YM BIOSCIENCES INC.

                             ANNUAL INFORMATION FORM

                            YEAR ENDED JUNE 30, 2004

















                                November 2, 2004






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                               YM BIOSCIENCES INC.

                             ANNUAL INFORMATION FORM



                                TABLE OF CONTENTS

    Corporate Structure  ....................................................8
    General Development of the Business .....................................8
    Narrative Description of the Business ...................................10
    Dividends................................................................53
    General Description of the Capital Structure.............................53
    Market For Securities ...................................................54
    Directors and Officers ..................................................54
    Legal Proceedings .......................................................61
    Interest of Management and Others in Material Transactions ..............61
    Transfer Agent and Registrar.............................................61
    Material Contracts.......................................................61
    Additional Information...................................................63

                       DOCUMENTS INCORPORATED BY REFERENCE

YM BioSciences' "Management's Discussion and Analysis of Financial Condition and
Results of Operations" (the "MD&A") and the audited  consolidated balance sheets
as at June 30, 2004 and June 30, 2003, and the audited  consolidated  statements
of earnings and retained earnings and changes in financial  position for each of
the  years in the  three  year  period  ended  June  30,  2004  (the  "Financial
Statements") previously filed.

The MD&A and the Financial  Statements,  in their entirety,  are incorporated by
reference in, and form part of, this Annual Information Form.

All of the  documents  referred  to above have been filed via SEDAR  (System for
Electronic  Document  Analysis and Retrieval) and are available to the public at
SEDAR's  website,  www.sedar.com.  Further  information may also be found on the
Corporation's website www.ymbiosciences.com.

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                       GLOSSARY OF TERMS AND PROPER NAMES

This  glossary   contains   general   terms  used  in  the   discussion  of  the
biopharmaceutical  industry,  as well as  specific  technical  terms used in the
descriptions of our technology and business.

Abgenix -  Abegnix Incorporated

Active  Immunotherapy  -  Deliberate  stimulation  of the  patient's  own immune
response  through  administration  of  antigens  with or  without  immunological
adjuvants.   Therapeutic   cancer   vaccines  are  considered   Active  Specific
Immunotherapy  agents  because the body is stimulated to make its own antibodies
specific for the tumor cells

Adjuvant - Substance added to a vaccine to enhance its immunogenicity  (i.e. its
ability to stimulate an immune response)

Affinity - Binding strength of an antibody to a target

Amgen - Amgen Incorporated

Antisense  Drug - Short  spans of nucleic  acid (DNA or RNA) used to disrupt the
expression of disease related genetic code

Aphton - Aphton Corporation

ASCO - The American Society of Clinical Oncology

AZ/AstraZeneca - AstraZeneca PLC

Autocrine  - Used  herein to describe a hormonal  pathway  characterized  by the
production of a  biologically  active  substance by a cell;  the substance  then
binds to receptors on that same cell to initiate a cellular response

Autocrine  loop - A  self-sustaining  process built on a  self-feeding  positive
feedback  cycle.  Refers to the ability of a  substance  to act on the same cell
that produced it

BMS - Bristol Myers Squibb Company

Cancer Vaccine - Vaccines or candidate vaccines designed to treat cancer,  using
pure or extracted tumor-specific antigens or using the patient's own whole tumor
cells as the source of antigens

CBQ - Centro de  Bioactivos  Quimicos  (Center for Bioactive  Chemicals),  Santa
Clara, Cuba

cDNA - Cloned copies of mRNA - the essential  messenger  element of the genes in
the DNA that help in the coding of proteins

cGMP - current good  manufacturing  practices,  as mandated from time to time by
Health Canada and the FDA

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Chemopotentiator  - A substance  that  enhances the  activity of a  chemotherapy
agent

Chimeric - A chimeric antibody consists mainly of human protein, but the portion
of the antibody that binds to the target is still mouse protein

CIM - Centro de Inmunologia Molecular (Center for Molecular Immunology), Havana,
Cuba

CIMAB - a Cuban company  responsible for  commercializing  products developed at
CIM and the product licensed from CBQ

Cisplatin - Approved chemotherapeutic agent

c-myc - Cellular gene involved in proliferation, commonly deregulated in cancer

CTA - Clinical Trial  Application - previously known as an  Investigational  New
Drug  application  which must be filed and accepted by the regulatory  agency of
Health Canada before each phase of human clinical trials may begin

Cyclophosphamide - Approved chemotherapeutic agent

Cytoprotective - Having the capacity to protect cells

Cytostatic - Having capacity to arrest the growth of cells

Cytotoxic - Having capacity to kill cells

Cytotoxic T cell response - Killing the tumor cell by activated tumor-specific T
cells

Doxorubicin - Approved chemotherapeutic agent

E. coli - A common bacterial strain often used as a host for recombinant protein
production

Eli Lilly - Eli Lilly and Company

Epidermal  Growth Factor - A growth factor known to be involved in regulation of
epithelial cell growth

Epithelial - Derived  from  epithelium  which is the layer of cells  forming the
epidermis of the skin and the surface layer of the serous and mucous membranes

Estramustine - An approved chemotherapeutic agent

Extracellular  domain  (ECD) - The  portion of a cell  surface  protein  located
outside the cell

5-FU - See Fluorouracil

Fluorouracil (5-Fluorouracil, 5-FU) - Approved chemotherapeutic agent

Fusion protein - Two or more proteins genetically engineered to be produced as a
single protein

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Genentech - Genentech Incorporated

Genmab - Genmab A/S

Genta - Genta Incorporated

Glioma - A form of brain cancer  involving  the  malignant  transformation  of a
glial cell

GMP  -  good  manufacturing  practices,   i.e.  guidelines  established  by  the
governments of various countries,  including Canada and the United States, to be
used  as  a  standard  in  accordance  with  the  World  Health   Organization's
Certification Scheme on the quality of pharmaceutical products

GnRH - Gonadotrophin  Releasing  Hormone;  controlling the circulating levels of
the sex hormones

HER-1 positive tumors - Tumors expressing/producing the EGF receptor

Hormone-refractory  - Term used to indicate that a tumor is no longer responsive
to hormone therapy

Humanized - The process whereby an antibody derived from murine cells is altered
to  resemble a human  antibody.  Humanized  antibodies  are less likely to cause
allergic  reactions when given to humans but retain the  biological  activity of
the original murine form

ImClone - ImClone Systems Incorporated

IND -  Investigational  New Drug application which must be filed and accepted by
the FDA before each phase of human clinical trials may begin

Irinotecan - An approved chemotherapeutic agent

In vivo - In the living body or organism. A test performed on a living organism

ISIS - ISIS Pharmaceuticals

Ligand - Used herein to describe a protein or peptide that binds to a particular
receptor

Lorus - Lorus Therapeutics Inc.

Merck - Merck KGaA

Metastatic  - A term used to describe a cancer  where tumor cells have  migrated
from the primary tumor to a secondary site (e.g. from prostate to bone)

Mitoxantrone - An approved chemotherapy agent

Monoclonal  antibody ("MAb") - Antibodies of exceptional  purity and specificity
derived  from  hybridoma  cells  (cells  which are fused  cells,  generally  MAb
produced in mice, that secrete MAbs)

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Murine - Derived from mouse cells

NCE - A new chemical entity

NCIC - The National Cancer Institute of Canada

Neoplastic - New and abnormal growth of tissue  (neoplasm),  which may be benign
or cancerous

NSCLC - Non Small Cell Lung Cancer

OFAC - U.S. Department of the Treasury Office of Foreign Asset & Control

Oncogene - A gene that induces or promotes uncontrolled cell growth

Oncoscience - Oncoscience AG

Orange Book - A reference to the Hatch/Waxman Act

Orphan  Drug - A drug aimed at treating a condition  with an  incidence  of less
than  200,000  per year in the United  States  (often  given a seven year market
exclusivity by the FDA

OSI - OSI Pharmaceuticals, Inc.

Overall  Survival - For patients who have died,  overall survival was calculated
in months from the day of  randomization to date of death.  Otherwise,  survival
was censored at the last day the patient is known alive

P64k - Outer membrane protein of N. meningitides

Passive  Immunotherapy -  Immunologically  active material  transferred into the
patient as a passive  recipient.  Monoclonal  antibodies are considered  Passive
Immunotherapy  since antibodies are generated  outside the body and given to the
patient

pGp - P-Glycoprotein.  A pumping mechanism that removes noxious  substances from
the cell

pGp inhibitor - Inhibitor of the activity of P-Glycoprotein

P. haemolytica - A bacterium causing respiratory disease in cattle and sheep

Phosphorylation -  Addition/donation  of a phosphate group to a particular amino
acid which can lead to tumor growth

Prednisone - An approved standard anti-inflammatory

Resection - The process of tumor removal

Roche - F.Hoffmann-LaRoche Ltd.

TAP - TAP Pharmaceuticals

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Taxol - An approved chemotherapeutic agent

Taxotere - An approved chemotherapeutic agent

TGFa - Transforming growth factor alpha

Th 1 - T helper cell type 1 (generally  involved in stimulating a  cell-mediated
immune response)

Therapeutic  vaccine - An approach to the treatment of cancer utilizing  "active
immunotherapy"

Titers - Term used to express levels of circulating antibodies

Tyrosine  kinase - An enzyme  that  catalyzes  the  phosphorylation  of tyrosine
residues in proteins with nucleotides as phosphate donors

Upregulation - Increased production of an RNA transcript or a protein by a cell

Vinylfuran - A chemical polymer

Yttrium 90 - A radioisotope used in the treatment of disease

                           FORWARD LOOKING STATEMENTS

Statements  contained  herein that are not based on historical  fact,  including
without limitation  statements containing the words "believes," "may," "likely,"
"plans," "will," "estimate," "continue," "anticipates," "intends," "expects" and
similar expressions,  constitute "forward-looking statements" within the meaning
of  the  U.S.   Private   Securities   Litigation   Reform  Act  of  1995.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual  results,  events or  developments to be
materially different from any future results,  events or developments  expressed
or implied by such  forward-looking  statements.  Such factors include,  without
limitation,  changing market conditions, our ability to obtain patent protection
and protect our  intellectual  property  rights,  commercialization  limitations
imposed by  intellectual  property  rights owned or controlled by third parties,
intellectual property liability rights and liability claims asserted against us,
the  successful  and  timely  completion  of  clinical  studies,  the  impact of
competitive products and pricing, new product development, uncertainties related
to the regulatory  approval process,  product development delays, our ability to
attract  and  retain  business  partners  and key  personnel,  future  levels of
government  funding,  our ability to obtain the capital  required for  research,
operations  and marketing  and other risks  detailed  from  time-to-time  in the
Company's  ongoing  quarterly  filings,  annual  information  forms  and  annual
reports.   We  undertake  no  obligation  to  publicly   update  or  revise  any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking  events  discussed  in this  annual  information  form might not
occur.

Unless otherwise indicated,  or the context requires otherwise,  the information
appearing  in this  annual  information  form is stated as at June 30,  2004 and
references in this annual  information  form to "$" or "dollars" are to Canadian
dollars.  Information  contained  on our  website  is not  part of  this  annual
information form.

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                               CORPORATE STRUCTURE

YM  BioSciences  Inc.  ("YM  BioSciences"  or  "YM"  or the  "Corporation")  was
incorporated  under the laws of the Province of Ontario on August 17,  1994.  On
February 7, 2001 the Corporation  changed its name to YM BioSciences Inc. and on
December 11, 2001 was continued  into the Province of Nova Scotia under the Nova
Scotia Companies Act.

The head  office and  principal  place of business  of the  Corporation  is 5045
Orbitor  Drive,  Building  11,  Suite 400,  Mississauga,  Ontario,  L4W 4Y4. The
registered head office of YM BioSciences is 1959 Upper Water Street,  Suite 800,
Halifax, Nova Scotia, B3J 2X2

Organizational Structure

The Corporation currently has four material subsidiaries, shown in the following
diagram:



                               [graphic omitted]



     (1)  Canadian operating subsidiary incorporated under the laws of Ontario.
     (2)  International  marketing  subsidiary  incorporated  under  the laws of
          Barbados.
     (3)  Articles of dissolution were issued for CBQYM Inc. August 24, 2004.



Unless otherwise noted, "YM BioSciences",  "YM", and the "Corporation"  includes
YM BioSciences Inc. and its subsidiaries.  Each of the companies incorporated in
Barbados  are  collectively   referred  to  as  the   "International   Marketing
Subsidiaries".


                       GENERAL DEVELOPMENT OF THE BUSINESS

The  Corporation was founded in 1994 to acquire rights to develop drug products.
The Corporation is principally focused on cancer therapeutics.

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In 1995,  the  Corporation  secured  our first  drug  licenses  and our  initial
financing.  The  Corporation  initially  licensed  a range of drug  products  at
various  stages  of  assessment  and  development,   including  certain  of  the
Corporation's  current anti-cancer  products and our anti-microbial  product. In
1998, the  Corporation  decided to concentrate  on anti-cancer  products,  while
retaining our interest in anti-microbials. The Corporation has used funds raised
in our initial  financing and subsequent  financings in 1997,  1999, 2000, 2002,
2003 and 2004 to advance certain of our licensed drug products  through clinical
trials in Canada,  the United States and Europe,  and to expand our portfolio of
anti-cancer  products by licensing  additional  drug products in later stages of
development.  In addition,  the Corporation  licensed certain drug products that
were in pre-clinical development for which we participated in development costs.
See "Narrative  Description of the Business - Products in Clinical  Development"
and "- Products in Pre-Clinical Development".

The  Corporation   has  four  product   candidates  in  the  clinical  stage  of
development:

     o    Tesmilifene  is  a  small  molecule  chemopotentiator  that  has  been
          clinically demonstrated to augment the anti-tumor activity of a number
          of cytotoxic drugs including  anthracyclines  and taxanes.  In a Phase
          III  trial  the drug  was used in  combination  with  doxorubicin  and
          demonstrated  a greater  than 50%  increase  in survival in women with
          metastatic  breast  cancer  compared  with the  patients  treated with
          doxorubicin alone.

     o    NorelinTM  is  a  therapeutic   vaccine   designed  to  stimulate  the
          production  of  antibodies  against  GnRH in  patients,  resulting  in
          reduced  production  of hormones  that may cause or  contribute to the
          growth of certain sex-hormone dependent cancers.

     o    TheraCIM  hR3, a humanized  monoclonal  antibody  MAb,  targeting  the
          protein  known  as  Epidermal  Growth  Factor  Receptor  ("EGFr"),  is
          designed to treat epithelial  cancers and to be administered prior to,
          simultaneously  with, or subsequent to, chemotherapy and radiotherapy.
          In a Phase  II  trial  the  drug has  doubled  the  reported  complete
          response rate to radiation in head-and-neck tumors.

     o    RadioTheraCIM  is a radiolabelled  humanized MAb,  targeting the EGFr,
          currently  being  developed  for the  treatment of brain  cancers.  In
          published  results from a pilot clinical study in patients with glioma
          the product  appears to increase  survival  compared  with  historical
          results with standard radiation therapy.

The  Corporation  also has two therapeutic  cancer vaccines in the  pre-clinical
stage of development,  namely TGFa Cancer Vaccine and HER-1 Cancer Vaccine.  The
Corporation's  licensed  rights to the TGFa  Vaccine  and the HER-1  Vaccine are
suspended  under  the  terms  of  the   out-licensing   agreement   between  the
Corporation,   our  subsidiary  CIMYM,  Inc.,  a  Barbados  corporation  ("CIMYM
(Barbados)"),   CIMAB  and  Tarcanta  Inc.  and  Tarcanta,  Ltd.  (collectively,
"Tarcanta"),   two  wholly-owned  subsidiaries  of  California-based   CancerVax
Corporation  ("CancerVax")  relating to Tarcanta  licensing  TGFa and HER-1 from
CIMAB. In connection with the out-licensing  agreement,  CancerVax has announced
that it has received a license from the Office of Foreign  Asset  Control of the
United States Department of Treasury ("OFAC" or "Treasury") authorizing Tarcanta
to enter into the transactions  with CIMAB and the Corporation.  See "Business -
Licensing Arrangements - Out-Licensing".

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There is no indication of any public takeover offers by third parties in respect
of the YM's  shares or by YM in respect of other  companies'  shares  which have
occurred during the last and current financial year.

             NARRATIVE DESCRIPTION OF THE BUSINESS (the "Business")

The  Corporation is a  biopharmaceutical  company  engaged in the development of
drugs primarily for the treatment of cancer. YM in-licenses  substances designed
for use in anti-cancer therapy in order to advance them along the regulatory and
clinical  pathways  toward  commercial  approval.   The  Corporation's  licenses
generally  cover the major market  countries of the developed  world  (including
Canada, the United States, Japan and Europe) or are world-wide.  The Corporation
uses our  expertise to manage and perform what we believe are the most  critical
aspects of the drug development  process which include the design and conduct of
clinical trials,  the development and execution of strategies for the protection
and  maintenance of intellectual  property rights and the interaction  with drug
regulatory authorities internationally.  YM concentrates on drug development and
does not engage in drug discovery,  avoiding the significant  investment of time
and capital  that is  generally  required  before a compound is  identified  and
brought to clinical trials. YM both conducts and out-sources clinical trials and
out-sources the manufacture of clinical materials to third parties.

The Corporation's current portfolio of products in clinical development includes
three anti-cancer agents (a small molecule, a vaccine and a monoclonal antibody)
in a number of formulations  targeting  seven different  tumors and/or stages of
cancer.  The  Corporation  also  has a  financial  interest  in  two  additional
anti-cancer immunotherapies in pre-clinical development. The Corporation intends
to license  the rights to  manufacture  and  market our drug  products  to other
pharmaceutical  companies in exchange for license fees and royalty  payments and
to continue to seek other  in-licensing  opportunities  in pursuing our business
strategy.  The  Corporation  does not currently  intend to manufacture or market
products  although we may, if the  opportunity  is  available  on terms that are
considered attractive,  participate in ownership of manufacturing  facilities or
retain marketing or co-development rights to specific drugs.

RISK FACTORS

Risks Related To Our Business

WE ARE IN THE EARLY  STAGES OF  DEVELOPMENT  AND,  AS A  RESULT,  ARE  UNABLE TO
PREDICT  WHETHER  WE  WILL  BE ABLE TO  PROFITABLY  COMMERCIALIZE  OUR  LICENSED
PRODUCTS.

The  Corporation  was  founded in 1994 and none of the  licensed  products  have
received regulatory approval for sale in any of the jurisdictions covered by the
licenses.  Accordingly,  the Corporation has not generated any revenues from the
commercialization  of  our  licensed  products.  A  significant   commitment  of
resources to conduct clinical trials and additional development will be required
to commercialize most of the licensed  products.  There can be no assurance that
the licensed products will meet applicable regulatory  standards,  be capable of
being produced in commercial  quantities at reasonable  cost or be  successfully
marketed,   or   that   the   investment   made  by  the   Corporation   in  the
commercialization  of the licensed  products  will be recovered  through  sales,
license fees or related royalties.

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WE HAVE A LACK OF REVENUES AND A HISTORY OF LOSSES AND, THEREFORE, ARE UNABLE TO
PREDICT THE EXTENT OF ANY FUTURE LOSSES OR WHEN WE WILL BECOME PROFITABLE.

Up to September,  2004, the Corporation received approximately $361,000 from the
commercialization  of our licensed products TGFa and HER-1. Since  incorporation
and up to September 30, 2004,  the  Corporation  has an  accumulated  deficit of
$45.9 million.  The Corporation expects expenditures and the accumulated deficit
to increase as we proceed with our commercialization programs until such time as
any sales,  license fees and royalty payments  generate  sufficient  revenues to
fund our continuing operations.

WE ARE  DEPENDENT  ON OTHERS FOR THE  MANUFACTURE,  DEVELOPMENT  AND SALE OF OUR
PRODUCTS.  IF WE ARE UNABLE TO ESTABLISH OR MANAGE COLLABORATIONS IN THE FUTURE,
THERE COULD BE A DELAY IN THE MANUFACTURE, DEVELOPMENT AND SALE OF OUR PRODUCTS.

The  Corporation  does not conduct any of our own research.  Basic research on a
particular drug product is conducted by biopharmaceutical companies,  scientific
and academic  institutions  and hospitals,  or scientists  affiliated with those
institutions.  Once the basic research is complete,  the Corporation enters into
license  agreements to in-license  the right to develop and market the products.
The  Corporation  has  negotiated  certain  in-licensing  agreements  with:  the
University of Manitoba,  CancerCare  Manitoba,  Vincent Research and Consulting,
CIMAB, Biostar Inc., the Veterinary  Infectious Disease Organization ("VIDO") (a
division of the University of Saskatchewan), and Heber Biotec S.A. See "Business
- Licensing Arrangements - In-Licensing".

The Corporation  enters into  arrangements  with and is dependant on others with
respect to the  manufacture,  development and sale of our in-licensed  products.
Product  development  includes,  but is not  limited to,  pre-clinical  testing,
clinical  testing,  regulatory  approvals  and  the  development  of  additional
regulatory and marketing information.  The Corporation's ability to successfully
develop and commercialize  our in-licensed  products is dependent on our ability
to make arrangements  with others on commercially  acceptable terms. The product
development  process  may be delayed or  terminated  if the  Corporation  cannot
secure or maintain such arrangements. The Corporation does not have any material
third  party  manufacture,   formulation  or  supply  agreements.  However,  the
Corporation has entered into an agreement with Pharm-Olam International, Ltd. in
connection with clinical testing and product development of tesmilifene.

