MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended June 30, 2004


This discussion and analysis should be read in conjunction with the consolidated
financial statements for the fiscal years ended June 30, 2004 and June 30, 2003
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 U.S. GAAP.
The differences, as they affect our consolidated financial statements, are set
out in Note 9 to the audited consolidated financial statements.

FORWARD-LOOKING STATEMENTS

This management 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 our 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.


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<PAGE>



SELECTED ANNUAL INFORMATION

<TABLE>
<CAPTION>

                                                 Year Ended     Year Ended     Year Ended
                                              June 30, 2004  June 30, 2003  June 30, 2002

<S>                                                <C>            <C>            <C>
      Interest income                              $347,187       $273,232       $154,112

      Expenses:
      General and administrative                  3,130,324      1,877,509      1,864,289
      Licensing and product Development           5,066,569      3,965,385      4,729,216

      Loss for the period                         7,211,374      7,381,820      6,446,693
      Deficit, beginning of period               36,411,810     28,969,893     22,523,200
                                                ===========    -----------    -----------

      Deficit, end of period                    $43,779,888    $36,411,810    $28,969,893
                                                ===========    ===========    ===========

      Basic and diluted loss per common share         $0.34          $0.56          $0.50
                                                ===========    ===========    ===========

      Total Assets                              $20,882,792     $8,649,842    $13,577,482
                                                ===========    ===========    ===========
</TABLE>


RESULTS OF OPERATIONS

Fiscal Year Ended June 30, 2004 Compared To Fiscal Year Ended June 30, 2003

During the fiscal year ended June 30, 2004, the Corporation expended $8,196,893
on the development and the commercialization of licensed products and on the
administration of the Corporation compared to $5,842,894 for the fiscal year
ended June 30, 2003. The loss for the fiscal year ended June 30, 2004 was
$7,211,374 compared to $7,381,820 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. The accumulated deficit at the end of
the period was $43,779,888 compared to $36,411,810 at June 30, 2003.

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 TheraCIM 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 also approximately $940,000 less spent on TheraCIM 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. This trial is
expected to carry on through fiscal 2006 and to include up to 700 patients.

The general and administrative expenses for the fiscal year ended June 30, 2004
totaled $3,130,324, compared to $1,877,509 for the prior year. The major
increases occurred in travel, legal & audit, and investor relations 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.

Fiscal Year Ended June 30, 2003 Compared To Fiscal Year Ended June 30, 2002

During the fiscal year ended June 30, 2003, the Corporation expended $5,842,894
on the development and the commercialization of licensed products and on the
administration of the Corporation compared to $6,593,505 for the fiscal year
ended June 30, 2002. The loss for the fiscal year ended June 30, 2003 was
$7,381,820 compared to $6,439,393 for the fiscal year ended June 30, 2002. In
fiscal 2003 before "Loss on marketable securities", the loss was $869,731 less
than the comparable figure of $6,439,393 in fiscal 2002. The carrying cost of
marketable securities was written down by $1,812,158 to market value at June 30,
2003. The accumulated deficit at the end of the period was $36,411,810 compared
to $28,969,893 at June 30, 2002.

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<PAGE>

During the fiscal year ended June 30, 2003 the Corporation funded licensing and
product development activities totaling $3,965,385, a decrease of $763,831 from
the prior year. There was approximately $570,000 less spent on the EGF vaccine
in fiscal 2003 than in fiscal 2002 because work was stopped on development of
the vaccine in the first quarter of fiscal 2003. There was also approximately
$470,000 less spent on TheraCIM in fiscal 2003 because fiscal 2002 included
manufacturing costs that were not repeated in fiscal 2003. Expenditures related
to the development of tesmilifene increased approximately $560,000 in 2003 over
fiscal 2002 as new patents were filed and new batches were manufactured for
clinical trials.

The general and administrative expenses for the fiscal year ended June 30, 2003
totaled $1,877,509, comparable to $1,864,289 for the prior year.

SUMMARY OF QUARTERLY RESULTS

                                                               Basic and
                              Revenue           Net Loss    diluted loss
                           (interest)                         per Common
                                                                   Share
      June 30, 2004        $  121,983         $3,225,056           $0.11
      March 31, 2004          120,441          2,107,232            0.09
      December 31, 2003        53,156          1,099,260            0.06
      September 30, 2003       51,607            779,826            0.04
      June 30, 2003            61,436          1,151,889            0.08
      March 31, 2003           74,601          2,056,653            0.16
      December 31, 2002        69,946          2,868,409            0.22
      September 30, 2002       67,249          1,304,869            0.10


Fourth Quarter -- Three Month Period Ended June 30, 2004 Compared To The Three
Month Period Ended June 30, 2003

Total expenditures for the three months ended June 30, 2004 were $3,231,494
compared to $1,251,667 for the same quarter last year. General and
Administrative expenses for the three months were $1,299,072, up from $481,982
from the prior year, principally due to expenses related to obtaining a US
listing. Licensing and Product Development expenses were $1,932,422 for the
three months compared to $772,685 for the same quarter last year. The fourth
quarter this year includes $1,170,000 for the tesmilifene Phase III clinical
trial in metastatic and recurrent breast cancer that commenced in March 2004 and
is expected to continue through fiscal 2006. Interest revenue was $121,983 this
year compared with $61,436 for the three months last year because of the
increased cash on hand.

