 30, 2004 and 2003, respectively, and for
        the
        period from inception to June 30, 2004, with corresponding increases to the
        deficit and contributed surplus. This change had the effect of increasing
        the
        annual basic and diluted loss per share by $0.02 in 2004 with no change in
        2003.
 
 *Income
        tax valuation allowance*
 The
        Corporation and its joint ventures have a net tax benefit resulting from
        non-capital losses carried forward, and pools of scientific research and
        experimental development expenditures and investment tax credit. In view
        of the
        history of net losses incurred, management is of the opinion that it is not
        more
        likely than not that these tax assets will be realized in the foreseeable
        future
        and hence, a full valuation allowance has been recorded against these future
        tax
        assets. Accordingly, no future tax assets are recorded on the balance sheets.
 
 **OTHER
        MD&A REQUIREMENTS**
 
 Outstanding
Share
                Data as at August 31, 2005:
              
              
              
              NumberCommon
                  shares
              
              $
              87,430,580
              
              
              41,412,066Warrants
              
              $
              5,313,283
              
              
              10,745,007Note:
                If all
                warrants were to be exercised, 10,745,007 shares would be issued
                for an
                aggregate consideration of $26,472,378.
  Additional
        information relating to the Corporation, including the Corporation’s Annual
        Information Form, is available on SEDAR at www.sedar.com .
  Dated:
        September 8, 2005
  7