The Corporation expects to enter into out-licensing  agreements with others with
respect to  manufacturing  and marketing our drug products.  The Corporation may
retain co-development and marketing rights if management deems it appropriate to
do so.  At this  time,  the  Corporation  has  entered  into  two  out-licensing
agreements.

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<PAGE>

The  Corporation  entered  into the first  out-licensing  agreement  through our
subsidiary,  CIMYM Inc., an Ontario corporation ("CIMYM"). On November 12, 2003,
CIMYM  out-licensed  the rights for TheraCIM in most of Europe to  Oncoscience .
Under the terms of the  agreement,  CIMYM is  entitled  to  receive  up to US$30
million as a share of any  amounts  received by  Oncoscience  in relation to the
development  or  sublicensing  of the  product  and as a royalty on initial  net
sales.  After CIMYM has  received  US$30  million,  CIMYM  continues to receives
royalties on net sales but at a lesser percentage.

The  Corporation  and CIMYM  (Barbados)  entered  into the second  out-licensing
agreement with Tarcanta and CIMAB relating to Tarcanta  licensing TGFa and HER-1
from the  Corporation.  CancerVax has  announced  that it has received a license
from Treasury authorizing Tarcanta to enter into the transactions with CIMAB and
the Corporation. On July 13, 2004, the Corporation,  CIMYM (Barbados), CIMAB and
Tarcanta  entered  into  a  License,   Development,   Manufacturing  and  Supply
Agreement.  By the terms of this agreement with Tarcanta, the 2001 CIMYM License
has been  suspended  until such time,  if at all,  there is a default  under the
agreement  with  Tarcanta.   Under  the  terms  of  the  new  agreement  and  in
consideration  for the suspension of the 2001 CIMYM License,  the Corporation is
entitled to receive an aggregate  payment of $1,000,000 which is payable in four
equal installments,  the final payment due December 31, 2005. In addition, under
the new agreement the Corporation may receive 35% of an aggregate of $16,350,000
in  milestone  payments.  Finally,  the  Corporation  retains an interest in the
revenues  from  the  manufacture  and  marketing  of the  drugs  or  from  their
sub-licensing.  See "Business - Licensing  Arrangements - Out-Licensing" and see
"Business - Licensing  Arrangements  -  In-Licensing  - Licenses  for  TheraCIM,
RadioTheraCIM, TGFa and HER-1".

There can be no assurance that the Corporation will be successful in maintaining
our  relationships  with  research  institutions  or  others  or in  negotiating
additional  in-licensing or out-licensing  agreements on terms acceptable to the
Corporation or that any such arrangements will be successful. In addition, there
can be no assurance that the  arrangements  between the  Corporation  and others
will prevent other parties from  entering into  arrangements  with such entities
for the development or commercialization of similar products or that the parties
with whom the Corporation has such arrangements will not be pursuing alternative
technologies or developing products either on their own or in collaboration with
others,  including the  Corporation's  competitors.  If the Corporation does not
establish  sufficient  in-licensing  and  out-licensing  arrangements,  we could
encounter  delays in product  introductions  or could find that the development,
manufacture  or sale of our  licensed  products  could be  materially  adversely
affected.

WE HAVE NO EXPERIENCE IN COMMERCIAL  MANUFACTURING OF OUR LICENSED  PRODUCTS AND
MAY  ENCOUNTER  PROBLEMS  OR DELAYS IN MAKING  ARRANGEMENTS  FOR  PRODUCTS TO BE
COMMERCIALLY MANUFACTURED, WHICH COULD RESULT IN DELAYED DEVELOPMENT, REGULATORY
APPROVAL AND MARKETING.

The Corporation has not commercially  launched any of the licensed  products and
has no  commercial  manufacturing  experience.  To be  successful,  the licensed
products  must be  manufactured  in commercial  quantities  in  compliance  with
regulatory  requirements and at acceptable  costs. The Corporation does not have
and does not intend to acquire  facilities  for the  production  of the licensed
products  although we may invest in the  ownership of  production  facilities if
appropriate opportunities are available.

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Two of the Corporation's licensed products (namely, TheraCIM and Radio TheraCIM)
are expected to be manufactured in small  quantities for testing by the relevant
licensor  (namely,  CIMAB) or a related  party,  subject  to  certain  terms and
conditions  of the  licensing  agreements  between  the  Corporation  and CIMAB.
Currently these expectations are being met. There can be no assurance,  however,
that such entities will be able to develop adequate  manufacturing  capabilities
for commercial scale quantities in a commercially reasonable manner.

Two other licensed products of the Corporation which are currently manufactured,
and finished and filled,  in small quantities for testing,  by third parties are
tesmilifene  and NorelinTM.  The  manufacturing  process for these drugs is such
that the Corporation  expects that  commercial  quantities of these drugs can be
manufactured.  If current suppliers cannot manufacture  commercial quantities or
the Corporation otherwise experiences a problem with current suppliers,  it will
be necessary for the  Corporation to obtain these drugs from new suppliers.  The
Corporation  does not have supply  agreements  with the third party suppliers of
tesmilifene and NorelinTM,  but such suppliers have produced  quantities for the
Corporation to specification on purchase order. The Corporation  expects that we
could  find new  suppliers  for  these  drugs,  if  necessary.  There  can be no
assurance,  however,  that the Corporation or our licensor will be able to reach
satisfactory  arrangements  with our current  suppliers  or, if  necessary,  new
suppliers or that such arrangements will be successful.

All  manufacturing  facilities must comply with applicable  regulations in their
jurisdiction  or where  products are to be sold. In addition,  production of the
licensed  products may require raw materials for which the sources and amount of
supply  are  limited.  An  inability  to obtain  adequate  supplies  of such raw
materials could  significantly  delay the development,  regulatory  approval and
marketing of the Corporation's licensed products.

WE ARE DEPENDENT ON LICENSES FROM THIRD PARTIES AND THE  MAINTENANCE OF LICENSES
IS NECESSARY FOR OUR SUCCESS.

The Corporation  has obtained our rights to the licensed  products under license
agreements from various third party licensors as follows:

     (a)  License  Agreement  between CIMYM Inc. and CIMAB SA,  January 24, 2001
          with respect to TGFa and HER-1,  which agreement has been suspended in
          accordance with the terms of the Tarcanta out-licensing agreement (See
          "Business - Licensing Agreements - Out-Licensing");

     (b)  License Agreement between YM BioSciences Inc.  (formerly known as York
          Medical  Inc.),   University  of  Manitoba  and  The  Manitoba  Cancer
          Treatment  and Research  Foundation,  carrying on its  undertaking  as
          Cancercare   Manitoba,   dated   November  2,  2000  with  respect  to
          tesmilifene;

     (c)  License Agreement between YM BioSciences Inc.  (formerly known as York
          Medical Inc.) and Biostar Inc.  dated October 11, 2000 with respect to
          NorelinTM; and

                                      -13-
<PAGE>

     (d)  License  Agreement  between YM  BioSciences  Inc.  (formerly  known as
          Yorkton  Medical Inc.) and CIMAB SA, dated May 3, 1995 with respect to
          TheraCIM and RadioTheraCIM.

The above listed license  agreements are more fully  described under the heading
"Business - Licensing Arrangements - In-Licensing".

The  Corporation  is dependent  upon the licenses for our rights to the licensed
products and  commercialization of the licensed products.  While the Corporation
believes we are in compliance with our obligations  under the licenses,  certain
licenses  may be  terminated  or  converted  to  non-exclusive  licenses  by the
licensors  if there is a breach  of the terms of the  licenses.  There can be no
assurance  that  the  licenses  are  enforceable  or will not be  terminated  or
converted. The termination or conversion of the licenses or the inability of the
Corporation  to enforce  our  rights  under the  licenses  would have a material
adverse effect on the Corporation as the Corporation  would not have products to
develop.  To the extent that  management  considers a  particular  license to be
material to the undertaking of the Corporation, the Corporation has entered into
a signed license agreement for that license. Terms of certain remaining licenses
are to be determined  at a later date.  The  in-license  agreements to which the
Corporation is currently a party require the  Corporation to maintain and defend
the patent rights that we in-license against third parties.

Although the Corporation's  current licenses are governed by the laws of Ontario
and Barbados,  their enforcement may necessitate  pursuing legal proceedings and
obtaining  orders in other  jurisdictions,  including  the United States and the
Republic  of Cuba.  There can be no  assurance  that a court  judgment  or order
obtained in one  jurisdiction  will be enforceable in another.  In international
venture undertakings it is standard practice to attorn to a neutral jurisdiction
to seek  remedy for  unresolved  commercial  disputes.  These  arrangements  are
usually  negotiated as part of the original business  agreement.  In the case of
the license  agreements with the  Corporation,  the parties have agreed that the
proper law of the  contract is Ontario and the parties will attorn to the courts
of Ontario or the Federal court of Canada to resolve any dispute.

As is the case in many developing  states,  the commercial legal  environment in
Cuba is in a formative stage and may be subject to greater political risk. It is
possible  that the  Corporation  may not be able to enforce our legal  rights in
Cuba or against Cuban  entities to the same extent as it would in a country with
a more developed  commercial and legal system.  Termination of the Corporation's
license  arrangements or difficulties in enforcement of such arrangements  could
have  a  material  adverse  effect  on the  Corporation's  ability  to  continue
development of our licensed products.

As described  under "Business - Licensing  Arrangements",  the Corporation has a
number  of  license  agreements  with  CIMAB.  CIMAB  is an  institution  of the
Government  of Cuba that  purportedly  operates  at  arms-length  from the state
bureaucracy  with  regard  to  its  business,   scientific  and   administrative
decision-making.  It  is  akin  to a  "crown  corporation"  in  Canada.  CIMAB's
management is purportedly  both  autonomous and  responsible  for the success of
their  business   decisions.   Despite  the  fact  that  CIMAB's  management  is
purportedly both autonomous and responsible for business  decisions and that the
license  agreements with the Corporation  declare Ontario as proper law, because
of the fact that CIMAB is a state-owned entity, the Corporation will not be able
to force CIMAB to comply with any  judgment if CIMAB or the  Government  of Cuba
refuses to comply.

                                      -14-
<PAGE>

WE HAVE  ADVANCED  FUNDS TO OUR  JOINT  VENTURE  SUBSIDIARIES  WHICH WE ARE ONLY
ENTITLED TO RECOVER WHEN THE JOINT  VENTURE'S  NET INCOME  EXCEEDS THE AMOUNT OF
CUMULATIVE ADVANCES.

YM and CIMAB  entered  into  funding  agreements  with CIMYM and CBQYM Inc.,  an
Ontario   corporation   ("CBQYM",   collectively   with  CIMYM,   the  "Canadian
Subsidiaries")  in November 1995 (the "Funding  Agreements")  in connection with
the  1995  CIMYM  License  and the  CBQYM  License,  respectively.  The  Funding
Agreements provide that YM will arrange for the appropriate studies and clinical
trials for the licensed products held by the Canadian Subsidiaries and will fund
the cost of such  studies  and  trials  provided  that  doing  so  would  not be
commercially or  scientifically  unreasonable.  Accordingly,  YM makes the final
determination  as to whether or not a clinical  trial expense is justified  with
respect to any given product.

CIMYM  (Barbados) and CBQYM  (Barbados)  (the  "Barbadian  Subsidiaries"),  were
incorporated  in Barbados in May 1996 to market the licensed  products under the
1995 CIMYM License and the CBQYM License,  respectively,  outside of Canada.  YM
provides  funding to CIMYM  (Barbados) and CBQYM  (Barbados) under similar terms
and conditions as funding to the Canadian  Subsidiaries,  except that while each
of the Canadian Subsidiaries have a payable outstanding for the amounts advanced
by YM to such Canadian Subsidiary,  the Barbadian  Subsidiaries have each issued
redeemable  preferred  shares to YM for the amounts  advanced to such  Barbadian
Subsidiary.

YM is entitled to be reimbursed for all funds we provide pursuant to the Funding
Agreements  out of  revenue  generated  from the  exploitation  of the  relevant
license,  subject to the  successful  development  of the licensed  products and
adequate  generation of revenue.  There can be no assurance,  however,  that the
Corporation  will be able to recover the  advances,  as the  Corporation  is not
entitled  to recover  such  advances  unless and until the joint  venture's  net
income exceeds the amount of the cumulative advances.

As at June 30, 2004, YM has advanced $29.6 million to CIMYM,  CIMYM  (Barbados),
CBQYM and CBQYM (Barbados),  collectively.  Accordingly, the Corporation has set
up a reserve in full  against  the other  joint  venture  partners  share of the
advances.  All advances have been expensed and, therefore,  any reimbursement of
such advances would be considered to be income by the Corporation.

WE ARE RELIANT ON LICENSORS FOR RESEARCH ON NEW PRODUCTS.

The  Corporation  does not conduct our own basic  research  with  respect to the
identification of new products.  Instead,  the Corporation  relies upon research
and  development  work conducted by others as a primary source for new products.
While the  Corporation  expects  that we will be able to  continue  to  identify
licensable products or research suitable for licensing and  commercialization by
the Corporation, there can be no assurance that this will occur.

                                      -15-
<PAGE>

WE CONDUCT OUR BUSINESS  INTERNATIONALLY AND ARE SUBJECT TO LAWS AND REGULATIONS
OF SEVERAL COUNTRIES WHICH MAY AFFECT OUR ABILITY TO ACCESS REGULATORY  AGENCIES
AND MAY AFFECT THE ENFORCEABILITY AND VALUE OF OUR LICENSES.

The Corporation has conducted  clinical trials in Canada, the United Kingdom and
the United States and intends to, and may,  conduct  future  clinical  trials in
these and other  jurisdictions.  There can be no  assurance  that any  sovereign
government, including Canada's, will not establish laws or regulations that will
be deleterious to the interests of the  Corporation.  There is no assurance that
the Corporation,  as a foreign corporation,  will continue to have access to the
regulatory  agencies in any jurisdiction where we might want to conduct clinical
trials or obtain final regulatory  approval,  and there can be no assurance that
the Corporation  will be able to enforce our licenses in foreign  jurisdictions.
Governments have, from time to time, established foreign exchange controls which
could  have a  material  adverse  effect on the  Corporation  and our  financial
condition, since such controls may limit the Corporation's ability to flow funds
into a country to meet our obligations under in-licensing agreements and to flow
funds out of a country which the  Corporation may be entitled to, in the form of
royalty and milestone payments, under out-licensing agreements. In addition, the
value of the Corporation's  licenses will depend upon no punitive or prohibitive
legislation in respect of biological materials.

WE ALSO  CONDUCT  OUR  BUSINESS  INTERNATIONALLY  IN THAT WE  CURRENTLY  LICENSE
PRODUCTS AND  TECHNOLOGIES  FROM SOURCES IN CANADA AND CUBA. WE HAVE PREVIOUSLY,
AND INTEND TO, AND MAY, LICENSE PRODUCTS FROM SOURCES IN OTHER JURISDICTIONS.

The Corporation has licensed  products,  namely TheraCIM,  RadioTheraCIM and the
G-1 anti-microbial product, from two academic institutes in Cuba, namely CIM and
CBQ. The United States has maintained an embargo  against Cuba,  administered by
Treasury.  The laws and regulations  establishing  the embargo have been amended
from  time to time,  most  recently  by the  passage  of the Cuban  Liberty  and
Democratic  Solidarity Act (the  "Helms-Burton  Bill").  The embargo  applies to
almost all transactions  involving Cuba or Cuban  enterprises,  and it bars from
such  transactions  any US persons unless such persons obtain specific  licenses
from Treasury  authorizing  their  participation in the  transactions.  There is
Canadian legislation (the Foreign Extraterritorial  Measures Act) which provides
generally that judgments against Canadian  companies under the Helms-Burton Bill
will not be enforced in Canada. The US embargo could have the effect of limiting
the  Corporation's  access  to US  capital,  US  finance,  US  customers  and US
suppliers.  In  particular,  the  Corporation's  products  licensed  from  Cuban
sources, noted above, are likely to be prohibited from sale in the United States
unless Treasury issues a license or the embargo is lifted.

The Corporation's  licensed rights to the TGFa Vaccine and the HER-1 Vaccine are
suspended  under  the  terms  of  the   out-licensing   agreement   between  the
Corporation, CIMYM (Barbados), CIMAB and Tarcanta relating to Tarcanta licensing
TGFa and HER-1 from  CIMAB.  In  connection  with the  out-licensing  agreement,
CancerVax has announced that it has received a license from Treasury authorizing
Tarcanta  to enter into the  transactions  with CIMAB and the  Corporation.  See
"Business  -  Licensing  Arrangements  -  Out-Licensing"  and  see  "Business  -
Licensing  Arrangements -  In-Licensing - Licenses for TheraCIM,  RadioTheraCIM,
TGFa and HER-1".

                                      -16-
<PAGE>

The Helms-Burton Bill authorizes private lawsuits for damages against anyone who
"traffics" in property confiscated,  without compensation,  by the Government of
Cuba from persons who at the time were, or have since  become,  nationals of the
United States.  The  Corporation  does not own any real property in Cuba and, to
the best of the Corporation's  knowledge, and based upon the advice of the Cuban
government,  none of the properties of the  scientific  centers of the licensors
from where the licensed  products were developed and are or may be  manufactured
was  confiscated by the Government of Cuba from persons who at the time were, or
have since  become,  nationals of the United  States.  However,  there can be no
assurance that the  Corporation's  understanding in this regard is correct.  The
Corporation does not intend to traffic in confiscated property.

Risks Related To Our Financial Results And Need For Financing

WE MAY BE A "PASSIVE FOREIGN  INVESTMENT  COMPANY" WHICH COULD RESULT IN ADVERSE
U.S. TAX CONSEQUENCES FOR U.S. INVESTORS.

The  Corporation  may be deemed to be a  "Passive  Foreign  Investment  Company"
("PFIC").  A PFIC is a non-U.S.  corporation that meets an income test and/or an
asset  test.  The  income  test is met if 75% or more of a  corporation's  gross
income is "passive income" (generally,  dividends,  interest,  rents, royalties,
and gains  from the  disposition  of assets  producing  passive  income)  in any
taxable  year.  The asset test is met if at least 50% of the average  value of a
corporation's assets produce, or are held for the production of, passive income.
Based on our current  income,  assets and  activities,  the Corporation may be a
PFIC. As a result,  a U.S.  Holder of the  Corporation's  common shares could be
subject to increased tax liability,  possibly including an interest charge, upon
the sale or other  disposition  of the U.S.  Holder's  common shares or upon the
receipt of "excess distributions".

WE MAY NOT BE ABLE TO OBTAIN  NECESSARY  FUNDING  FROM SALES OR LICENSE  FEES OR
ROYALTIES AND, AS A RESULT, MAY NEED TO TRY TO OBTAIN FUTURE CAPITAL THROUGH THE
PUBLIC  MARKET OR PRIVATE  FINANCING  WHICH MAY NOT BE AVAILABLE  ON  ACCEPTABLE
TERMS.

The Corporation may require additional funding for the  commercialization of the
licensed  products,  and we will  require  additional  funds if new products are
licensed and put into  development.  The amount of additional  funding  required
depends on the status of each project or new  opportunity at any given time. The
Corporation's  business  strategy  is to  in-license  rights to  promising  drug
products,  further  develop those  products by progressing  the products  toward
regulatory  approval by conducting and managing clinical trials,  and finally to
out-license rights to manufacture and/or market resulting drug products to other
pharmaceutical  firms in exchange for royalties and license fees. Due to the in-
and out-licensing  arrangements and the  Corporation's  dependence on others for
the  manufacture,   development  and  sale  of  our  in-licensed  products,  the
Corporation  does not have  consistent  monthly or  quarterly  expenditures  and
cannot determine the amount and timing of required  additional  funding with any
certainty.  As at September  30, 2004 the  Corporation  had cash and  short-term
deposits  totaling  $37,349,984 and payables of $1,150,153.  Management  expects
that the current cash  reserves  will be  sufficient  to fund the  Corporation's
development program beyond the fiscal year ending June 30, 2006.

                                      -17-
<PAGE>

The Corporation  assesses our additional  funding needs on a  project-by-project
basis from  time-to-time.  To the extent that the  Corporation is unable to fund
our expenditures from sales, license fees and royalties,  it may be necessary to
reconsider the continuation of existing  projects or entering into new projects,
or require  the  Corporation  to access  either  the  public  markets or private
financings  whenever  conditions  permit.  In addition,  the  Corporation has no
established  bank financing  arrangements and there can be no assurance that the
Corporation will be able to establish such  arrangements on satisfactory  terms.
Such  financing,  if required and completed,  may have a dilutive  effect on the
holders of our common shares.  There is no assurance that such financing will be
available if required, or that it will be available on favorable terms.

OUR OPERATING RESULTS AND STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY.

The trading  price of the  Corporation's  common  shares,  as with many emerging
biopharmaceutical  companies,  is likely to be highly volatile.  Factors such as
the efficacy of the Corporation's  products or the products of the Corporation's
competitors,  announcements of  technological  innovations by the Corporation or
our  competitors,  governmental  regulations,  developments  in patents or other
proprietary  rights  of the  Corporation,  our  licensors  or  our  competitors,
litigation, fluctuations in the Corporation's operating results, the Corporation
being thinly  capitalized,  market conditions for  biopharmaceutical  stocks and
general market and economic  conditions  could have a significant  impact on the
future trading price of the common shares. In addition, the Corporation's common
shares are highly  volatile  since it may take years  before any of our licensed
products will receive final  regulatory  approval to be marketed in Canada,  the
United States or other territories.