Net loss for the three months ended June 30, 2004 was $3,225,056, up from
$1,151,889 for the same period last year because of the increase in development
expenditures.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Corporation has financed the evaluation, licensing and
further development of our licensed products as well as the evaluation of
prospective products principally through equity issuances. Since the Corporation
does not have net earnings from our operations, the Corporation's long-term
liquidity depends on our ability to out-license our 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 our
clinical trials, the development of our 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.

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<PAGE>

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 a total gross proceeds of $19,067,402 (net $17,047,001) by means of
a private placement financing.

As at June 30, 2004 the Corporation had cash and short-term deposits totaling
$20,387,858 and current liabilities of $1,163,711.

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 $18,611,860). Each unit consists 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 YM
BioSciences Inc. at a price of $3.75 at any time for up to 36 months following
the closing. The underwriters may draw down additional 700,000 units ($2.2
million) under the over-allotment provisions.

As of June 30, 2004, the only determinable future payments were those related
operating lease obligations, which payments are set forth below.

<TABLE>
<CAPTION>

--------------------------------- ----------- ------------- ------------- ------------ --------------
    Contractual Obligations         Total     Less Than 1    1-3 Years     3-5 Years    More Than 5
                                                  Year                                     Years
--------------------------------- ----------- ------------- ------------- ------------ --------------
<S>                                <C>          <C>           <C>          <C>          <C>
        Operating Lease            $213,115     $58,632       $154,483         -             -
    (Expires: January 2008)
--------------------------------- ----------- ------------- ------------- ------------ --------------

</TABLE>

In addition, as of June 30, 2004, 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.

Finally, during the fiscal year ended June 30, 2004, the Corporation entered
into a Clinical Research Services Agreement with Pharm-Olam International, Ltd.
("POI"), dated March 10, 2004. The Corporation has contracted with POI to
conduct a Phase III clinical trial on it's behalf with tesmilifene in metastatic
and recurrent breast cancer. POI in turn is contracting 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 payment of clinical services costs, data management costs and pass
through costs.

The Corporation plans to continue the clinical development of tesmilifene and
Norelin and is in discussion with others regarding additional clinical trials
for TheraCIM. There are also ongoing activities directed at licensing out
tesmilifene and TheraCIM. The Corporation anticipates that it has sufficient
cash to support its current development program to beyond the end of fiscal
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.
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<PAGE>

Other than as discussed above, the Corporation is not aware of any material
trends related the Corporation's business of product development, patents and
licensing.

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 ability of the Corporation
to obtain, protect and use patents and other proprietary rights; (v) the
Corporation's dependence on collaborative partners; (vi) the ability of the
Corporation to keep abreast of rapid technological change; (vii) the ability 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 ability 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 our 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 our
subsidiaries will be reimbursed. The arrangements are described in notes 1, 4
and 9 of the financial statements. The Corporation makes provision for any
advances to the joint ventures that do not eliminate on consolidation such that
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
effect: the amount of development expenditures expensed vs. capitalized; the
fair value of options and share purchase warrants; the amount reserved against
the amount advanced to joint ventures in excess of the Corporation's
proportionate share of expenses incurred by the joint ventures; and the income
tax valuation allowances.

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.

All expenditures incurred by the joint ventures are funded by advances from the
Corporation. The Corporation will not be able to recover the advances unless and
until the joint venture's net income exceeds the amount of the cumulative
advances. Accordingly, the Corporation has set up a reserve in full against the
other joint venture partners' share of the advances.

The Corporation and our 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
recent 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 income tax
assets. Accordingly, no future income assets or liabilities are recorded on the
balance sheets.
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<PAGE>

OTHER MD&A REQUIREMENTS

Outstanding Share Data as at September 30, 2004, after giving effect to the
financing that closed on September 30, 2004.

                 Common Shares                $77,280,157
                 Warrants                      $5,208,720
                    Number of common shares    35,315,989
                        Number of Warrants     10,819,361

Additional information relating the Corporation, including the Corporation's
Annual Information Form, is available on SEDAR at www.sedar.com .


Dated:  September 30, 2004





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