THERE IS NO ASSURANCE  THAT AN ACTIVE  TRADING  MARKET IN OUR SHARES IN THE U.S.
WILL BE ESTABLISHED AND/OR, IF ESTABLISHED, SUSTAINED.

As of September 30, 2004,  our common shares have been listed for trading on the
American  Stock  Exchange.  However,  there can be no  assurance  that an active
trading  market  in our  shares  in the  U.S.  will  be  established  and/or  if
established sustained.

Risks Related To Our Industry

IF OUR  PRE-CLINICAL  AND  CLINICAL  TESTING  OF DRUG  PRODUCTS  DO NOT  PRODUCE
SUCCESSFUL RESULTS, WE WILL NOT BE ABLE TO COMMERCIALIZE OUR PRODUCTS.

Each of the  Corporation's  licensed  products  must be subjected to  additional
pre-clinical  and/or  clinical  testing in order to  demonstrate  the safety and
efficacy of the  Corporation's  licensed  products in humans.  The Corporation's
ability to  commercialize  our licensed  products  will depend on the success of
currently ongoing  pre-clinical and clinical trials and subsequent  pre-clinical
and clinical trials that have not yet begun.

The Corporation is not able to predict the results of pre-clinical  and clinical
testing of drug products,  including the Corporation's  licensed products. It is
not possible to predict, based on studies or testing in laboratory conditions or
in animals, whether a drug product will prove to be safe or effective in humans.

                                      -18-
<PAGE>

In addition,  success in one stage of testing is not  necessarily  an indication
that the  particular  drug  product  will succeed in later stages of testing and
development. There can be no assurance that the pre-clinical or clinical testing
of the Corporation's licensed products will yield satisfactory results that will
enable the  Corporation to progress toward  commercialization  of such products.
Unsatisfactory  results may cause material adverse affects on the  Corporation's
business, financial condition or results of operations as it could result in the
Corporation having to reduce or abandon future testing or  commercialization  of
particular drug products.

IF OUR COMPETITORS DEVELOP AND MAINTAIN THEIR TECHNOLOGICAL  CAPABILITIES BETTER
THAN THE CORPORATION,  WE MAY NOT BE ABLE TO REMAIN  COMPETITIVE IF DEFICIENCIES
IN OUR TECHNOLOGICAL  CAPABILITIES DELAY PRE-CLINICAL AND CLINICAL TRIALS OF OUR
LICENSED PRODUCTS.

The  Corporation's  success  depends in part on  developing  and  maintaining  a
competitive  position in the development and  commercialization  of our licensed
products  and  technological   capabilities  in  our  areas  of  expertise.  The
biotechnology and pharmaceutical industries are subject to rapid and substantial
technological   change.   While  the   Corporation   will  seek  to  expand  our
technological  capabilities  in order to  remain  competitive,  there  can be no
assurance that developments by others will not render the Corporation's licensed
products  non-competitive  or that the Corporation or our licensors will be able
to  keep  pace  with  technological  developments.  Competitors  have  developed
technologies  that could be the basis for  competitive  products.  Some of those
products may have an entirely  different  approach or means of accomplishing the
desired  therapeutic effect than the Corporation's  licensed products and may be
more  effective  or less costly than the  Corporation's  licensed  products.  In
addition, other forms of medical treatment may offer competition to the licensed
products. The Corporation's  technological  capabilities and competitiveness and
the  success  of  the   Corporation's   competitors   and  their   products  and
technologies,  could have a material  adverse impact on the future  pre-clinical
and  clinical  trials of the  Corporation's  licensed  products,  including  the
Corporation's  ability  to obtain the  necessary  regulatory  approvals  for the
conduct of such clinical trials.

IF OUR COMPETITORS  DEVELOP AND MARKET PRODUCTS THAT ARE MORE EFFECTIVE THAN OUR
EXISTING  PRODUCT  CANDIDATES  OR ANY PRODUCTS  THAT WE MAY  DEVELOP,  OR OBTAIN
MARKETING  APPROVAL  BEFORE WE DO, OUR  PRODUCTS  MAY BE  RENDERED  OBSOLETE  OR
UNCOMPETITIVE.

Technological competition from pharmaceutical companies, biotechnology companies
and  universities is intense and is expected to increase.  Many  competitors and
potential  competitors of the  Corporation  have  substantially  greater product
development  capabilities  and  financial,   scientific,   marketing  and  human
resources than the Corporation. The Corporation's future success depends in part
on our  ability to maintain a  competitive  position,  including  our ability to
further progress our licensed  products  through the necessary  pre-clinical and
clinical  trials  towards  regulatory  approval for sale and  commercialization.
Other  companies  may  succeed  in  commercializing  products  earlier  than the
Corporation  is able to  commercialize  our licensed  products or in  developing
products that are more effective  than the licensed  products.  The  Corporation
considers its main competitors to be:  Genentech,,  Genta,  Lorus,  ISIS and Eli
Lilly with respect to tesmilifene;  Aphton,  TAP and AstraZeneca with respect to
NorelinTM;  and Abgenix. , Amgen, Genmab,  ImClone , BMS, Merck, OSI, Roche, and
AstraZeneca with respect to TheraCIM and RadioTheraCIM.

                                      -19-
<PAGE>

While the  Corporation  will seek to expand our  technological  capabilities  in
order to  remain  competitive,  there  can be no  assurance  that  research  and
development  by others  will not render  products  licensed  by the  Corporation
obsolete  or  uncompetitive  or result in  treatments  or cures  superior to the
licensed  products,  or that the  licensed  products  will be  preferred  to any
existing or newly developed technologies.

WE ARE SUBJECT TO EXTENSIVE  GOVERNMENT  REGULATION  THAT INCREASES THE COST AND
UNCERTAINTY  ASSOCIATED  WITH GAINING FINAL  REGULATORY  APPROVAL OF OUR PRODUCT
CANDIDATES.

Securing  final  regulatory  approval  for the  manufacture  and  sale of  human
therapeutic   products  in  Canada  and  the  Corporation's  other  territories,
including the United States,  is a long and costly process that is controlled by
that particular  territory's national regulatory agency. The national regulatory
agency in Canada is Health Canada ("Health Canada"), and in the United States it
is the United  States  Health and Human  Services  Food and Drug  Administration
("FDA").  See "Regulatory  Approvals" for a description of approval processes in
Canada and the United Sates.  Other  national  regulatory  agencies have similar
regulatory approval  processes,  but each national regulatory agency has its own
approval  processes.  Approval  in either  Canada or the United  States does not
assure  approval by other  national  regulatory  agencies,  although  often test
results from one country may be used in applications for regulatory  approval in
another country.

Prior to obtaining  final  regulatory  approval to market a drug product,  every
national  regulatory  agency has a variety of  statutes  and  regulations  which
govern the  principal  development  activities.  These laws  require  controlled
research and testing of products, government review and approval of a submission
containing  pre-clinical and clinical data  establishing the safety and efficacy
of the  product  for each  use  sought,  approval  of  manufacturing  facilities
including  adherence  to GMP  during  production  and  storage,  and  control of
marketing activities, including advertising and labeling.

None of the Corporation's products have been completely developed or tested and,
therefore,  we are not yet in a position  to seek final  regulatory  approval to
market  any of our  in-licensed  products.  To  date we  have  obtained  various
regulatory approvals to develop and test our in-licensed products. Currently the
Corporation  is conducting an  international  Phase III trial of  tesmilifene in
metastatic  and recurrent  breast cancer in 700 patients.  The  Corporation  has
received  regulatory  approvals for the tesmilifene study in several  countries,
including  Canada and the United States,  and approval is pending in a few other
countries.  In addition,  TheraCIM has been  designated an orphan drug in Europe
and the  Corporation is currently  seeking orphan drug  designation for TheraCIM
from the FDA. See "Products in Clinical Development".

                                      -20-
<PAGE>

Two of the Corporation's  products,  namely TheraCIM and RadioTheraCIM which are
being  developed  in Canada and Europe are also being  separately  developed  or
tested in Cuba.  Cuba is among several nations which have been identified by the
U.S.  Department of State as being a state sponsoring  terrorism and as such the
U.S. Government has put in place certain  anti-terrorism  controls against Cuba.
Although as of the date of this filing such anti-terrorism controls have not had
any  adverse  affect  on the  operations  of  the  Corporation,  because  of the
anti-terrorism controls and the Helms-Burton Bill there is no assurance that the
Corporation  will be able to  successfully  complete  our  clinical  testing and
obtain final  regulatory  approval in order to  successfully  commercialize  our
Cuban sourced  products.  There can be no assurance  that the licensed  products
will be successfully commercialized.  The process of completing clinical testing
and  obtaining  final  regulatory  approval to market the  licensed  products is
likely to take a number of years for most of the  licensed  products and require
the expenditure of substantial  resources.  Any failure to obtain, or a delay in
obtaining,  such approvals could adversely affect the  Corporation's  ability to
develop the product and delay  commercialization of the product.  Further, there
can be no assurance that the  Corporation's  licensed  products will prove to be
safe and effective in clinical  trials under the standards of the regulations in
the Corporation's  territories or receive applicable  regulatory  approvals from
applicable regulatory bodies.

CHANGES IN  GOVERNMENT  REGULATIONS  ALTHOUGH  BEYOND OUR CONTROL  COULD HAVE AN
ADVERSE EFFECT ON OUR BUSINESS.

The Corporation  has, or has had,  licenses with, or clinical trials at, various
academic  organizations,  hospitals and companies in Canada,  Cuba,  Italy,  the
United  States and the United  Kingdom  and  depends  upon the  validity  of our
licenses and access to the data for the timely  completion of clinical  research
in  those  jurisdictions.   Any  changes  in  the  drug  development  regulatory
environment  or shifts in political  attitudes  of a  government  are beyond the
control of the Corporation and may adversely affect our business.

Two of the Corporation's  products,  namely TheraCIM and RadioTheraCIM which are
being  developed  in Canada and Europe are also being  separately  developed  or
tested in Cuba.  Cuba is among several nations which have been identified by the
U.S.  Department of State as being a state sponsoring  terrorism and as such the
U.S. Government has put in place certain  anti-terrorism  controls against Cuba.
Although as of the date of this filing such anti-terrorism controls have not had
any  adverse  affect  on the  operations  of  the  Corporation,  because  of the
anti-terrorism controls and the Helms-Burton Bill there is no assurance that the
Corporation  will be able to  successfully  complete  our  clinical  testing and
obtain final  regulatory  approval in order to  successfully  commercialize  our
Cuban sourced products.

The business of the  Corporation may also be affected in varying degrees by such
factors  as  government  regulations  with  respect  to  intellectual  property,
regulation  or export  controls.  Such changes  remain beyond the control of the
Corporation and the effect of any such changes cannot be predicted.

These factors could have a material adverse effect on the Corporation's  ability
to further develop of our licensed products.

Risks Related To Intellectual Property And Litigation

OUR SUCCESS  DEPENDS UPON OUR ABILITY TO PROTECT OUR  INTELLECTUAL  PROPERTY AND
OUR PROPRIETARY TECHNOLOGY.

                                      -21-
<PAGE>

The  Corporation's  success  will  depend,  in  part,  on  the  ability  of  the
Corporation  and  our  licensors  to  obtain  patents,  maintain  trade  secrets
protection,  and operate without  infringing on the proprietary  rights of third
parties or having third parties  circumvent the  Corporation's  rights.  Certain
licensors and the  institutions  that they represent,  and in certain cases, the
Corporation on behalf of the licensors and the institutions that they represent,
have filed and are  actively  pursuing  certain  applications  for  Canadian and
foreign patents.  The patent position of pharmaceutical and biotechnology  firms
is uncertain and involves  complex legal and financial  questions for which,  in
some cases,  important legal principles are largely unresolved.  There can be no
assurance that the patent  applications made in respect of the licensed products
will  result  in the  issuance  of  patents,  that the term of a patent  will be
extendable  after  it  expires  in  due  course,   that  the  licensors  or  the
institutions that they represent will develop  additional  proprietary  products
that are patentable,  that any patent issued to the licensors or the Corporation
will provide the Corporation with any competitive  advantages,  that the patents
of others will not impede the ability of the  Corporation to do business or that
third parties will not be able to circumvent the patents  obtained in respect of
the licensed products.  The cost to the Corporation of obtaining and maintaining
patents is high.  Furthermore,  there can be no  assurance  that others will not
independently  develop  similar  products  which  duplicate  any of the licensed
products,  or, if patents are issued,  design around the patent for the product.
There can be no  assurance  that  processes  or  products  of the  Corporation's
licensors or the  Corporation  do not or will not  infringe  upon the patents of
third  parties,  or that  the  scope  of  patents  issued  to the  Corporation's
licensors  or the  Corporation  will  successfully  prevent  third  parties from
developing similar and competitive products.

Much of the Corporation's know-how and technology may not be patentable,  though
they may constitute trade secrets. There can be no assurance,  however, that the
Corporation  will be able to  meaningfully  protect our trade  secrets.  To help
protect our rights, the Corporation  requires employees,  consultants,  advisors
and  collaborators  to enter into  confidentiality  agreements.  There can be no
assurance  that these  agreements  will provide  meaningful  protection  for the
Corporation's  trade secrets,  know-how or other proprietary  information in the
event of any unauthorized use or disclosure.

Further,  the  Corporation's  business may be materially  adversely  affected by
competitors who independently develop competing  technologies,  especially if no
patents or only narrow patents are obtained by the Corporation in respect of our
licensed products.

The Corporation maintains patents in connection with tesmilifene,  NorelinTM and
TheraCIM.  The following is a description of the  Corporation's  key current and
pending patents in connection with these drug products.

     TESMILIFENE

Tesmilifene  itself was first described many decades ago as a member of a family
of compounds having anti-histamine properties. In the early 1980's, research was
conducted  into its  potential  as a  chemotherapeutic  agent.  Ultimately,  the
development of tesmilifene for these indications was not advanced.

                                      -22-
<PAGE>

More recently,  the value of  tesmilifene  as a potentiator of  chemotherapeutic
agents was  discovered,  and patents were obtained by the University of Manitoba
for this  application.  The basic  patents  are  granted in the  United  States,
Europe, Japan, Canada and Australia. The scope of patent coverage and the patent
term differ by country.  In the United States,  the Corporation  relies on three
layers of basic patent  protection.  A key patent  among these is US  5,859,065,
having  claims  relating  to the use of  tesmilifene  and  certain  structurally
related analogs in combination  with any  chemotherapeutic  for the treatment of
any cancer.  The twenty year term of this patent  expires in December  2010, but
extensions of up to five additional years may be available under the Patent Term
Restoration  Act in the United  States.  We intend to take full advantage of the
available term extension.  In addition, in the United States, the Corporation is
licensed under two granted patents with related  coverage,  namely, US 6,284,799
expiring February 2014 and US 5,747,543 expiring May 2015.

In addition to being licensed under these granted  patents,  YM is also licensed
under numerous  pending patents  relevant to our clinical  development  program.
These include national filings based on WO03/039526 and WO03/037318. This series
of  patent  applications  is  focused  on the  survival  advantage  demonstrated
following  analysis  of the  phase  III  tesmilifene  trial,  and  relates  to a
selection   of  patient   subpopulations   that  will  most   benefit  from  the
chemopotentiating   and  cytoprotective   properties  of  tesmilifene.   Patents
resulting  from these patent  filings will expire in November 2022 in the United
States and most other major markets.

The  tesmilifene  patent  estate  licensed  to YM includes  still other  patents
pending  for  particular   chemotherapeutic/tesmilifene   combination  therapies
adapted for improved  efficacy in the treatment of breast and prostate  cancers,
among others.

In  addition  to  patents,  YM  intends  to rely on the  available  term of data
exclusivity in the US and other countries,  given that tesmilifene  qualifies as
an NCE. Furthermore,  full advantage will be taken of the Orange Book provisions
in the United States and equivalent provisions in Canada and other countries, as
a means for delaying generic competition.

     NORELIN TM

YM has a license to human therapeutic applications of this GnRH vaccine based on
a  leukotoxin-derived  but non-leukotoxic  carrier protein,  to which multimeric
units of GnRH are coupled at each flank.  By eliciting  an antibody  response to
GnRH,  NorelinTM is designed to block GnRH from  reaching  its  receptors in the
pituitary gland.

The  NorelinTM  patent  estate is  extensive,  and includes  four key US patents
covering  various  aspects of NorelinTM as a composition of matter,  the carrier
component of the  NorelinTM  vaccine,  as well as  production  of NorelinTM as a
recombinant  product.  A  key  US  patent  is US  5,837,268,  which  covers  the
particular  NorelinTM sequence,  its formulation as a vaccine,  and its end-use,
and subject to any term  restoration,  will expire in 2012. Other key US patents
are US  5,422,110;  US 5,708,155;  and US 5,837,268.  All of the key patents are
owned by the University of Saskatchewan and licensed to YM, through Biostar (See
"Licensing Arrangements").

In  addition,  YM has more  recently  applied for our own patents  covering  the
NorelinTM formulation and dosing regimen that is the subject of current clinical
trials. Patents resulting from these applications will not expire until 2024.

                                      -23-
<PAGE>

The Corporation is aware of US patent #6,303,123 owned by Aphton relating to the
use of GnRH immunogenic conjugates to treat GnRH-dependent  diseases,  including
prostatic  hypertrophy,  and is developing a strategy for addressing this patent
should  it  prove  relevant  to the  Corporation's  commercial  activities  with
NorelinTM.

There can be no  assurance  that  litigation  or other  proceedings  will not be
commenced seeking to challenge patent  protection or patent  applications of the
Corporation's licensors, or that any such challenges will not be successful. The
cost of  litigation to uphold the validity and prevent  infringement  of patents
related to the  Corporation's  licensed  drug  products may be  significant.  In
addition,  it is possible  that others may claim  rights in YM's  licensed  drug
products, patents or patent applications.  These other persons could bring legal
actions  against the  Corporation,  our  licensors or our customers or licensees
claiming  damages  and  seeking to enjoin  them from  using,  manufacturing  and
marketing  the  affected  products  or  processes.   If  any  such  action  were
successful,  in addition to any potential liability for damages, the Corporation
could be required  to obtain a license in order to  continue  to  develop,  use,
license or market the  affected  product or process.  There can be no  assurance
that the  Corporation  would  prevail  in any such  action or that any  required
license  would  be made  available  or,  if  available,  would be  available  on
acceptable terms.

     THERACIM

CIMYM is the exclusive licensee under a patent estate that includes  composition
of  matter  coverage  for  TheraCIM  hR3,  and  further  includes  coverage  for
TheraCIM-based  formulations  and end-uses in the  treatment  of  EGFR-dependent
cancers.  The composition of matter patents are granted in the United States, in
Europe, are allowable in Japan, and are pending in Canada.

CIMYM's  key US  patent,  US  5,891,996  expires  in  November  2015,  and  term
extensions  of up  to  five  years  may  be  available  under  the  Patent  Term
Restoration  Act.  The same term and  extension  apply also to the key  European
patent, EP 712863.

The  Corporation  is aware of US patent  #5,770,195  granted to Genentech,  Inc.
("Genentech"),  for the  anti-cancer  use of EGFr  MAbs  in  combination  with a
cytotoxic  agent.  The Corporation is also aware of US patents granted to others
in this field. In April 2001 Rorer International (Overseas) ("Rorer") was issued
the US patent  #6,217,866  which includes  claims to any antibody  targeting the
EGFr administered with any anti-neoplastic  agent. A counterpart patent has been
granted in Europe.  The  Corporation has filed an opposition to the grant of the
European patent. The Corporation believes that the Rorer patents are licensed to
ImClone. In addition,  the Corporation is aware of a separate series of national
patent applications filed by ImClone, and represented by EP1080113, claiming the
anti-cancer  use of radiation in combination  with any inhibitor of any receptor
tyrosine  kinase  that is  involved  in the  genesis of tumors.  ImClone is also
reported to have filed a PCT application  covering the use of EGFr MAbs to treat
patients  having  tumors  that do not  respond to  treatment  with  conventional
therapies.  The Corporation is also  challenging  ImClone's claims in respect of
the  radiation-related  patent applications by having filed additional prior art
at the relevant national patent offices.  The outcome of these challenges cannot
be predicted, and there can be no assurance that the Corporation will succeed in
challenging  the  validity  or scope of patent  claims by  ImClone  or any other
patent applicant.

                                      -24-
<PAGE>

The manufacturing of TheraCIM may fall within the scope of process patents owned
by Protein Design Labs Inc., Genentech,  and the Medical Research Council of the
United  Kingdom.  Management  is aware that some of these  process  patents  are
currently  being  challenged by companies other than YM. In the event any of the
applicable  process patents are upheld,  management  believes we will be able to
obtain  licenses under such patents on  commercially  reasonable  terms,  though
there can be no assurance thereof.

There may also be risks related to TheraCIM and the Corporation's other licenses
for drug products originating from Cuba, namely RadioTheraCIM,  TGFa Vaccine and
HER-1 Cancer Vaccine.  Cuba is a socialist country and, under the current patent
law,  ownership  of the  inventions  of the Cuban  inventors  for  which  patent
applications  have  been  filed  rests  with the  State.  The  material  license
agreements for the Corporation's Cuban sourced products are as follows:

     (e)  License  Agreement  between CIMYM Inc. and CIMAB SA,  January 24, 2001
          with respect to TGFa and HER-1,  which agreement has been suspended in
          accordance with the terms of the Tarcanta out-licensing agreement (See
          "Business - Licensing Agreements - Out-Licensing"); and

     (f)  License  Agreement  between YM  BioSciences  Inc.  (formerly  known as
          Yorkton  Medical Inc.) and CIMAB SA, dated May 3, 1995 with respect to
          TheraCIM and RadioTheraCIM.

The above listed license  agreements are more fully  described under the heading
"Business - Licensing Arrangements - In-Licensing".

THE  CORPORATION'S  POTENTIAL  INVOLVEMENT IN INTELLECTUAL  PROPERTY  LITIGATION
COULD NEGATIVELY AFFECT THE CORPORATION'S BUSINESS.

The  Corporation's  future success and competitive  position depend in part upon
the Corporation's ability to maintain our intellectual property portfolio. There
can be no  assurance  that any patents  will be issued on any existing or future
patent applications.  Even if such patents are issued, there can be no assurance
that  any  patents  issued  to or  licensed  to  the  Corporation  will  not  be
challenged.  The  Corporation's  ability to establish and maintain a competitive
position may be achieved in part by  prosecuting  claims  against others who the
Corporation  believes are infringing the  Corporation's  rights and by defending
claims  brought by others who believe that we are  infringing  their rights.  In
addition, enforcement of the Corporation's patents in foreign jurisdictions will
depend on the legal procedures in those  jurisdictions.  Even if such claims are
found to be invalid,  the  Corporation's  involvement in  intellectual  property
litigation  could have a material  adverse  effect on our ability to out-license
any  products  that  are  the  subject  of such  litigation.  In  addition,  the
Corporation's  involvement in intellectual  property  litigation could result in
significant  expense to it, which could  materially  adversely affect the use or
licensing  of  related  intellectual  property  and  divert  the  efforts of the
Corporation's  valuable technical and management  personnel from their principal
responsibilities,   whether  or  not  such   litigation   is   resolved  in  the
Corporation's favor.

PRODUCT  LIABILITY  CLAIMS  ARE AN  INHERENT  RISK OF OUR  BUSINESS,  AND IF OUR
CLINICAL  TRIAL  AND  PRODUCT  LIABILITY  INSURANCE  PROVE  INADEQUATE,  PRODUCT
LIABILITY CLAIMS MAY HARM OUR BUSINESS.

                                      -25-
<PAGE>

Human therapeutic  products involve an inherent risk of product liability claims
and associated adverse publicity.  The Corporation  currently maintains clinical
trial  liability  insurance  with an ultimate net loss value of up to $5 million
per claim and a policy aggregate of $10 million.  The Corporation  currently has
no other product liability  insurance and there can be no assurance that we will
be able to obtain or maintain product liability insurance on acceptable terms or
with  adequate  coverage  against  potential  liabilities.   Such  insurance  is
expensive,  difficult  to  obtain  and may not be  available  in the  future  on
acceptable  terms,  or at all.  An  inability  to  obtain  sufficient  insurance
coverage on reasonable terms or to otherwise  protect against  potential product
liability  claims could have a material  adverse  affect on the  Corporation  by
preventing or inhibiting  the  commercialization  of the licensed  products if a
product  is  withdrawn  or a product  liability  claim is  brought  against  the
Corporation.

Risks Related To Being A Canadian Entity For Foreign Investors

AS WE ARE A CANADIAN  COMPANY,  THERE MAY BE LIMITATIONS  ON THE  ENFORCEMENT OF
CERTAIN CIVIL  LIABILITIES  AND JUDGMENTS  OBTAINED IN THE UNITED STATES AGAINST
US.

The Corporation is  incorporated  under the laws of the province of Nova Scotia,
Canada and our  assets are  located  outside of the United  States.  Many of the
Corporation's  directors and officers and certain of the experts named elsewhere
in this annual  information  form are residents of Canada.  All or a substantial
portion of our assets and the assets of these persons are located outside of the
United States.  As a result,  it may be difficult for  shareholders to enforce a
U.S.  judgment  in Canada or other  non-U.S.  jurisdictions  or to  succeed in a
lawsuit in a non-U.S.  jurisdiction based only on violations of U.S.  securities
laws.

THE  CORPORATION IS GOVERNED BY THE CORPORATE LAWS IN NOVA SCOTIA,  CANADA WHICH
ARE IN SOME CASES HAVE A DIFFERENT  EFFECT ON  SHAREHOLDERS  THEN THE  CORPORATE
LAWS IN DELAWARE, UNITED STATES.

The material  differences  between the NSCA as compared to the DGCL which may be
of most  interest  to  shareholders  include  the  following:  (i) for  material
corporate  transactions (such as amalgamations,  other  extraordinary  corporate
transactions,  amendments to the memorandum of association and amendments to the
articles of association) the NSCA generally requires three-quarter majority vote
by shareholders which in most instances requires a confirmatory  resolution by a
majority of the shareholders  (and, in addition,  especially where the holders a
class of shares is being  affected  differently  from others,  approval  will be
required  by holders  of  two-thirds  of the  shares of such  class  voting in a
meeting called for the purpose), whereas DGCL generally only requires a majority
vote of shareholders for similar material  corporate  transactions;  (ii) quorum
for shareholders  meetings is not prescribed under the NSCA and is only 5% under
the Corporation's articles of association, whereas under DGCL quorum is when the
holders of a majority of the shares entitled to vote are present;  and (iii) the
Corporation's  articles  of  association  require a special  resolution  and the
Corporations  Miscellaneous Provisions Act (Nova Scotia) requires three-quarters
of all  shareholders  entitled  to  vote to  pass a  resolution  for one or more
directors to be removed,  whereas DGCL only requires the  affirmative  vote of a
majority of the shareholders.

                                      -26-
<PAGE>

BUSINESS STRATEGY

The Corporation is principally focused on development of drugs for the treatment
of cancer.  YM's  strategy  is to license  rights to  promising  drug  products,
further develop those products by conducting and managing  clinical research and
trials and progressing the products toward regulatory approval,  and sub-license
or out-license  rights to manufacture  and/or market  resulting drug products to
other  pharmaceutical  firms in exchange for  royalties  and license  fees.  The
Corporation  seeks  to  use  our  product  development  capabilities  to  bridge
discoveries  and  research  from   scientific/academic   institutions  or  other
biopharmaceutical  companies, on the one hand, with commercial manufacturing and
marketing of biopharmaceutical products, on the other hand.

The main elements of the Corporation's business strategy are described below:

Identification  of  Product  Candidates.  The  Corporation  performs  scientific
evaluation and market assessment of biopharmaceutical drug products and research
developed  by  scientific/academic   institutions  and  other  biopharmaceutical
companies.  As part of this  process,  the  Corporation  evaluates  the  related
scientific  research and  pre-clinical  and clinical  research,  if any, and the
intellectual  property  rights in such  products  and  research,  with a view to
determining the therapeutic and commercial  potential of the applicable  product
candidates.

In-Licensing.  Upon identifying a promising  biopharmaceutical drug product, the
Corporation  seeks to negotiate a license to the rights for the product from the
holder of those rights, the developer or researcher.  The terms of such licenses
vary, but generally the Corporation's  goal is to secure licenses that permit us
to  engage  in  further  development,  clinical  trials,  intellectual  property
protection  (on behalf of the licensor or  otherwise)  and further  licensing of
manufacturing and marketing rights to any resulting drug products.  This process
of securing license rights to drug products is commonly known as "in-licensing".

Further Development.  Upon in-licensing a drug, the Corporation's strategy is to
apply our skills and  expertise  to  progress  the  products  toward  regulatory
approval and commercial  production and sale in major markets.  These activities
include   implementing   intellectual   property   protection  and  registration
strategies,  performing or having  performed for it,  pre-clinical  research and
testing,  the formulating or reformulating of drug products,  making  regulatory
submissions, performing or managing clinical trials in target jurisdictions, and
undertaking or managing the collection, collation and interpretation of clinical
and field data and the  submission of such data to the relevant drug  regulatory
authorities in compliance with applicable protocols and standards.

Out-Licensing.  The Corporation generally plans to further license manufacturing
and  marketing  rights to our  licensed  drug  products to other  pharmaceutical
firms.  This is  commonly  known as  "out-licensing".  Under  the  Corporation's
business  model,  licensees  would be  expected,  to the  extent  necessary,  to
participate  in the  remaining  clinical  development  required to obtain  final
regulatory approval for the product.  The Corporation expects that out-licensing
would  result  in a  pharmaceutical  company  or  other  licensee  marketing  or
manufacturing  the product in return for licensing fees in addition to royalties
on any sales of the product.  Management  believes this model is consistent with
current  biotechnology  and  pharmaceutical  industry  licensing  practices.  In
addition,  although out-licensing is a primary strategy of the Corporation,  the
Corporation  may retain  co-development  or marketing  rights to particular drug
products or territories.  To date, the Corporation has  out-licensed  one of our
products in certain  European  countries,  and our two anti-cancer  pre-clinical
products to two wholly-owned  subsidiaries of a United States  corporation.  See
"Business - Licensing Arrangements - Out-Licensing".

                                      -27-
<PAGE>

The  Corporation  actively  searches  for new  product  opportunities  using the
relationships  of our management and advisory team and continuous  monitoring of
the academic and biotechnology environment in cancer treatment developments. The
Corporation's  staff  analyses  and  evaluates  opportunities  and  continuously
reviews them. In addition,  the Corporation has existing rights of first refusal
in certain of our existing license  agreements for certain  additional  products
and  extensions  to existing  products.  The  Corporation  intends to seek other
in-licensing opportunities in pursuing our business strategy.

CANCER AND CANCER THERAPEUTIC MARKET

According to Millennium  Research Group,  Inc. (June 2001) it was estimated that
worldwide 10.1 million  people are diagnosed  with some type of cancer  annually
and in North America there were approximately 1.1 million new cases in 2000. The
Millennium  Research  Group,  Inc.  projects  that the incidence of new cases is
likely to increase by 0.27% per year  between  2000 and 2005.  According  to the
American Cancer Society, in the United States cancer is the second leading cause
of disease-related death, behind cardiovascular disease which it is predicted to
surpass in the next few years. The principal  reasons for this projection appear
to be the aging  population in more developed  countries,  environmental  issues
related  to  industrial  development,  and  improvements  in  the  treatment  of
cardiovascular  disease.  North  America,  Europe  and Japan  are the  principal
markets for cancer  therapies  because of the  established  healthcare and payor
systems.

The principal types of cancer in the United States, accounting for approximately
55% of the  incidence  of all  cancers,  based  on  management's  analysis,  are
prostate (17%),  breast (16%),  lung (13%) and colorectal (8%). These four types
of cancer are also  responsible for the highest combined  mortality,  accounting
for  approximately  50% of all  cancer  deaths in the  United  States.  Bladder,
ovarian,  brain and oral  cancer,  as well as  lymphoma,  leukemia  and melanoma
account for the  majority of the balance of cancer  deaths.  The  incidence of a
particular cancer varies greatly between continents,  apparently because of diet
and habit.

Surgery,  radiation and chemotherapy remain the principal  effective  treatments
for  cancer.   Although   there  is  an  ongoing   debate  about  the  value  of
chemotherapeutics  with regards to prolongation of life,  their palliative value
has  resulted  in  significant  improvements  in  quality  of  life  for  cancer
sufferers. In addition,  although the reason is not clearly understood,  current
cancer drugs are effective in only a subpopulation  of individuals with the same
disease.  Notwithstanding  this,  revenues  in the global  oncology  market were
reported    to    be    approximately     US$20    billion    in    2003    (see
http://www.bioscorpio.com/dmhc1926.htm),  and are  expected  to increase to over
US$45  billion by 2011.  The use of cancer  therapies is forecast to increase as
diagnostic  methods improve (as already  demonstrated  in prostate  cancer) and,
particularly, as more effective treatments are developed.

                                      -28-
<PAGE>

Numerous new approaches to cancer are currently in clinical  trials.  As targets
become  validated  and  technologies  improve,  research is  beginning  to yield
therapeutic  approaches  that appear to be more  effective  than existing  ones.
Monoclonal  antibodies  were first  described in 1978,  and are now beginning to
yield commercially viable therapeutic  products,  such as Rituxan(R),  the first
monoclonal treatment for cancer, approved by the FDA in 1998. The Corporation is
aware of only six  monoclonal  antibodies  approved in the United States for the
treatment  of  cancer,  Rituxan(R),   Campath(R),   Herceptin(R),   Mylotarg(R),
Bexxar(R)  and  Erbitux(R)  although  many  more  are in  development.  A second
approach  to cancer  treatment,  therapeutic  cancer  vaccines,  has been  under
development  for many  years,  and the  first  such  vaccine,  Melacine(R),  was
approved in 1999 in Canada.

PRODUCTS IN CLINICAL DEVELOPMENT

The Corporation has an interest in three anti-cancer agents (a small molecule, a
vaccine and a monoclonal  antibody) in a number of formulations  targeting seven
different tumors and/or stages of cancer.  The Corporation has also out-licensed
two additional anti-cancer immunotherapies in pre-clinical development. A number
of these  involve  newer  approaches  to the treatment of cancer and include two
formulations  of a  monoclonal  antibody,  TheraCIM  and  RadioTheraCIM,  and an
anti-cancer therapeutic vaccine, NorelinTM, currently in clinical development as
well as two  anti-cancer  therapeutic  vaccines,  HER-1 and TGFa, in preclinical
development.  The Corporation's  lead product,  tesmilifene,  is a chemical that
appears to enhance the activity of known  chemotherapeutics.  The  Corporation's
drug  products  target some of the most  common  cancer  indications,  including
breast and prostate  (early-stage  as well as  metastatic  disease).  YM is also
pursuing  several smaller cancer  indications  including  head-and-neck  cancer,
brain  cancers  and certain  indications  with  orphan  drug  designations.  The
Corporation  expects,  based on clinical  trials done to date, to develop all of
our clinical stage candidates beyond their respective initial indications.

TESMILIFENE

BACKGROUND:

Tesmilifene is a small molecule  anti-cancer  drug with multiple modes of action
that appears to enhance the activity of  traditional  chemotherapy  agents.  Its
chemical   designation   is    N,N-diethyl-2-[4-(phenylmethyl)phenoxy]ethanamine
hydrochloride.  It has demonstrated  synergistic  effects with anthracyclines in
late-stage  clinical trials and with taxanes,  5-FU and platins in earlier-stage
clinical and pre-clinical studies.

CLINICAL EXPERIENCE AND DEVELOPMENT PLANS:

Tesmilifene  has been  administered  to  approximately  500 cancer  patients and
demonstrated  to be well  tolerated.  The product has been approved by either or
both of the FDA and Health Canada for use in numerous clinical trials including:

     (g)  Phase  I/II  study  of  tesmilifene  alone  and  in  combination  with
          doxorubicin in patients with metastatic and recurrent breast cancer;

     (h)  Phase  I/II  study  of  tesmilifene   in   combination   with  various
          anti-neoplastic agents;

                                      -29-
<PAGE>

     (i)  Phase I/ II study of tesmilifene in combination with  cyclophosphamide
          in patients with hormone-refractory prostate cancer;

     (j)  Phase  II trial of  tesmilifene  plus  doxorubicin  in  patients  with
          metastatic and recurrent breast cancer;

     (k)  Phase II pilot study of  mitoxantrone/prednisone  plus  tesmilifene in
          patients  with  symptomatic   hormone-refractory  metastatic  prostate
          cancer;

     (l)  Phase II combination  study of tesmilifene  with doxorubicin and taxol
          in advanced breast cancer;

     (m)  Randomized Phase III trial of tesmilifene plus doxorubicin in patients
          with metastatic and recurrent breast cancer;

     (n)  Phase II  combination  study of  tesmilifene  with various  taxanes in
          first-line metastatic and recurrent breast cancer; and

     (o)  Randomized   Phase  III  trial  of  tesmilifene  plus  epirubicin  and
          cyclophosphamide  in patients with  metastatic  and  recurrent  breast
          cancer.

In October,  2003 the FDA provided  clearance to the  Corporation  to initiate a
Phase III trial,  the design and  endpoints  of which were subject to a positive
review  by the FDA in March,  2003  under a process  known as  Special  Protocol
Assessment  ("SPA").  An SPA is intended to provide official  evaluation of, and
agreement  with,  a  protocol  and  endpoints  to form  the  basis of a new drug
application.  In November,  2003 the Corporation received approval, from the FDA
to apply an  "adaptive  design"  to the  pivotal  trial  for  which  the SPA had
approved the protocol.  This adaptive design,  which in the case of YM's pivotal
trial  provides  for  "sequential   analysis",   permits  the  independent  Data
Monitoring  Board  ("DMB") to review the status of the patients in the trial and
to conclude,  at any point during the trial, whether the trial should be stopped
because of sufficient  evidence of the effect of tesmilifene;  continued for the
purpose of  increasing  the  numbers of the  patients  in the trial;  or stopped
because of the absence of any effect  (futility)  of the drug in  patients  with
metastatic and recurrent breast cancer.  This sequential analysis can be applied
at any point  during the trial.  The FDA has  advised the  Corporation  that the
first interim  analysis of the data generated  under this process may take place
after  192  deaths  have  occurred  in the  patient  population  of  the  trial.
Sequential analysis differs  significantly from the classical trial design which
requires enrollment of the full number of patients  contemplated in the original
protocol  prior to which no review of the  patients may take place except with a
considerable  statistical  penalty  being  paid by the  sponsor  for  the  trial
results.  Under a sequential  analysis a positive outcome would permit shortened
time to approval, and thus to market.

The Corporation has initiated the above-mentioned  international Phase III trial
of tesmilifene in metastatic  and recurrent  breast cancer in 700 patients.  The
FDA has agreed that the trial may be stopped after 192 patient  events  (deaths)
have  been  recorded  provided  that  certain  results  have been  achieved,  as
determined by the DMB.

                                      -30-
<PAGE>

In March  2004,  the  Corporation  entered  into a  Clinical  Research  Services
Agreement with  Pharm-Olam  International,  Ltd.  ("POI"),  a clinical  research
organization  ("CRO"), to conduct this Phase III trial  internationally.  POI in
turn is  contracting  with others to perform  services  and to recruit and treat
patients.  The contract with POI is payable over the next few years and payments
due are  dependent  on the number of  patients  recruited,  number of  countries
trials are  conducted  in, the  length of time over  which  particular  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  agreement  will
terminate  after POI has  completed  all  services  thereunder,  if the  parties
mutually  consent,  or may be terminated by either party in the event of certain
defaults  by the  other  party.  In the  event the  Corporation  terminates  the
agreement  without  cause  and  prior to the study  under  the  agreement  being
completed,  then the  Corporation  must pay POI a termination  fee of 10% of the
remaining  compensation,  if any is still owed, for clinical  services costs and
data management costs under the agreement at the time of the termination.

The SouthWest  Oncology Group, a US National Cancer  Institute-supported  cancer
clinical trials cooperative  group,  advised the Corporation that it proposes to
undertake a  randomized  Phase II trial in which  tesmilifene  is to be combined
with mitoxantrone (Novantrone(R))/prednisone and compared to results in patients
to be treated with  taxotere/estramustine/calcitriol  for advanced,  metastatic,
hormone-refractory prostate cancer.

The  Corporation  completed a US/Canadian  Phase II trial of  tesmilifene  in 29
patients in combination  with  mitoxantrone  (Novantrone(R))/prednisone  for the
treatment of metastatic, hormone-refractory prostate cancer. Preliminary results
from this trial were presented at the annual meeting of ASCO in May 2002.  Those
data  demonstrated an objective  reduction in pain in 75% of patients  receiving
tesmilifene/mitoxantrone/prednisone  compared  with 29% in previous  studies who
received  mitoxantrone/prednisone alone and a decrease in PSA in 59% of patients
compared  with 33% in previous  studies.  Objective  pain  reduction is measured
using a specific  pain-related  questionnaire and by discontinuance or reduction
of treatment with analgesics.

The National Cancer  Institute of Canada ("NCIC") and BMS, the  then-licensee of
tesmilifene,  designed and conducted a global, open-label,  randomized Phase III
study of  tesmilifene/doxorubicin  versus  doxorubicin  alone in metastatic  and
recurrent  breast cancer with tumor  response and  progression-free-survival  as
primary  endpoints  and  overall  survival as a  secondary  endpoint.  A planned
interim  analysis  failed  to  demonstrate  improvement  in tumor  response  and
progression-free-survival and BMS terminated all clinical development.  However,
the 305 patients  then  enrolled in the study were  followed by NCIC for overall
survival.

At the 2001 ASCO  meeting,  two years  after the  decision  by BMS to  terminate
development,  the NCIC reported that an increase in overall  survival of greater
than 50% was seen in those patients who had received the tesmilifene/doxorubicin
combination compared with patients receiving  doxorubicin alone (23.6 months vs.
15.6 months; p<0.03, as adjusted). Results of the trial have been published in a
major oncology journal.

MANUFACTURING:

                                      -31-
<PAGE>

Tesmilifene is a small  molecule that is  inexpensive  and simple to manufacture
through a two-step  chemical process.  The tesmilifene  active drug substance is
currently manufactured at Fabbrica Italiana Sintetici in Italy and is formulated
into final drug product by Chesapeake Biological Laboratories Inc. in the United
States.  Both of these suppliers operate facilities  meeting GMP standards.  The
Corporation does not have supply agreements with these suppliers,  but both have
produced  quantities for the  Corporation to  specification  on a purchase order
basis.  The  Corporation  has not at this time  engaged in detailed  discussions
regarding   commercial  scale   manufacturing  of  tesmilifene,   however,   the
Corporation  believes  that  numerous   pharmaceutical   chemical  manufacturers
worldwide would be able to manufacture this compound at commercial scale.

INTELLECTUAL PROPERTY:

Aspects of  tesmilifene,  including  its  anti-cancer  uses,  are the subject of
patents  that have  issued in the  United  States,  Europe,  Japan,  Canada  and
Australia.  Tesmilifene's cytoprotective end-use is the subject of other patents
granted or pending in major markets. In addition,  the drug's use in combination
with  anti-cancer  agents to enhance  the  survival  of cancer  patients  is the
subject of patent  filings in the U.S.  and many other major and minor  markets.
The  Corporation  has obtained our rights to such  patents  principally  under a
license  agreement with University of Manitoba and CancerCare  Manitoba and also
by  assignment  from our  consultant,  Vincent  Research &  Consulting  Inc. See
"Business - Licensing Arrangements".

The scope of patent  coverage  and the patent  term  differ by  country.  In the
United  States,   the  Corporation  relies  on  three  layers  of  basic  patent
protection. A key patent among these is US 5,859,065,  having claims relating to
the use of tesmilifene and certain  structurally  related analogs in combination
with any  chemotherapeutic for the treatment of any cancer. The twenty year term
of this patent expires in December 2010, but extensions of up to five additional
years may be  available  under the  Patent  Term  Restoration  Act in the United
States.  We intend to take full  advantage of the available term  extension.  In
addition,  in the United States,  the  Corporation is licensed under two granted
patents with related coverage,  namely, US 6,284,799  expiring February 2014 and
US 5,747,543 expiring May 2015.

In addition to being licensed under these granted  patents,  YM is also licensed
under numerous  pending patents  relevant to our clinical  development  program.
These include national filings based on WO03/039526 and WO03/037318. This series
of  patent  applications  is  focused  on the  survival  advantage  demonstrated
following  analysis  of the  phase  III  tesmilifene  trial,  and  relates  to a
selection   of  patient   subpopulations   that  will  most   benefit  from  the
chemopotentiating   and  cytoprotective   properties  of  tesmilifene.   Patents
resulting  from these patent  filings will expire in November 2022 in the United
States and most other major markets.

The  tesmilifene  patent  estate  licensed  to YM includes  still other  patents
pending  for  particular   chemotherapeutic/tesmilifene   combination  therapies
adapted for improved  efficacy in the treatment of breast and prostate  cancers,
among others.

In  addition  to  patents,  YM  intends  to rely on the  available  term of data
exclusivity  in the US and other  countries,  given that we believe  tesmilifene
qualifies as an NCE.  Furthermore,  full  advantage  will be taken of the Orange
Book  provisions  in the United States and  equivalent  provisions in Canada and
other countries, as a means for delaying generic competition.

                                      -32-
<PAGE>

COMPETITIVE POSITION:

The  primary   competition  for  tesmilifene  is  other  enhancers  of  standard
chemotherapies and possibly the market reduction for those  chemotherapies  from
the introduction of new drugs for tesmilifene's  target conditions.  Competition
appears to be principally from antisense drugs and pGp inhibitors.

Avastin  from  Genentech  is  being   developed  as  an  inhibitor  of  vascular
endothelial growth factor (VEGF) and its activity,  while a different  approach,
could be competitive with tesmilifene.

Antisense  drugs  (including  Genasense from Genta  Incorporated,  GTI 2501 from
Lorus  Therapeutics  Inc.  and ISIS  2503 from  ISIS  Pharmaceuticals)  have the
potential to become competitive for tesmilifene as chemopotentiators.

To the knowledge of the Corporation only one pGp inhibitor,  Zosuquidar-LY335979
from Eli Lilly and Company, continues in clinical development.

The  development of new drugs for  metastatic and recurrent  breast cancer could
reduce  the  size of the  market  for  currently  used  chemotherapeutics  which
tesmilifene  is  demonstrated  to enhance.  To the knowledge of the  Corporation
there are more than 300 Phase III studies in  metastatic  and  recurrent  breast
cancer currently underway.

THERACIM AND RADIOTHERACIM

BACKGROUND:

TheraCIM,  targeting the EGFr,  is a humanized  MAb. The EGFr is present at high
concentrations on the surface of many cancer cells and it is postulated that the
binding of ligands to this  receptor is  important in the  continuing  growth of
cancer cells. TheraCIM blocks this binding resulting in the potential for direct
inhibition of cell growth or,  possibly,  cell destruction by the immune system.
Improved  tumor  responses  have been reported when MAbs are combined with other
anti-cancer treatments.

                                      -33-
<PAGE>

The Corporation's EGFr MAb is being developed in the following formulations:

----------------- --------------- ------------ ---------------------------------
TheraCIM          Naked           Administered in combination with conventional
                  Antibody        radiation therapy.
----------------- --------------- ------------ ---------------------------------
RadioTheraCIM     Radiolabelled   For local injection directly into tumor
                  Antibody        resection cavities, such as in the treatment
                                  of brain cancers.
----------------- --------------- ------------ ---------------------------------

The  discussion  below on  Manufacturing  and  Competitive  Position  refers  to
TheraCIM.

CLINICAL EXPERIENCE - THERACIM:

In June 2004,  the  Corporation  was  advised  that  Oncoscience,  the  European
licensee for TheraCIM,  ("Theraloc" in Europe) had enrolled the first patient in
a 47-patient  rolling  Phase I/II trial  utilizing  the  monoclonal  antibody in
pediatric  glioma,  a form of brain cancer.  The  Corporation  understands  that
certain new trials will be initiated in Europe by Oncoscience, in 2005.

The  Corporation has also been advised that  recruitment for a randomized  Phase
III, 84 patient  study in  head-and-neck  cancer  with  TheraCIM  together  with
radiation being conducted by the Corporation's licensor, CIMAB, is ongoing and a
CIMAB-sponsored  single-arm  Phase II glioma study of the drug with radiation is
also ongoing.

In the first quarter of calendar 2003, the Corporation completed recruitment for
a Phase  II  clinical  trial of  TheraCIM  in  patients  with  locally  advanced
head-and-neck  cancer.  Twenty-four  fully evaluable  patients were recruited in
five sites across Canada.  The side effects seen to date in this study appear to
be less severe than those  previously  noted with the current  standard-of-care,
chemoradiation,  with no  apparent  loss  of  effectiveness  of the  combination
therapy.  TheraCIM  appears  to  sensitize  tumors to the degree  that  patients
receiving  the antibody  appear to have in excess of twice the response  rate to
radiation than that reported for patients receiving radiation alone.

A previous  Phase I/II trial for which  recruitment  was  completed in the third
quarter of calendar 2002 and  conducted by the  Corporation's  licensor,  CIMAB,
resulted in 24 fully evaluable patients receiving TheraCIM with radiation.  This
trial  demonstrated a significant  benefit  compared to radiation alone (greater
than 60% complete  response  compared to  approximately  30%  complete  response
expected from  radiation  alone).  Results of the trial have been published in a
major oncology journal.

In July 2001, YM received  approval from Health Canada, to initiate a Phase I/II
study of TheraCIM hR3 in conjunction  with  radiotherapy  in patients with brain
cancer  resulting  from  metastases  from  non-small-cell  lung  cancer.  YM has
postponed  implementing  this trial while we  evaluate  the results of trials of
competitive approaches to treatment of this condition.

In August 2004, the monoclonal  antibody was designated an orphan drug in Europe
for glioma.

                                      -34-
<PAGE>

CLINICAL EXPERIENCE - RADIOTHERACIM:

In  May  2003,  data  were  presented  at  the  ASCO  annual   meeting,   of  an
investigator-led trial utilizing an Yttrium-90-labeled version of TheraCIM in 45
patients,  post-excision,  with glioma.  The  presentation  concluded  that this
method  is  feasible  and   warrants   further   study.   Since  the  trial  was
physician-sponsored,  neither the  Corporation  nor CIMAB,  the  supplier of the
RadioTheraCIM, controlled the conduct of the trial.

MANUFACTURING:

Currently, the agent of the Corporation's licensor, CIMAB, supplies TheraCIM and
RadioTheraCIM in quantities sufficient to facilitate the clinical development of
these products.  It is expected that CIMAB will manufacture and supply,  or will
contract for the manufacture and supply of commercial quantities of TheraCIM and
RadioTheraCIM in accordance with the current  licensing  agreements at such time
and stage of product development as commercial  quantities of these products are
required.  There is a risk that CIMAB may experience  difficulties  obtaining or
producing commercially viable quantities of these products. Product from CIMAB's
manufacturing  plant has been approved for use in a clinical trial in Canada and
Europe.  The plant operates  according to GMP principles and its cGMP compliance
status has been  reviewed  on behalf of the  Corporation  by  industry  experts.
However,  the facility has not been inspected by a non-Cuban  regulatory  agency
and the Corporation  recognizes that the manufacturing  facility has to continue
to  meet  GMP  standards  in  order  to  supply  product  for  commercial   use.
Consequently,  in 1999, the Corporation  entered into a  collaboration  with the
Biotechnology Research Institute ("BRI") of the National Science and Engineering
Research  Council  of Canada  ("NSERC")  in order to fund the  development  of a
manufacturing  process to produce clinical grade material on a commercial scale.
This collaboration  yielded promising results, and CIMAB is currently working to
develop a validated  commercial  scale  manufacturing  process and generate data
required to satisfy applicable regulatory requirements.

The Corporation's license agreement for TheraCIM  contemplates  manufacturing of
the product by CIMAB or a supplier  contracted  by CIMAB.  Should CIMAB agree to
alternative  manufacturing  arrangements,   such  as  a  sub-licensee  of  CIMYM
manufacturing  the product,  the loss of manufacturing  benefits to CIMAB may be
reflected  in a  lower  license  fee  and  royalty  payable  to  CIMYM  than  if
manufacturing remains with CIMAB. See "Business - Licensing Arrangements".

MARKETING:

TheraCIM and  RadioTheraCIM are licensed by the Corporation from a Cuban source,
CIMAB,  and as such are likely to be  prohibited  from sale in the United States
unless OFAC issues a license or the U.S. embargo against Cuba is lifted.

INTELLECTUAL PROPERTY:

                                      -35-
<PAGE>


Aspects of TheraCIM,  including claims to the antibody and its formulation,  are
the subject of patents  that have  issued in the United  States and Canada and a
patent application that has been granted in Europe. In addition, the combination
of any  EGF-based  passive  immunization  (such as TheraCIM)  together  with any
EGF-based  active  immunization  is the  subject  of Patent  Cooperation  Treaty
("PCT") and United States patent  applications.  CIMYM is the exclusive licensee
under a patent estate that includes  composition of matter coverage for TheraCIM
hR3, and further includes coverage for TheraCIM-based  formulations and end-uses
in the treatment of  EGFr-dependent  cancers.  The composition of matter patents
are granted in the United  States,  in Europe,  are allowable in Japan,  and are
pending in Canada. The Corporation has obtained our rights to such patents under
a   license   agreement   with   CIMAB,   the   company   responsible   for  the
commercialization  of  products  developed  at CIM  and  CBQ.  See  "Business  -
Licensing Arrangements".

CIMYM's  key US  patent,  US  5,891,996  expires  in  November  2015,  and  term
extensions  of up  to  five  years  may  be  available  under  the  Patent  Term
Restoration  Act.  The same term and  extension  apply also to the key  European
patent, EP 712863.

The Corporation is aware of US patent #5,770,195  granted to Genentech,  for the
anti-cancer  use of  EGFr  MAbs  in  combination  with a  cytotoxic  agent.  The
Corporation  is also aware of US patents  granted  to others in this  field.  In
April 2001, Rorer  International  (Overseas)  ("Rorer") was issued the US patent
#6,217,866 which includes claims to any antibody targeting the EGFr administered
with any anti-neoplastic agent. A counterpart patent has been granted in Europe.
The Corporation has filed an opposition to the grant of the European patent. The
Corporation  believes  that the  Rorer  patents  are  licensed  to  ImClone.  In
addition,  the  Corporation  is aware of a separate  series of  national  patent
applications  filed by ImClone,  and  represented  by  EP1080113,  claiming  the
anti-cancer  use of radiation in combination  with any inhibitor of any receptor
tyrosine  kinase  that is  involved  in the  genesis of tumors.  ImClone is also
reported to have filed a PCT application  covering the use of EGFr MAbs to treat
patients  having  tumors  that do not  respond to  treatment  with  conventional
therapies.  The Corporation is also  challenging  ImClone's claims in respect of
the radiation-related  patent applications by filing additional prior art at the
relevant  national patent  offices.  The outcome of these  challenges  cannot be
predicted,  and there can be no assurance that the  Corporation  will succeed in
challenging  the  validity  or scope of patent  claims by  ImClone  or any other
patent  applicant.  The  Corporation  has  not  incurred  material  expenses  in
connection   with  the   challenges   to  ImClone's   radiation-related   patent
application.

The manufacturing of TheraCIM may fall within the scope of process patents owned
by Protein Design Labs Inc., Genentech,  and the Medical Research Council of the
United  Kingdom.  Management  is aware that some of these  process  patents  are
currently  being  challenged by companies other than YM. In the event any of the
applicable  process patents are upheld,  management  believes we will be able to
obtain  licenses under such patents on  commercially  reasonable  terms,  though
there can be no assurance thereof.

COMPETITIVE POSITION:

To the knowledge of the  Corporation,  other  companies that are involved in the
development of monoclonal antibody cancer  therapeutics  directly related to the
Corporation's efforts include Abgenix/Amgen, Genmab, ImClone/BMS, and Merck.

                                      -36-
<PAGE>


The Corporation  understands  that OSI in concert with Genentech and Roche,  and
AstraZeneca have small molecules  designed to target the tyrosine kinase domains
of EGF receptors. The Corporation understands that Iressa(R),  from AstraZeneca,
has been approved in twenty countries, including Japan and the United States for
third line monotherapy of NSCLC. OSI's product,  TarcevaTM, is reported to be in
co-development with Roche and Genentech and is reported to be in numerous trials
in various indications including Phase III registration studies.  Tarceva(TM) is
under a rolling NDA submission in the United States for NSCLC. OSI reported that
it has  positive  survival  data in a phase III  monotherapy  study in treatment
refractory NSCLC. See "- Competition".

Erbitux(R), developed by ImClone/BMS and Merck, is approved in the United States
and Switzerland for metastatic  colorectal cancer in combination with irinotecan
in  irinotecan-refractory  patients.  Management  understands that Erbitux(R) is
under review by other regulatory  agencies  including  European Medicines Agency
(EMEA) ("EMEA"), the European regulatory agency.

NORELIN TM

BACKGROUND:

Originally  developed  by  Biostar  Inc.  ("Biostar"),  NorelinTM  is an  active
specific  immunotherapy  agent that  harnesses  the  immune  system to block the
activity of the master hormone GnRH,  which controls the production of both male
and female sex hormones.  These  hormones bind to receptors in malignant  cancer
cells and  promote  the growth and spread of cancer.  By  eliciting  an antibody
response  to GnRH,  NorelinTM  is  designed  to block  GnRH  from  reaching  its
receptors in the  pituitary  gland,  thus reducing the amount of sex hormones in
circulation and thus reducing their effect on tumor growth.  NorelinTM  consists
of an  adjuvant  combined  with the  immunogen,  the drug  substance  IPS-21,  a
proprietary  carrier  protein  that is a non-toxic  fragment of P.  haemolytica,
flanked by eight  copies of GnRH on both ends.  Extensive  testing by Biostar of
IPS-21 and product  formulations  has been carried out in numerous  domestic and
laboratory  species,  using a range of  adjuvants  and  doses.  In  pre-clinical
testing,  NorelinTM has been effective in inducing an antibody response to GnRH,
which in turn reduced sex hormones to  sterilization  levels in the pre-clinical
animal models assessed.  In addition,  a significant  anti-tumor effect has been
demonstrated in several animal models.

CLINICAL EXPERIENCE:

In 2002, YM obtained a Clinical  Trial  Application  approval from Health Canada
for  NorelinTM  and  a  safety  and   immunogenicity   study  in  patients  with
hormone-sensitive prostate cancer was initiated in the third quarter of calendar
2002.  In  2004 a  second  leg was  added  to the  trial  for  Norelin(TM),  our
anti-cancer  fusion  protein  vaccine for which the first leg of a 12-24 patient
Phase I/II trial was completed in 2003 with good evidence of immunogenicity  and
biological  effect. The outcome from the combined legs will determine whether it
is appropriate to take Norelin(TM) forward given the significant commitment that
randomized trials require and, prior to that decision,  we shall wish to confirm
the reversibility of the effect of the vaccine resulting from the dissipation of
antibodies over time. The  confirmation of that event would support the case for
the drug  having the  prospect of not only  addressing  the  sex-hormone  driven
cancers (prostate and breast),  but also uterine fibroids and endometriosis.  YM
filed a formulation  patent on the current  generation of the product which,  if
issued, will protect the YM formulation and use of the product until 2024.

                                      -37-
<PAGE>


MANUFACTURING:

Unlike  MAbs,  NorelinTM  can be produced  in a bacterial  host such as E. coli.
Numerous production facilities are available in North America and elsewhere. The
Corporation does not have a supply agreement with any particular  supplier,  but
this drug has been  produced  in  suitable  quantities  for the  Corporation  to
specification  on a purchase order basis. The drug substance was manufactured by
Diosynth Inc., located in North Carolina, U.S., and the current drug product has
been   manufactured   under  cGMP   conditions  by  the   University  of  Iowa's
Pharmaceutical Services Division, located in Iowa, U.S. The Corporation is aware
of US patent  #6,303,123 owned by Aphton relating to the use of GnRH immunogenic
conjugates to treat GnRH-dependent  diseases,  including prostatic  hypertrophy,
and is developing a strategy for addressing this patent should it prove relevant
to the Corporation's commercial activities with NorelinTM.

INTELLECTUAL PROPERTY:

Aspects of NorelinTM,  including claims to the fusion protein, its synthesis and
its  formulation,  are the  subject  of patents  that have  issued in the United
States, and patent  applications are pending in a number of other major markets.
The  NorelinTM  patent  estate is  extensive,  and includes  four key US patents
covering  various  aspects of NorelinTM as a composition of matter,  the carrier
component of the  NorelinTM  vaccine,  as well as  production  of NorelinTM as a
recombinant  product.  A  key  US  patent  is US  5,837,268,  which  covers  the
particular  NorelinTM sequence,  its formulation as a vaccine,  and its end-use,
and subject to any term restoration, will expire in 2012.

The  Corporation  has  obtained  our  rights  to such  patents  under a  license
agreement with Biostar. See "Business - Licensing Arrangements".

COMPETITIVE POSITION:

Although  the  Corporation  is aware of  numerous  products in  development  for
prostate  cancer,  the Corporation is aware of only three competing  products in
the GnRH vaccine  field.  Of the four  products in  development  (including  the
Corporation's product), to the knowledge of the Corporation, a product by Aphton
appears to be the most advanced, having reportedly completed Phase I testing and
having reportedly  commenced Phase II testing. The Corporation believes that the
competitive   vaccines  are  based  on  chemical   synthesis   and/or  classical
conjugation techniques,  unlike NorelinTM which is produced in a bacterial host.
As a result,  the Corporation  believes those  competitive  vaccines are complex
mixtures of proteins  that would be expected to be more  difficult and expensive
to produce than NorelinTM.

These vaccine products will seek to compete with existing treatments.  Two major
existing  products  designed to induce  chemical  castration in the treatment of
prostate  cancer have been  approved  for  marketing  and have been in use for a
number of years. These products,  Lupron by TAP  Pharmaceuticals  and Zoladex by
AstraZeneca, have a strong market presence.

                                      -38-
<PAGE>


PRODUCTS IN PRE-CLINICAL DEVELOPMENT

TGFa CANCER VACCINE

BACKGROUND:

Human  epidermal  growth  factors  and  their  receptors  are  known  to play an
important role in both normal cell  proliferation and in neoplastic  growth. The
EGFr is overexpressed in many human epithelial  malignancies,  including breast,
bladder, ovarian, colon, lung, brain and esophageal cancer. In some tumors, EGFr
overexpression is an indicator of a poor clinical prognosis.  There are a number
of ligands  (proteins  or peptides  produced in the human body) that can bind to
the EGFr and are postulated to promote  cancer growth.  These include EGF, TGFa,
amphiregulin, heparin-binding EGF-like growth factor and betacellulin.

RATIONALE:

The most  common  ligand for the EGFr in human  tissues is TGFa,  which is often
overexpressed in human epithelial malignancies. With this ligand, the EGFr forms
a well-defined  autocrine loop and there are numerous reports  demonstrating the
influence of the TGFa/EGFr system in human tumors.  Increased  production in the
body of  either  EGFr or TGFa  have  been  identified  as  early  events  in the
progression of head-and-neck cancers. The autocrine loop EGFr/TGFa has also been
found to be very  important  for the  growth  of human  renal  carcinoma  cells.
Furthermore,  studies with both brain tumor cell lines and primary tumor tissues
suggest that the TGFa and the EGFr  function as an important  autocrine  loop in
supporting  proliferation  of brain tumors.  The  relationship  between TGFa and
oncogenes is also established.  One example is the relationship between TGFa and
the  oncogene  c-myc.  Overexpression  of these genes is  demonstrated  in human
cancers,  suggesting that their  interaction may be a critical step in malignant
growth.  Taken as a whole, these studies suggest that overexpression of EGFr and
its ligand TGFa is frequent in human tumors.

INTELLECTUAL PROPERTY:

Aspects of the TGFa Vaccine,  including claims for vaccines containing TGFa, are
the  subject of patent  applications  that have been filed in all major  markets
including the United States. The TGFa Vaccine would also fall under the scope of
the  passive/active  immunization  claims described in connection with TheraCIM,
above. The Corporation has obtained our rights to such patent applications under
a license agreement with CIMAB. See "Business - Licensing Arrangements".

PRODUCT STATUS:

A  TGFa/P64k  fusion  protein has been  produced  in E. coli and  semi-purified.
Immunized mice have mounted an anti-TGFa antibody response. A murine tumor model
depending on TGFa expression for in vivo growth is currently under development.

                                      -39-
<PAGE>


HER-1 BASED CANCER VACCINE

BACKGROUND:

As described  above,  the  EGF/EGFr  system is an  attractive  target for cancer
therapy.  The EGFr is  overexpressed  in many  malignant  tumors  of  epithelial
origin,  such as breast,  bladder,  ovarian,  colon,  lung, brain and esophageal
cancer.  EGFr  expression in human breast tumors has been correlated with a poor
prognosis.  Furthermore  it has been  demonstrated  that  expression  of EGFr in
breast tumor  metastases is frequently  elevated  compared to the primary tumor,
which suggests the involvement of EGFr in the metastatic  process,  though there
can be no assurance thereof.

Although  several MAbs against the EGFr,  both naked and those  associated  with
drugs,  toxins or radioisotopes,  are being evaluated for cancer  immunotherapy,
active specific  immunotherapy with the EGFr itself has not, to the knowledge of
the Corporation, been tested.

RATIONALE:

The HER-1 Vaccine  project is aimed at developing a cancer  vaccine  composed of
the extracellular domain of the human EGFr, presented in a  Th1-pattern-inducing
vehicle.  An antibody response would block the interaction  between EGFr and its
ligands,  provoking  a  cytostatic  effect,  but tumor  shrinkage  could also be
induced by a cytotoxic T cell ("CTL") response.

INTELLECTUAL PROPERTY:

Aspects of the HER-1 Vaccine,  including claims for vaccines  containing  HER-1,
are the subject of patent applications that have been filed in the major markets
including the United  States.  The HER-1 Vaccine would also fall under the scope
of the passive/active immunization claims described in connection with TheraCIM,
above. The Corporation has obtained our rights to such patent applications under
a license agreement with CIMAB. See "Business - Licensing Arrangements".

The Corporation's  license for the HER-1 Based Cancer Vaccine is suspended under
the  terms  of  the  out-licensing  agreement  between  the  Corporation,  CIMYM
(Barbados),  CIMAB and Tarcanta  relating to Tarcanta  licensing  TGFa and HER-1
from CIMAB.  In  connection  with the  out-licensing  agreement,  CancerVax  has
announced that it has received a license from Treasury  authorizing  Tarcanta to
enter into the  transactions  with CIMAB and the  Corporation.  See  "Business -
Licensing   Arrangements  -   Out-Licensing"   and  see  "Business  -  Licensing
Arrangements  - In-Licensing  - Licenses for TheraCIM,  RadioTheraCIM,  TGFa and
HER-1".

PRODUCT STATUS:

In the product,  the cDNAs  encoding the  extra-cellular  domain  ("ECD") of the
human and murine EGFr have been cloned into expression vectors,  and stable cell
lines secreting these ECDs appear to have been established.  Mice were immunized
with the ECD of the murine EGFr in different immunogenic preparations.  Specific
T cell  proliferation  and antibody  titers above 1/1000 were  obtained  without
severe toxicity. Pre-clinical tumor challenge experiments are ongoing.



<PAGE>

-40-

CURRENT STATUS of TGFa and HER-1 LICENSES:

The Corporation's license for the TGFa Cancer Vaccine and the HER-1 Based Cancer
Vaccine is suspended under the terms of the out-licensing  agreement between the
Corporation, CIMYM (Barbados), CIMAB and Tarcanta relating to Tarcanta licensing
TGFa  and  HER-1  from  CIMAB.  Under  the  terms  of the new  agreement  and in
consideration  for the suspension of the 2001 CIMYM License,  the Corporation is
entitled to receive an aggregate  payment of $1,000,000 which is payable in four
equal installments,  the final payment due December 31, 2005. In addition, under
the new agreement the Corporation may receive 35% of an aggregate of $16,350,000
in  milestone  payments.  Finally,  the  Corporation  retains an interest in the
revenues  from  the  manufacture  and  marketing  of the  drugs  or  from  their
sub-licensing.  In connection with the  out-licensing  agreement,  CancerVax has
announced that it has received a license from Treasury  authorizing  Tarcanta to
enter into the  transactions  with CIMAB and the  Corporation.  See  "Business -
Licensing   Arrangements  -   Out-Licensing"   and  see  "Business  -  Licensing
Arrangements  - In-Licensing  - Licenses for TheraCIM,  RadioTheraCIM,  TGFa and
HER-1".

G-1 VINYLFURAN

BACKGROUND:

G-1, a vinylfuran,  is the lead compound in a family of  anti-microbial  agents.
The properties of this molecule and related  structures  could result in a range
of therapeutic  products for bacterial and fungal  infections  affecting various
systems of the body.

CLINICAL EXPERIENCES:

A cream formulation of the G-1 product did not satisfy the criteria in a Phase I
study in the United Kingdom.  However, the original ointment formulation appears
to not have those  difficulties.  The  ointment  formulation  is reported by the
licensor  to have has been  tested  successfully  in both  Phase I and  Phase II
trials.  The licensor submitted results from its Phase III trial to CBQYM. CBQYM
distributed  marketing  materials  based on the trial results to  pharmaceutical
companies in order to elicit interest in sub-licensing the product.

CURRENT STATUS:

YM is  involved in no current  clinical  activity  on G-1 and has  notified  the
licensor that it intends to wind-up CBQYM.  Articles of dissolution  were issued
for CBQYM on August 24, 2004.

INDUSTRY COMPETITION

The  biopharmaceutical  industry  is  intensely  competitive.   Many  companies,
including other  biopharmaceutical  companies and biotechnology  companies,  are
actively engaged in activities  similar to those of the  Corporation,  including
research  and   development   of  drugs  for  the  treatment  of  cancer.   More
specifically,  competitors for the  development of new  therapeutic  products to
treat cancer also focus on MAb-based  cancer  therapeutics,  cancer vaccines and
other approaches that are based on both active and passive  immunotherapies  and
small molecule  discovery and development.  A 2001 survey by the  Pharmaceutical
Research and  Manufacturers  of America  ("PhRMA") listed 402 new treatments for
cancer that are currently being tested by researchers.

                                      -41-
<PAGE>

To the knowledge of the  Corporation,  other  companies that are involved in the
development of monoclonal antibody cancer  therapeutics  directly related to the
Corporation's efforts include Abgenix/Amgen, Genmab, ImClone/BMS, and Merck. The
Corporation  understands  that OSI in  concert  with  Genentech  and  Roche  and
AstraZeneca has small  molecules  designed to target the tyrosine kinase domains
of EGF  receptors.  Iressa(R) has been approved in twenty  countries,  including
Japan and the United States for third line  monotherapy  of NSCLC.  OSI reported
that is has positive survival data in a phase III monotherapy study in treatment
refractory  NSCLC.  Tarceva(TM)  is under a rolling NDA submission in the United
States for NSCLC.  Erbitux(R) is approved in United States and  Switzerland  for
metastatic  colorectal in combination  with irinotecan in  irinotecan-refractory
patients. Erbitux(R) is under review by other regulatory agencies including EMEA
the European regulatory agency.

The   Corporation   expects  to  encounter   significant   competition  for  the
pharmaceutical products we are developing and plan to develop in future. Many of
the  Corporation's  competitors have  substantially  greater financial and other
resources,  larger  research and  development  capabilities  and more  extensive
marketing and  manufacturing  organizations  than the Corporation.  In addition,
some such  companies  have  considerable  experience  in  pre-clinical  testing,
clinical  trials  and  other  regulatory  approval  procedures.  There  are also
academic  institutions,  governmental agencies and other research  organizations
which are conducting  research in areas in which the  Corporation is working and
they may also  market  commercial  products,  either  on  their  own or  through
collaborative  efforts.  If any of these  competitors were to complete  clinical
trials,  obtain required  regulatory  approvals and commence commercial sales of
their products before the Corporation they may achieve a significant competitive
advantage.

CLINICAL, PRE-CLINICAL AND BASIC RESEARCH

The Corporation,  designs, funds and manages pre-clinical and clinical research,
and may support, but does not conduct,  basic research.  The Corporation manages
the development of products that we in-license through our own team of clinical,
regulatory,  licensing and business development  executives and through a number
of research and medical  collaborations.  The  Corporation  is  responsible  for
filing  applications with the relevant  authorities for regulatory  approval for
clinical trials and conducts, or has conducted on our behalf, clinical trials to
progress  products  in  development  toward  regulatory  approval  and  possible
out-licensing for commercial sale. The Corporation's  current licenses generally
provide that the Corporation will conduct,  or cause to be conducted,  the tests
and  clinical  studies  necessary  to progress  products in  development  toward
regulatory  approval  with a view to  obtaining  the  approval  for  sale of the
licensed drug from  appropriate  regulatory  authorities.  The  Corporation  has
received regulatory  approvals for clinical trials in Canada, the United States,
the United  Kingdom and South Africa from Phase I through  Phase III. Some basic
research is conducted at the facilities of the Corporation's  licensors, and the
Corporation pays for certain amounts of this research.

                                      -42-
<PAGE>


LICENSING ARRANGEMENTS

IN-LICENSING

LICENSE FOR TESMILIFENE

In  November  2000,  YM  was  granted  an  exclusive  worldwide  license  by the
University of Manitoba and The Manitoba Cancer Treatment and Research Foundation
(now  CancerCare  Manitoba)  (the  "Original  Licensor")  for all  products  and
formulations  of  tesmilifene  pursuant to which the  Corporation  undertook the
responsibility   for  the   clinical   development   of  the   product  and  its
commercialization.

The  Corporation  must  pay  to  the  Original  Licensor  a  specified  minority
percentage  of revenues  received  from  sub-licensing  the  product,  after our
recovery of certain specified development costs. If the Corporation manufactures
and sells tesmilifene itself rather than through sub-licensing,  the Corporation
must pay a specified lesser minority percentage of net sales, after our recovery
of certain specified  development  costs, to the Original  Licensor.  Management
believes  these  royalties are  consistent  with general  industry  practice for
similar arrangements.  No royalties have been paid to date, and future royalties
cannot be quantified  because they are dependent on net sales, net royalties and
net revenues which have not yet materialized. There can be no assurance as to if
or  when  the  Corporation  may  sell  the  licensed   product  nor  enter  into
sub-licensing  arrangements  for the  product.  Under the terms of this  license
agreement,  the  Corporation  paid US$300,000 over the years 2000, 2001 and 2002
for sponsored  research.  The Corporation must make reasonable efforts to ensure
that the licensed  product is efficiently  marketed and  distributed by November
2005. The Corporation may sub-license the product.  This license agreement shall
be in force as long as any patents  thereunder are valid,  or until such time as
the license  agreement is terminated by either party because of a default by the
other  party,  by either  party if the other party  enters into  liquidation  or
reorganization  proceedings or receivership  or bankruptcy,  or by YM on 90 days
written notice if there are no sub-licensees.  In 2003, the Corporation acquired
certain  additional  patent  rights  for the  use of  tesmilifene  from  Vincent
Research and  Consulting  in exchange  for a small share of YM's future  royalty
revenues. Management of YM does not consider the agreement with Vincent Research
and Consulting to be material to YM as of the date hereof.

LICENSE FOR NORELIN TM

In October 2000, YM secured the exclusive, sub-licensable,  worldwide license to
the  human  therapeutic  rights  to  NorelinTM  from  Biostar.  The  license  is
non-exclusive  with  respect  to  diagnostic  applications  for  P.  haemolytica
antibodies and excludes applications related to infectious diseases. Pursuant to
the  license,  the  Corporation  paid  75,000 of our  common  shares  and 37,500
warrants  were granted to purchase our common  shares.  The warrants  granted to
Biostar  were  granted at a price of US$9.00  per  common  share and  expired on
October 11, 2004. Finally,  pursuant to the license, the Corporation is required
to pay Biostar an amount  equal to the lesser of (a) either two or four  percent
(depending on the nature of the product) of net sales, and (b) 10 percent of any
sub-licensing revenue received by the Corporation. No such royalty payments have
been paid to date, and future  royalties  cannot be quantified  because they are
dependent  on net  sales  and  sub-licensing  arrangements  which  have  not yet
materialized.  There can be no  assurance as to if or when the  Corporation  may
have  net  sales or  enter  into  sub-licensing  arrangements  for the  licensed
products.  This  license  agreement  shall be in  force  as long as any  patents
thereunder are valid, or until such time as the license  agreement is terminated
by either party because of a default by the other party,  by either party if the
other  party  enters  into   liquidation   or   reorganization   proceedings  or
receivership  or bankruptcy,  or by YM on 90 days written notice if there are no
sub-licensees. Notwithstanding the foregoing, any sub-license will be terminated
upon  the  termination  of  the  underlying  license  between  Biostar  and  the
University  of  Saskatchewan.  YM  has  been  advised  that  certain  rights  to
technology  under the  license  depend on patents and patent  applications,  the
prosecution  and  maintenance  of which are funded by third parties  pursuant to
agreements  with the Veterinary  Infectious  Disease  Organization  ("VIDO"),  a
division of the University of  Saskatchewan.  If such parties purport to abandon
any such  applications  or patents,  VIDO has the obligation to provide  Biostar
with  the   opportunity  to  fund  the   prosecution  and  maintenance  of  such
applications  and  patents,  if VIDO  chooses  not to do so  itself.  Similarly,
Biostar  has the  obligation  to  provide  YM with the  opportunity  to fund the
prosecution and maintenance of such applications and patents, if Biostar chooses
not to do so itself.

                                      -43-
<PAGE>

LICENSES FOR THERACIM, RADIOTHERACIM, TGFa AND HER-1.

(i) The 1995 CIMYM License

In May 1995, YM acquired an exclusive,  sub-licensable  license (as amended, the
"1995  CIMYM  License")  from CIMAB,  acting on behalf of CIM,  to products  for
passive  immunotherapy  of  cancer  directed  toward  EGF and  EGFr as  targets,
including  hR3,  a  humanized  MAb  targeting  the  EGFr.  CIMAB is the  company
responsible  for the  commercialization  of  products  developed  at CIM and the
product  licensed  from CBQ.  The 1995  CIMYM  License  is in respect of Europe,
Canada, the United States, Japan, Australia,  Taiwan, Singapore,  Thailand, Hong
Kong, South Korea,  Malaysia,  Indonesia and the  Philippines.  As a term of the
1995 CIMYM  License,  YM has a right of first  refusal with respect to licensing
any other  products  derived from the EGF and EGFr  programs of CIMAB except its
anti-EGFr monoclonal antibody for psoriasis in Europe.

Pursuant to the 1995 CIMYM License,  in 1995 the Corporation  incorporated CIMYM
and assigned the 1995 CIMYM License to CIMYM.  Pursuant to the terms of the 1995
CIMYM License,  CIMAB acquired a 20% interest in CIMYM as partial  consideration
for the 1995 CIMYM  License.  In addition to that 20% equity  interest in CIMYM,
CIMAB is entitled to receive 10% of net revenues received by CIMYM. In addition,
YM and CIMYM, pursuant to the terms of the 1995 CIMYM License, paid US$2,750,000
for certain  product  development  costs for TheraCIM and US$330,000 for certain
product development costs for RadioTheraCIM.

The terms of the 1995 CIMYM License  provide for CIMYM to conduct or cause to be
conducted pre-clinical and clinical trials to evaluate the licensed products and
to work with CIMAB to select sites, develop protocols and instruct investigators
for pre-clinical  and clinical trials.  CIMYM is to decide after the end of each
stage of trials whether to proceed with further  development or to terminate the
1995 CIMYM  License with respect to that  product.  In addition,  the 1995 CIMYM
License  provides  that,  where  commercially   reasonable,   CIMYM  shall  file
applications  for  regulatory  approval to market the  licensed  products in the
applicable territory.  Pursuant to the 1995 CIMYM License,  CIMAB has the right,
subject to certain terms and  conditions,  to supply the related drug substances
(i.e.,  TheraCIM and  RadioTheraCIM)  for commercial  sale. CIMAB shall sell the
product manufactured by it in Cuba to CIMYM at 85% of the sales price that CIMYM
sets for the sale of the product to  sub-licensees,  thereby  entitling CIMYM to
the 15%  difference.  CIMYM shall use its best  efforts to obtain a  sub-license
agreement in which CIMAB retains the right to manufacture  the product.  YM will
be responsible for any failure of CIMYM to fulfil its obligations under the 1995
CIMYM License.  This license  agreement shall be in force as long as any patents
thereunder are valid, or until such time as the license  agreement is terminated
by either  party  because  of a default  by the other  party,  or by CIMYM  with
written notice within 90 days after the end of a stage of pre-clinical trials or
after each stage of clinical trials.

                                      -45-
<PAGE>

In connection with the 1995 CIMYM License,  CIMYM entered into an  international
sales,  marketing,   manufacturing  and  administrative   agreement  with  CIMYM
(Barbados)  pursuant to which  CIMYM  (Barbados)  acquired  the rights to market
TheraCIM outside Canada (see  "Arrangements  with  Subsidiaries").  CIMAB owns a
corresponding 20% interest in CIMYM (Barbados).

(ii) The 2001 CIMYM License

In 2001, CIMYM  (Barbados)  acquired an exclusive,  sub-licensable  license (the
"2001 CIMYM License") from CIMAB to two active immunotherapy  products described
as HER-1  Vaccine  and TGFa  Vaccine.  CIMAB  has the  right to  consent  to any
sub-licensee,  such  consent  not to be  unreasonably  withheld.  The 2001 CIMYM
License is in respect of Europe,  Canada, the United States,  Japan,  Australia,
New Zealand,  Taiwan,  Singapore,  Thailand,  Hong Kong, South Korea,  Malaysia,
Indonesia and the  Philippines.  Under the 2001 CIMYM License,  CIMYM (Barbados)
has a right of first  refusal  with  respect  to  licensing  all other  products
derived from the EGF active immunotherapy program of CIM.

The terms of the 2001 CIMYM License  provide for CIMYM  (Barbados) to conduct or
cause to be conducted  pre-clinical and clinical trials to evaluate the licensed
products, and to work with CIMAB to select sites, develop protocols and instruct
investigators  for  pre-clinical  and clinical  trials.  CIMYM  (Barbados) is to
decide  after the end of each stage of trials  whether to proceed  with  further
development or to terminate the 2001 CIMYM License with respect to that product.
In  addition,   the  2001  CIMYM  License  provides  that,  where   commercially
reasonable,  CIMYM (Barbados) shall file applications for regulatory approval to
market the licensed products in the applicable  territory.  Pursuant to the 2001
CIMYM License,  subject to certain terms and conditions,  CIMAB has the right to
supply the related drug substance  (i.e.,  TGFa and HER-1) for commercial  sale,
unless sub-licensees  require manufacturing rights. CIMAB shall sell the product
manufactured  by it in Cuba to CIMYM  (Barbados)  at either 90%, if there are no
positive net revenues,  or 100% of the best available price for the manufacture,
supply and delivery of such product in Havana, Cuba.

If the Corporation elects to proceed with the license,  the Corporation would be
expected to make milestone and research and development payments,  the amount of
such payments to be negotiated  between the Corporation and CIMAB. On signing of
the 2001 CIMYM  License,  CIMYM  (Barbados)  paid CIMAB  US$125,000  for product
develop costs.

                                      -45-
<PAGE>

The terms of the 2001 CIMYM License have been  suspended  pursuant to a License,
Development,  Manufacturing and Supply agreement entered into by the Corporation
and its subsidiary,  CIMYM  (Barbados),  Tarcanta and CIMAB on July 13, 2004. By
the terms of this  agreement  with  Tarcanta,  the 2001 CIMYM  License  has been
suspended  until such time,  if at all,  there is a default  under the agreement
with Tarcanta. See "Business - Licensing Arrangements - Out-Licensing".

As at  September  30,  2004 YM has  advanced  US$24  million  to CIMYM and CIMYM
(Barbados),  collectively,  for the  licensing and  development  of the products
licensed by CIMYM.  Under the terms of the 1995 and 2001 CIMYM Licenses,  YM was
given the right to recover  all funds  advanced  to CIMYM and CIMYM  (Barbados),
collectively, from either CIMYM and CIMYM (Barbados). To the extent that the net
revenues  of CIMYM are less than or equal to the  advanced  amounts,  YM is only
permitted to recover such advances  from 30% of the net  revenues.  At this time
none of the advances have been repaid. There have been no revenues to date.

In connection with each of the 1995 CIMYM License and the 2001 CIMYM License, it
is expected that,  notwithstanding  that CIMAB owns 20% of the voting securities
of each of CIMYM  and  CIMYM  (Barbados),  it  could,  based on the terms of the
relevant license,  receive approximately 40% of the overall economic return from
commercialization  of the related drug products.  This could occur, for example,
if CIMAB manufactures the licensed product.

LICENSE FOR G-1

In May 1995, YM acquired an exclusive,  sub-licensable  license (as amended, the
"CBQYM  License")  from CIMAB,  acting on behalf of CBQ, to G-1 as an antifungal
and  antibacterial  agent  (excluding  opthalmic  veterinary  use in  respect of
Europe).  The CBQYM License is in respect of Europe,  Canada, the United States,
Japan, Australia, Taiwan, Singapore, Thailand, Hong Kong, South Korea, Malaysia,
Indonesia  and the  Philippines.  On June 10, 2003,  CIMAB  assigned,  and Heber
Biotec, S.A, accepted all rights and obligations under the G-1 License. On March
10,  2004,  the G-1  License  was  amended  such all of YM's  rights  under  the
agreement  became  non-exclusive.  Management  of YM does not consider the CBQYM
License to be material to YM as of the date hereof.

OUT-LICENSING

The   Corporation   generally   plans  to  out-license  our  licensed  drugs  to
pharmaceutical companies for manufacturing and marketing under license, although
we may retain  co-development  or marketing  rights if  management  considers it
appropriate to do so. Under the Corporation's business model, licensees would be
expected,  to the extent  necessary,  to participate  in the remaining  clinical
development  required to obtain final regulatory  approval for the product.  The
Corporation expects that out-licensing would result in a pharmaceutical  company
or other licensee marketing or manufacturing the product in return for licensing
fees and royalties on the sale of the product. Management believes this model is
consistent with current  biotechnology  and  pharmaceutical  industry  licensing
practices.

The Corporation's objectives in seeking to out-license products include:

                                      -46-
<PAGE>


     obtaining  long term revenue  streams from royalty  payments on the sale of
     the products;

     providing  access to the resources and  experience of large  pharmaceutical
     companies;

     obtaining up-front payments for product sub-licensing rights; and

     minimizing   development   expenditures  through  cost  sharing  programmes
     (especially    late-stage   clinical   trials   and   regulatory   approval
     applications).

The Corporation believes that out-licensing  arrangements could be attractive to
pharmaceutical  corporations  because they would provide the prospective partner
with  access to new  products  without  the  initial  research  risk or  earlier
clinical development costs. Since partners are expected to be sought only at the
later  stages of a  product's  development,  the  Corporation  anticipates  that
prospective licensees would view the Corporation's  products as having a reduced
risk of failure to achieve regulatory approval.

YM does not intend to develop our own  manufacturing,  marketing or distribution
programmes  although we may wish to  participate  in ownership of  manufacturing
facilities  if  appropriate  opportunities  become  available.  The  Corporation
intends to remain principally focused on the identification, further development
and commercialization of in-licensed products.

THERACIM:

On November 12, 2003, the Corporation's  subsidiary,  CIMYM, licensed the rights
for TheraCIM in most of Europe to Oncoscience. Under the terms of the agreement,
CIMYM is  entitled  to  receive up to US$30  million  as a share of any  amounts
received by  Oncoscience  in  relation to  development  or  sublicensing  of the
product and as a royalty on initial net sales.  After CIMYM has  received  US$30
million,  CIMYM  continues  to receives  royalties  on net sales but at a lesser
percentage.  Oncoscience  has agreed to use diligent and  reasonable  efforts to
develop and commercially exploit TheraCIM in the licensed territory.  No amounts
or royalties have been received as of the date hereof by CIMYM from Oncoscience,
since  no  sublicensing  fees  or  net  sales  amounts  have  been  received  by
Oncoscience.  This license  agreement  may be  terminated by either party in the
event  of  specified  breaches  and  insolvency  events,  if a Phase II trial of
TheraCIM has not commenced in Europe within two years, or if certain  regulatory
approvals  for marketing  TheraCIM in Europe have not been obtained  within five
years.  In addition,  Oncoscience  may terminate the agreement at any time on 90
days notice.

TGFa CANCER VACCINE AND HER-1 BASED CANCER VACCINE:

On July 13, 2004, the  Corporation and its subsidiary,  CIMYM  (Barbados),  have
entered into a License,  Development,  Manufacturing  and Supply  Agreement with
Tarcanta,  two  wholly-owned  subsidiaries  of CancerVax,  and CIMAB relating to
Tarcanta licensing TGFa and HER-1 from the Corporation.  CancerVax has announced
that it has received a license from OFAC authorizing  Tarcanta to enter into the
transactions with CIMAB and the Corporation. By the terms of this agreement with
Tarcanta,  the 2001 CIMYM License has been suspended until such time, if at all,
there is a default under the agreement with Tarcanta. Under the terms of the new
agreement and in consideration for the suspension of the 2001 CIMYM License, the
Corporation is entitled to receive an aggregate  payment of $1,000,000  which is
payable in four equal installments,  the final payment due December 31, 2005. In
addition,  under  the  new  agreement  the  Corporation  may  receive  35% of an
aggregate of $16,350,000 in milestone payments. Finally, the Corporation retains
an interest in the revenues from the  manufacture  and marketing of the drugs or
from their  sub-licensing.  Tarcanta  has agreed to undertake  further  clinical
development of the licensed drugs,  and acquired an exclusive  license to market
and sell the products in North America,  Europe and certain other jurisdictions.
This  agreement is terminable by a party in certain  circumstances  including in
the event of specified  breaches and insolvency  events.  CIMAB has the right to
terminate if reasonable  efforts are not made to file  submissions  for clinical
trials  for the  licensed  products,  or if the first  regulatory  approval  for
marketing the licensed  products is not received  within 12 years.  In addition,
Tarcanta may  terminate  the  agreement  at any time on 180 days notice.  In the
event of early termination, the 2001 CIMYM License would be reinstated.

                                      -48-
<PAGE>

REGULATORY APPROVAL

Securing  final  regulatory  approval  for the  manufacture  and  sale of  human
therapeutic   products  in  Canada  and  the  Corporation's  other  territories,
including the United States,  is a long and costly process that is controlled by
that particular  territory's national regulatory agency. The national regulatory
agency in Canada is Health Canada, and in the United States it is the FDA. Other
national regulatory  agencies have similar regulatory  approval  processes,  but
each  national  regulatory  agency has its own approval  processes.  Approval in
either  Canada or the United States does not assure  approval by other  national
regulatory agencies, although often test results from one country may be used in
applications for regulatory approval in another country.

Prior to obtaining  final  regulatory  approval to market a drug product,  every
national  regulatory  agency has a variety of  statutes  and  regulations  which
govern the  principal  development  activities.  These laws  require  controlled
research and testing of products, government review and approval of a submission
containing  pre-clinical and clinical data  establishing the safety and efficacy
of the  product  for each  use  sought,  approval  of  manufacturing  facilities
including  adherence  to GMP  during  production  and  storage,  and  control of
marketing activities, including advertising and labeling.

None of the Corporation's products have been completely developed or tested and,
therefore,  we are not yet in a position  to seek final  regulatory  approval to
market  any of our  in-licensed  products.  To  date we  have  obtained  various
regulatory approvals to develop and test our in-licensed products. Currently the
Corporation  is conducting an  international  Phase III trial of  tesmilifene in
metastatic  and recurrent  breast cancer in 700 patients.  The  Corporation  has
received  regulatory  approvals for the tesmilifene study in several  countries,
including  Canada and the United States,  and approval is pending in a few other
countries.  In addition,  TheraCIM has been  designated an orphan drug in Europe
and the  Corporation is currently  seeking orphan drug  designation for TheraCIM
from the FDA. See "Products in Clinical Development".

CANADIAN APPROVAL PROCESS

                                      -48-
<PAGE>

The  manufacture,  distribution and consumption of medical  products,  drugs and
equipment  is  regulated  by  a  variety  of   industry-specific   statutes  and
regulations  in Canada and the countries to which YM has rights for the licensed
products.  Drugs sold in Canada are regulated by the Food and Drugs Act (Canada)
and the regulations made under that Act.

Even though a drug, medical product or device may be approved for use in another
jurisdiction,  it may not be sold in Canada  until  approved  by Health  Canada.
Outside Canada, the regulatory  approval process for the manufacture and sale of
pharmaceuticals  varies  from  country to country and the time  required  may be
longer or shorter than that required by Health Canada.

The Food and Drug Regulations  require  licensing of  manufacturing  facilities,
carefully  controlled research and testing of products,  governmental review and
approval  of test  results  prior to  marketing  of  therapeutic  products,  and
adherence to GMP, as defined by each licensing jurisdiction, during production.

The principal activities which must be completed prior to obtaining approval for
marketing of a therapeutic drug product are essentially the same in Canada as in
most major markets of the world and are as follows:

     Pre-clinical Animal Studies.  Pre-clinical studies are conducted in animals
     to test  pharmacology and toxicology and to do formulation work based on in
     vivo results.

     Phase I  Clinical  Trials.  Phase I  clinical  trials  consist of testing a
     product  in a small  number  of  humans  for its  safety  (toxicity),  dose
     tolerance and pharmacokinetic properties.

     Phase II Clinical Trials. Phase II clinical trials usually involve a larger
     patient population than is required for Phase I trials and are conducted to
     evaluate  the  efficacy  of a product in  patients  having  the  disease or
     medical  condition  for which the product is  indicated.  These trials also
     serve to  further  identify  side  effects  and risks in a larger  group of
     patients.

     Phase III Clinical  Trials.  Phase III clinical  trials involve  conducting
     tests in an expanded patient  population at  geographically  dispersed test
     sites (multi-center trials) in a controlled and/or uncontrolled environment
     to gather information about clinical safety and efficacy. These trials also
     generate  information from which the overall  benefit-risk  relationship of
     the drug can be determined and provide a basis for drug labeling.

Two key factors  influencing  the progression of clinical trials are the rate at
which  patients  can be recruited  into  clinical  trials and whether  effective
treatments  are  currently  available  for the  disease  the drug is intended to
treat.  Patient recruitment is largely dependent upon the incidence and severity
of the disease and the alternative  treatments  available,  as well as alternate
research studies.

A  Clinical  Trial  Application  must  be  filed  and  accepted  by  either  the
Therapeutic  Products Directorate ("TPD") or the Biologics and Genetic Therapies
Directorate ("BGTD") of Health Canada before each phase of human clinical trials
may begin. The CTA application must contain specified  information including the
results of the  pre-clinical  or clinical tests completed at the time of the CTA
application.  In  addition,  since the  method of  manufacture  may  affect  the
efficacy  and  safety of a drug,  information  on  chemistry  and  manufacturing
methods must be  presented.  Health  Canada  conducts  inspections  to determine
compliance with GMP. Good manufacturing practices and quality control procedures
must be in place.

                                      -49-
<PAGE>

Upon completion of all clinical studies, the results are submitted to the TPD or
BGTD as part of a New Drug Submission  ("NDS").  A notice of compliance  ("NOC")
which permits  marketing of the product typically takes between 12 and 24 months
from the date a NDS is submitted.

Even after marketing approval has been obtained, further studies may be required
to provide  additional data on safety and efficacy in order to gain approval for
the use of a drug as a treatment for clinical  indications  other than those for
which the product was initially tested. Also, Health Canada conducts post-market
surveillance  programmes  to  monitor  a  product's  side  effects.  Results  of
post-marketing programmes may limit or expand the further marketing of products.
A serious  safety or efficacy  problem  involving  an  approved  drug or medical
device may result in Health  Canada action  requiring  withdrawal of the product
from the market.

UNITED STATES APPROVAL PROCESS

In the United States,  the FDA, a federal  government agency, is responsible for
the drug approval  process.  The FDA's mission is to ensure that all medications
on the market are safe and are effective.  The FDA's approval  process  examines
potential drugs; only those that meet strict requirements are approved.

The drug  approval  process  begins  with the  discovery  of a  potential  drug.
Pharmaceutical  companies then test the drug  extensively.  A description of the
different stages in the drug approval process in the US follows.

Stage 1: Preclinical Research

After  an  experimental  drug  is  discovered,  research  is  conducted  to help
determine  its  potential  for  treating  or curing an  illness.  This is called
preclinical research. Animal studies are conducted to determine if there are any
harmful  effects  of the  drug  and to  help  understand  how  the  drug  works.
Information from these experiments is submitted to the FDA in an Investigational
New Drug  Application.  The FDA reviews  information in an IND  Application  and
decides if the drug is safe to study in humans.

Stage 2: Clinical Research

In Stage 2, the experimental drug is studied in humans. The studies are known as
clinical  trials.   Clinical  trials  are  carefully   designed  and  controlled
experiments in which the  experimental  drug is administered to patients to test
its safety and to determine the effectiveness of an experimental  drug. The four
general phases of clinical research are described below.

Phase I clinical studies are generally conducted with healthy volunteers who are
not taking other  medicines;  patients with the illness that the drug will treat
are not tested at this stage.  Ultimately,  Phase I studies  demonstrate  how an
experimental drug affects the body of a healthy individual.  Phase I consists of
a series of small studies consisting of "tens" of volunteers.  Tests are done on
each  volunteer  throughout  the study to see how the person's  body  processes,
responds  to, and is affected by the drug.  Low doses and high doses of the drug
are usually studied,  resulting in the determination of the safe dosage range in
volunteers by the end of Phase I. This  information  will determine  whether the
drug proceeds to Phase II.

                                      -50-
<PAGE>

Phase  II  clinical   studies  are  conducted  in  order  to  determine  how  an
experimental  drug affects  people who have the disease to be treated.  Phase II
usually  consists of a limited  number of studies that help determine the drug's
short-term safety, side effects, and general effectiveness. The studies in Phase
II  are  often  controlled  investigations,  involving  comparison  between  the
experimental  drug  and a  placebo,  or  between  the  experimental  drug and an
existing drug.  Information  gathered in Phase II studies will determine whether
the drug proceeds to Phase III.

Phase III studies  consists of  numerous  clinical  trials that are used to more
fully  investigate  the nature of the drug.  These  trials  differ from Phase II
trials  because a larger  number  of  patients  are  studied  (sometimes  in the
thousands)  and because the  studies  are usually of longer  duration.  As well,
Phase III studies can  include  patients  who have more than one illness and are
taking  medications  in  addition  to the  experimental  drug used in the study.
Therefore,  the patients in Phase III studies  more closely  reflect the general
population.  The  information  from  Phase  III  forms the basis for most of the
drug's initial labeling, which will guide physicians on how to use the drug.

Phase IV studies are conducted after a drug is approved. Companies often conduct
Phase IV studies  to more fully  understand  how their  drug  compares  to other
drugs.  Also, the FDA may require additional studies after the drug is approved.
FDA-required  Phase IV studies often  investigate  the drug in specific types of
patients that may not have been included in the Phase III studies.  FDA-required
Phase IV studies  can also  involve  very large  numbers of  patients to further
assess the drug's safety.

Stage 3: FDA Review and Approval

Following Phase III, the pharmaceutical  company prepares reports of all studies
conducted  on  the  drug  and  submits  the  reports  to the  FDA in a New  Drug
Application  ("NDA"). The FDA reviews the information in the NDA to determine if
the drug is safe and effective for its intended use. Occasionally,  the FDA will
ask experts  for their  opinion of the drug;  this occurs at advisory  committee
meetings.  If the FDA determines  that the drug is safe and effective,  the drug
will be approved.

Stage 4: Marketing

After the FDA has approved the experimental drug, the pharmaceutical company can
make it available to physicians and their patients.  A company may also continue
to conduct research to discover new uses for the drug. Each time a new use for a
drug is  discovered,  the drug is once again  subject to the entire FDA approval
process before it an be marketed for that purpose.

ARRANGEMENTS WITH SUBSIDIARIES

YM  and  CIMAB  entered  into  certain  Funding  Agreements  with  the  Canadian
Subsidiaries,  CIMYM and CBQYM,  in November  1995 in  connection  with the 1995
CIMYM  License  and the CBQYM  License,  respectively.  The  Funding  Agreements
provide that YM will arrange for the appropriate studies and clinical trials for
the licensed  products held by the Canadian  Subsidiaries and will fund the cost
of such studies and trials  provided that doing so would not be  commercially or
scientifically unreasonable. Accordingly, YM makes the final determination as to
whether or not a clinical  trial expense is justified  with respect to any given
product.  YM is entitled to be reimbursed  for all funds we provide  pursuant to
the Funding  Agreements out of revenue  generated from the  exploitation  of the
relevant license, subject to the successful development of the licensed products
and adequate generation of revenue.

                                      -51-
<PAGE>

YM and CIMAB,  contemporaneously  with the  assignment of each of the 1995 CIMYM
License  and  the  CBQYM  License,   entered  into  joint-venture   shareholders
agreements  (the  "Shareholders  Agreements")  with  the  Canadian  Subsidiaries
relating to their  operation.  Pursuant  to the  Shareholders  Agreements,  each
Canadian  Subsidiary  is  required  to include  nominees  of CIMAB both as board
members  and as members of  operating  management.  The  Shareholder  Agreements
provide that: (i) issued and outstanding  shares of either  Canadian  Subsidiary
may not be sold or  transferred  without the consent of both YM and CIMAB;  (ii)
the issue of  additional  shares of either  Canadian  Subsidiary  shall first be
offered to each of YM and CIMAB in proportion to their holdings, and thereafter,
with the consent of both YM and CIMAB, to any other person; and (iii) the boards
of  directors  of  each  of the  Canadian  Subsidiaries  will  consist  of  five
directors,  three of whom are  nominees  of YM and two of whom are  nominees  of
CIMAB.  All material and  out-of-the-ordinary-course-of-business  contracts of a
Canadian Subsidiary, including those relating to the borrowing of money, issuing
guarantees,  entering into non  arm's-length  agreements,  paying  dividends and
pledging of property, must be approved by four-fifths of the Board of directors.

CIMYM   (Barbados)   and  CBQYM   (Barbados)   (the   "International   Marketing
Subsidiaries"), were incorporated in Barbados in May 1996 to market the licensed
products  under the 1995  CIMYM  License  and the CBQYM  License,  respectively,
outside of Canada.  YM and CIMAB have  entered  into  joint-venture  shareholder
agreements  (the  "Barbados  Shareholders  Agreements")  with the  International
Marketing  Subsidiaries  relating to their operation.  The terms of the Barbados
Shareholders Agreements are consistent with the Shareholders Agreements,  except
that the boards of directors of each of the International Marketing Subsidiaries
consist  of  a  majority   of   directors   nominated   by  YM.   Material   and
out-of-the-ordinary-course-of-business  contracts and approval for the strategic
marketing  plan and annual  budget must be approved by a vote of the majority of
directors,  including the affirmative vote of at least one nominee of YM and one
nominee of CIMAB. YM provides  funding to CIMYM  (Barbados) and CBQYM (Barbados)
under similar terms and conditions as funding to the Canadian Subsidiaries.  All
earnings of the International  Marketing Subsidiaries are to be paid annually to
the  shareholders  as dividends  unless a change in such policy is approved by a
majority of the directors, including one nominee of each of YM and CIMAB.

Pursuant to international  sales,  marketing,  manufacturing and  administrative
agreements  dated  as of  July  4,  1996,  each  of  the  Canadian  Subsidiaries
sub-licensed  certain of its respective rights to the licensed product under the
1995 CIMYM  License  and the CBQYM  License to the  corresponding  International
Marketing Subsidiary in exchange for certain royalty payments.

Under the current arrangements,  the International  Marketing  Subsidiaries will
arrange  for  the  out-licensing  of  the  licensed  products  in  all  relevant
territories except Canada. The Canadian  Subsidiaries remain responsible for all
elements of  commercializing  the licensed  products within Canada,  and for the
cost of commercializing  the licensed products outside of Canada up to the point
of out-licensing.

                                      -52-
<PAGE>

The Corporation recently made the decision, and has instructed counsel in Canada
and Barbados,  to dissolve CBQYM and CBQYM  (Barbados).  Articles of dissolution
were issued for CBQYM on August 24, 2004.

PROPERTY, PLANTS AND EQUIPMENT

FACILITIES

The  Corporation  currently  occupies 5,800 square feet of space in Mississauga,
Ontario pursuant to a sub-lease  agreement dated July 31, 1997 (the "Sub-Lease")
and a lease amending and extension  agreement dated February 1, 2003 (the "Lease
Amending  Agreement"),  such Lease Amending Agreement extended the initial terms
of the  Sub-Lease  for a term of five years  commencing  on February 1, 2003 and
expiring on January 31, 2008.  The average  annual  costs,  including  operating
expenses, are approximately $120,000.

There  are no  environmental  issues  associated  with  the  facilities  and the
Corporation  currently  has  no  plans  to  construct,  expand  or  improve  the
facilities.

EQUIPMENT AND OTHER PROPERTY

As at September 30, 2004,  the  Corporation  owned  tangible fixed assets with a
book value of $10,597, consisting primarily of computer equipment.

EMPLOYEES

As of June 30, 2004, the Corporation  employed 14 permanent  employees.  Each of
the  employees  are  located  at  the  Corporation's  head  office.  Other  than
administrative  staff,  the employees  conduct the  Corporation's  licensing and
product development activities.

                                    DIVIDENDS

The  Corporation  has not  paid  any  dividends  since  its  incorporation.  The
Corporation  will  consider  paying  dividends  in  future  as  its  operational
circumstances may permit having regard to, among other things, the Corporation's
earnings, cash flow and financial requirements.  It is the current policy of the
board of directors to retain all earnings to finance the Corporation's  business
plan.


                                CAPITAL STRUCTURE

The authorized share capital of the Corporation  consists of 500,000,000  common
shares  without  nominal or par value,  500,000,000  Class A  non-voting  common
shares  without  nominal  or par value,  500,000,000  Class A  preferred  shares
without nominal or par value and 500,000,000 Class B preferred shares,  issuable
in series,  without nominal or par value.  As at September 30, 2004,  there were
35,315,989  common shares,  no Class A non-voting common shares and no preferred
shares outstanding.

                                      -53-
<PAGE>

                              MARKET FOR SECURITIES

The  Corporation  has been listed on the Toronto Stock Exchange  ("TSX") and the
Alternative  Investment  Market  ("AIM")  operated by the London Stock  Exchange
since June 11, 2002.  Initially,  the  Corporation  listed our Class B Preferred
Shares, Series 1. On June 12, 2003, the Class B Preferred Shares, Series 1, were
automatically  converted on a one-for-one  basis into the common  shares,  which
became listed on the TSX and the AIM on that date.

The Corporation's common shares have traded on the TSX since June 12, 2003 under
the symbol "YM",  were admitted to trading on the AIM on June 12, 2003 under the
symbol "YMBA" and have been traded on the American Stock Exchange ("Amex") since
October 1, 2004 under the symbol "YMI".

                             DIRECTORS AND OFFICERS

<TABLE>
<CAPTION>

-------------------------------- -------------------------------------------------- -------------------
Name                             Position                                           Period Served
-------------------------------- -------------------------------------------------- -------------------
<S>                              <C>                                                <C>
David G.P. Allan                 Chairman, Chief Executive Officer and Director     Since 1994
Toronto, Canada
-------------------------------- -------------------------------------------------- -------------------
Thomas I.A.                      Director                                           Since 1996
Allen (1)(2)(3)
Toronto, Canada
-------------------------------- -------------------------------------------------- -------------------
Mark Entwistle (3)               Director                                           Since 1997
Ottawa, Canada
-------------------------------- -------------------------------------------------- -------------------
John Friedman                    Director                                           Since 2004
New York, USA
-------------------------------- -------------------------------------------------- -------------------
Henry Friesen (1)                Director                                           Since 2001
Winnipeg, Manitoba
-------------------------------- -------------------------------------------------- -------------------
Paul M. Keane                    Officer                                            Since 1996
Mississauga, Ontario
-------------------------------- -------------------------------------------------- -------------------
Vincent Salvatori                Officer                                            Since 1998
Victoria, British Columbia
-------------------------------- -------------------------------------------------- -------------------
Len Vernon                       Officer                                            Since 1997
Nobleton, Ontario
-------------------------------- -------------------------------------------------- -------------------
Julius Vida (2)                  Director                                           Since 2001
Greenwich, USA
-------------------------------- -------------------------------------------------- -------------------
Gilbert Wenzel                   Director                                           Since 2001
Zurich, Switzerland
-------------------------------- -------------------------------------------------- -------------------
Tryon M.                         Director                                           Since 1995
Williams (1)(2)(3)
London, England
-------------------------------- -------------------------------------------------- -------------------
</TABLE>

                                      -54-
<PAGE>

(1)  Member of Audit Committee.
(2)  Member of Corporate Governance and Nominating Committee.
(3)  Member of Compensation Committee.

SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets out details of our shares and options that are directly
or indirectly held by directors and executive officers as at September 30, 2004,
based on 35,315,989 common shares issued and outstanding on such date.

<TABLE>
<CAPTION>

--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
                                                               Common
                               Number of      Percentage of    Shares
                               Common       Common Shares     Held Under
           Name                Shares        Outstanding        Option       Exercise Price        Expiration Date
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
<S>                           <C>               <C>            <C>            <C>                    <C>
David G.P. Allan              669,659           1.8%           656,250        $1.75 - $4.50          2007 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Thomas I.A. Allen                -                *            105,600        $1.75 - $4.50          2007 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Mark Entwistle                   -                *             80,660        $1.75 - $4.50          2007 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
John Friedman                    -                *             50,000            $2.10                 2014
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Henry Friesen                    -                *             80,660        $1.75 - $4.50          2011 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Paul M. Keane                    -                *            204,000        $1.75 - $4.50          2007 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Vincent Salvatori                -                *             80,000        $1.75 - $2.50          2008 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Len Vernon                       -                *            170,000        $1.75 - $4.50          2008 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Julius Vida                      -                *             75,660        $1.75 - $4.50          2011 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Gilbert Wenzel                   -                *             75,660        $1.75 - $4.50          2011 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Tryon M. Williams              20,100             *            118,160        $1.75 - $4.50          2007 - 2013
--------------------------- ------------- ------------------ ------------- -------------------- ----------------------
</TABLE>

* Less than one percent



As of the date of hereof, the directors and senior officers of YM BioSciences as
a group beneficially owned or controlled, directly or indirectly, 689,759 common
shares of the  Corporation,  representing  approximately  1.9% of the issued and
outstanding voting shares of the Corporation.

DAVID G.P. ALLAN - CHAIRMAN, CHIEF EXECUTIVE OFFICER AND DIRECTOR

                                      -55-
<PAGE>

Mr. Allan has been Chief Executive  Officer of the Corporation  since April 1998
and Chairman of the Board of directors of the Corporation  since August 1994. In
1992 Mr.  Allan  created  the  Knowledge-Based  Industries  Group for a Canadian
investment  bank where he was  Executive  Director  until 1998.  Mr.  Allan is a
former governor of The Toronto Stock  Exchange,  a former member of the Canadian
Healthcare  Licensing  Association and of the Awards Selection Committee for the
Networks of Centres of Excellence in Canada.

THOMAS I.A. ALLEN, Q.C., F.C.I.ARB - DIRECTOR

Mr.  Allen was called to the Bar in  Ontario  and began  practicing  law in 1965
concentrating  on securities  law and  corporate  law. He was a member of senior
management  of  Gordon  Capital  Corporation,  and  its  merchant  bank,  Gordon
Investment Corporation, from mid 1989 until early 1994. Mr. Allen was counsel to
Davies,  Ward & Beck from 1994 until 1996 when he joined the  Toronto  office of
the law firm Ogilvy Renault.  Mr. Allen is Chairman of the Accounting  Standards
Oversight Council of Canada, a member of the Advisory Board of the Office of the
Superintendent  of Financial  Institutions of Canada and a director of Bema Gold
Corporation,  Mundoro Mining Inc.,  GEAC Computer  Corporation,  Unisphere Waste
Conversion Inc., and Middlefield  Bancorp Limited.  Mr Allen has been a director
of the Corporation since December 1996.

MARK ENTWISTLE, M.A. - DIRECTOR

Prior to founding his own consulting  practice in 1997 in  international  trade,
political business intelligence and strategic communications,  Mr. Entwistle was
an Ambassador for Canada in the Caribbean  from 1993 to 1997. Mr.  Entwistle was
previously a career diplomat with the Canadian Department of Foreign Affairs and
International  Trade in a variety of embassy  positions  from 1982 to 1997,  and
served as Press Secretary and Director of  Communications  to the Prime Minister
of Canada from  1991-1993.  He is a Fellow of the  Canadian  Defence and Foreign
Affairs  Institute.  Mr. Entwistle has been a director of the Corporation  since
October 1997.

JOHN FRIEDMAN - DIRECTOR

Mr. Friedman  launched the Easton Capital Group  ("Easton") in 1993, with Easton
Capital  Corporation.  In 1999,  Easton Hunt  Capital  Partners was added to the
Group.   Prior  to  Easton,  Mr.  Friedman  was  a  founder  of  Atrium  Capital
Corporation,  which he helped  manage from  1991-1993,  and also the founder and
Managing General Partner of Security Pacific Capital Investors from 1989 through
1991. Security Pacific Capital Investors was a $200-million  private equity fund
geared  towards  expansion  financings and  recapitalizations.  Prior to joining
Security  Pacific,  Mr.  Friedman  was a Managing  Director  and Partner at E.M.
Warburg,  Pincus & Co.,  Inc.,  where  he  spent  eight  and a half  years  from
1981-1989. Prior thereto, he worked at Shearson Loeb Rhoades and was an attorney
with  Sullivan and Cromwell  from 1978 through  1980.  He holds a JD degree from
Yale Law School and a BA degree from Yale College. Mr. Friedman currently serves
on the  Boards  of Conor  Medsystems,  Renovis,  Acorda  Therapeutics,  Comverse
Technology,  Trellis Bioscience, YM BioSciences Inc., Assistive Technology,  and
ModelWire,  Inc.,  and is on the  President's  Council at the Cold Spring Harbor
Laboratory.  Mr.  Friedman  has been a director of the  Corporation  since April
2004.

                                      -56-
<PAGE>

HENRY FRIESEN, O.C., M.D., F.R.S.C. - DIRECTOR

Dr. Friesen is the Chair, Genome Canada, a non-profit organization that supports
national  genomics to benefit Canadian  science and industry.  From 1991 to 2000
Dr. Friesen was President of the Medical Research  Council of Canada,  now known
as the Canadian  Institutes  of Health  Research.  Dr.  Friesen is noted for his
discoveries  about the human hormone  prolactin and as Head of the Department of
Physiology and Professor of Medicine at the University of Manitoba.  Dr. Friesen
is a Fellow of the Royal  Society of Canada,  a Companion of the Order of Canada
and also sits on the Board of directors of Aventis  Pasteur  Canada and Spectral
Diagnostics  Inc.  Dr.  Friesen  has been a director  of the  Corporation  since
November 2001.

PAUL M. KEANE,  M.D.,  F.R.C.P.C.,  F.A.C.P.,  F.R.C.  PATH - DIRECTOR,  MEDICAL
AFFAIRS

Dr. Keane has been an officer of the  Corporation  since January 1996. Dr. Keane
was Director of Clinical  Research at Miles Canada Inc.  (now Bayer Canada) from
1989 to 1995,  prior to which he was  Professor  of  Medicine at  University  of
Calgary and  Professor  of  Pathology  at  McMaster  University.  Dr.  Keane has
authored numerous scientific  publications in peer review journals, has acted as
a reviewer of research  proposals for the Medical Research Council of Canada and
has acted in an editorial capacity for a number of scientific journals.

VINCENT SALVATORI, PH.D. - EXECUTIVE VICE PRESIDENT

Dr.  Salvatori has been an officer of the  Corporation  since December 2002. Dr.
Salvatori is an experienced  drug  development  executive  with an  accomplished
background in the pharmaceutical and biotechnology industry. He has more than 20
years of experience in all aspects of drug development, corporate operations and
external collaborations. Dr. Salvatori most recently held the position of Senior
Vice  President of Clinical  Operations for Bioniche Life Sciences Inc. from May
1998 to July 2002. He was  previously at StressGen  Biotechnologies  Corporation
from January 1995 to April 1998 where he held the  positions of Chief  Operating
Officer and Vice President of Research and Development,  subsequently  appointed
to Senior Vice President.  In this capacity,  Dr.  Salvatori was responsible for
corporate operations,  strategic management and clinical/regulatory development.
Prior to joining  StressGen,  Dr.  Salvatori was the Senior  Director of Program
Management  at QLT  PhotoTherapeutics  Inc.  from June 1990 to December 1994 and
held various positions at Boehringer  Ingelheim (Canada) Ltd. from April 1982 to
June 1990.

LEN VERNON, B.SC., C.A. - DIRECTOR, FINANCE AND ADMINISTRATION

Mr. Vernon earned a B.Sc. in 1968 and was awarded his C.A. in 1972 with Clarkson
Gordon & Co. (now Ernst & Young). He has held senior financial  positions with a
number of  organizations  both  public  and  private.  Prior to joining YM as an
officer in July 1997,  Mr.  Vernon was an  independent  consultant  working with
senior   management  in  a  variety  of   industries.   Prior  to  1992  he  was
Vice-president, Finance and Administration of Unitel Inc. (now Allstream Inc.) a
major Canadian telecommunications company.

                                      -57-
<PAGE>

JULIUS VIDA, PH.D., M.B.A. - DIRECTOR

Dr.  Vida  has  been  the   President  of  Vida   International   Pharmaceutical
Consultants,   a  consulting  firm  advising  pharmaceutical  and  biotechnology
companies,  since 1993.  Previously  Dr.  Vida was  Director  of  Licensing  and
subsequently  Vice  President,  Business  Development,  Licensing  and Strategic
Planning at Bristol-Myers Squibb, from 1975 to 1993. Dr. Vida is a director of a
number of biotechnology  firms including  Medarex,  Inc., Orphan Medical,  Inc.,
ALS, Inc., FibroGen,  Inc.,  OsteoScreen,  Inc., Spectrum  Pharmaceuticals Inc.,
Albachem,  LTD. (UK) and SWITCH Biotech AG, Inc. Dr. Vida has been a director of
the Corporation since September 2001.

GILBERT WENZEL, PH.D. - DIRECTOR

Dr. Wenzel is currently President and Chief Executive Officer of Quisisana AG, a
business  development  firm  focused  on  pharmaceuticals.   Prior  to  founding
Quisisana  in  January  2003,  Dr.  Wenzel  joined   Novartis  Group,  a  global
pharmaceutical  manufacturer,  in  November  2000  where  he  served  as Head of
Strategic  Planning and a Member of its Executive  Committee until January 2003.
Prior to joining  Novartis  in November  2000,  Dr.  Wenzel  spent 15 years with
McKinsey & Co., an international management consulting firm, and was a member of
the  European  Leadership  Group  of  its  Pharma/Healthcare  Sector  and of the
European New Venture Initiative. From 1981 to 1985, Dr. Wenzel was at Hoechst AG
in Germany and developed  global  strategies  for generics and  over-the-counter
medicines. Dr. Wenzel has been a director of the Corporation since March 2001.

TRYON M. WILLIAMS, B.SC. (MATH) - DIRECTOR

Mr.  Williams is the Chairman,  CEO and director of CellStop  Systems,  Inc., an
automobile electronics manufacturer, and Chief Executive Officer and director of
Bingo.com,  Inc., an internet technology  company.  Since 1993, Mr. Williams has
been Adjunct  Professor,  Sauder School of Business,  The  University of British
Columbia. Mr. Williams is also a director of Infowave Software, Inc. and several
other private corporations.  Mr. Williams has been a director of the Corporation
since November 1995.

CLINICAL AND SCIENTIFIC ADVISORY BOARD

The  Corporation  maintains a Clinical and  Scientific  Advisory  Board ("CSAB")
composed of  internationally  recognized  clinicians and scientists.  Management
meets with members of the CSAB periodically to review operational aspects of the
Corporation's  clinical and scientific  programme and make  recommendations with
regard to the perceived  trends and  direction of medical and  biopharmaceutical
technologies  and the industry  generally.  Each member of the CSAB has signed a
confidentiality  agreement with the Corporation.  CSAB members receive honoraria
paid by the Corporation of varying amounts per year. The current  composition of
the CSAB is as follows:

                                      -58-
<PAGE>

LORNE J. BRANDES, B.SC., M.D., C.R.C.P.C.

Professor, Departments of Medicine and Pharmacology/Therapeutics,  University of
Manitoba, Winnipeg, Manitoba, Canada; Section of Hematology/Oncology, CancerCare
Manitoba,  Winnipeg,  Manitoba,  Canada.  Dr.  Brandes has been an advisor since
November 2000.

ROBERT S. KERBEL, PH.D.

Professor  of Medical  Biophysics,  University  of  Toronto,  Toronto,  Ontario,
Canada;  Canada Research Chair in Molecular  Medicine;  Director,  Molecular and
Cell Biology  Research,  Sunnybrook and Women's  College Health Science  Centre,
Toronto, Ontario, Canada. Dr. Kerbel has been an advisor since April 1999.

AGUSTIN LAGE DAVILA M.D. PH.D.

Director, Centro de Inmunologia Molecular,  Havana, Cuba; Professor of Medicine,
University  of Havana.  Dr. Davila was a director of the  Corporation  until his
resignation on May 28, 2002 at which time he became an advisor.

DEREK RAGHAVAN, M.D., PH.D., F.A.C.P., F.R.A.C.P.

Professor of Medicine and Urology,  Chief,  Division of Oncology,  University of
Southern  California (USC), Los Angeles,  California,  United States;  Associate
Director for Clinical  Research at  USC/Norris  Comprehensive  Cancer Center and
Hospital,  Los Angeles,  California,  United States. Dr. Raghavan was an advisor
since October 2000.

RAYMOND M. REILLY, PH.D.

Associate Professor, Departments of Medical Imaging and Pharmaceutical Sciences,
University of Toronto, Toronto, Ontario, Canada; Associate Scientist, Department
of Medical Imaging,  University Health Network,  Toronto,  Ontario,  Canada. Dr.
Reilly was an advisor since December 1998.

NICLAS STIERNHOLM, PHD.

Chief Executive Officer,  Trillium Therapeutics Inc., Toronto,  Ontario, Canada.
Dr.  Stiernholm  was an executive  vice-president  of the  Corporation  until he
resigned in December 2002 at which time he became an advisor.

MARK VINCENT, M.D., M.R.C.P., F.R.C.P.C.

Associate  Professor,  Department of Oncology,  University  of Western  Ontario,
London,  Ontario,  Canada;  Staff Medical  Oncologist,  London  Regional  Cancer
Centre, London,  Ontario,  Canada. Dr. Vincent has been an advisor since October
1998.

                                      -59-
<PAGE>

DANIEL D. VON HOFF, M.D., F.A.C.P.

Professor of  Medicine,  University  of Arizona and  Executive  Vice  President,
Translational  Genomics  Research  Institute  and Director,  Translational  Drug
Development Program,  Tucson,  Arizona,  United States. Dr. Von Hoff has been an
advisor since July 2001.

BOARD PRACTICES

All  directors  hold  office  until  the  next  annual  general  meeting  of our
shareholders  or until they resign or are removed from office in accordance with
the Corporation's memorandum of association and articles of association.

No director has a service contract with us. Each director has formally consented
to serve as a director and signed a confidentially agreement with us.

From time to time the Board  appoints,  and  empowers,  committees  to carry out
specific  functions on behalf of the Board. The following  describes the current
committees of the Board and their members:

AUDIT COMMITTEE

The members of the  Corporation's  Audit Committee are Thomas I.A. Allen,  Henry
Friesen, and Tryon M. Williams.

The principal  functions of the Audit  Committee are to appoint,  compensate and
oversee  the  external  auditors;  to review and  approve  annual and  quarterly
financial  statements and all legally required  continuous and public disclosure
documents containing financial information about the Corporation;  to review and
approve  the  adequacy  of  internal  accounting  controls  and the  quality  of
financial  reporting  procedures and systems;  to examine the  presentation  and
impact of key financial and other  significant risks that may be material to the
Corporation's  financial  reporting;  and to review and  approve  the nature and
scope of the  annual  audit and review the  results  of the  external  auditor's
examination.  The Audit  Committee  reports its  findings  with  respect to such
matters to the Board of directors.

A new  mandate  was put in  place  for  the  Audit  Committee  by the  Board  of
Directors. A copy of that mandate is set out at Schedule "A".



CORPORATE GOVERNANCE AND NOMINATING COMMITTEE

The members of the Corporation's  Corporate  Governance and Nominating Committee
are Thomas I.A. Allen, Julius Vida and Tryon M. Williams.

The mandate of the Corporation's  Corporate  Governance and Nominating Committee
is to develop and monitor the  Corporation's  system of corporate  governance in
the context of the Toronto Stock Exchange  Report on Corporate  Governance,  and
the rules and regulations  promulgated by the Ontario Securities  Commission and
the Securities and Exchange  Commission,  including reviewing the mandate of the
Board of directors and its committees; periodically reviewing and evaluating the
performance of all directors, committees and the Board as a whole; selecting new
candidates  for  Board  memberships,  making  recommendations  to the  Board and
ensuring that appropriate orientation and education programmes are available for
new Board  members;  establishing  procedures  to ensure that the Board may meet
independent  of Management  and reviewing  annually the membership and chairs of
all committees.

                                      -60-
<PAGE>

COMPENSATION COMMITTEE

The members of the Corporation's  Compensation  Committee are Thomas I.A. Allen,
Tryon M. Williams and Mark Entwistle.

The  mandate of the  Compensation  Committee  is to  establish  and  monitor the
Corporation's  policies for  attracting,  retaining,  developing  and motivating
senior  employees.  The  compensation  policies  are  designed  to  support  the
Corporation's  strategic  objectives,   ensure  that  incentive  programmes  are
designed to motivate senior managers to achieve or exceed  corporate  objectives
and to  enhance  shareholder  value  and to  ensure  that  there  is  reasonable
consistency in the application of the compensation  policies.  The Corporation's
responsibilities  include  reviewing  annually  the  performance  of  the  Chief
Executive  Officer (or more frequently if deemed  necessary by the  Compensation
Committee),   setting  the  Chief  Executive  Officer's   compensation  and,  in
consultation  with  the  Chief  Executive  Officer,  establishing  his  personal
objectives,   reviewing  the  performance  and  approving  the  compensation  of
executive  officers  of the  Corporation  on  the  recommendation  of the  Chief
Executive Officer, establishing incentive compensation programmes and monitoring
their  effectiveness and developing and documenting the compensation  policy and
philosophy of the Corporation for approval by the Board of directors.

                                LEGAL PROCEEDINGS

The  Corporation  is not a party to any material  pending  legal or  arbitration
proceedings and is not aware of any material  contemplated  legal proceedings to
which we may be a party.


                          TRANSFER AGENT AND REGISTRAR

The registrar and transfer agent for the  Corporation's  common shares in Canada
is CIBC Mellon Trust Company at its principal offices in Toronto,  Canada and in
the United States is Mellon  Investor  Services LLC at its principal  offices in
Ridgefield Park, New Jersey.


                               MATERIAL CONTRACTS

Except for contracts  entered into in the ordinary course of business,  the only
material  contracts which the Corporation  entered into prior to the date hereof
as follows:

                                      -61-
<PAGE>

     (a)  Stock Option Plan dated  November 22, 1996, as amended on November 26,
          2003. See "Share Ownership of Directors and Executive Officers - Stock
          Option Plan".

     (b)  Clinical Research  Services  Agreement between YM BioSciences Inc. and
          Pharm-Olam  International,  Ltd.  ("POI"),  dated March 10, 2004.  The
          Corporation  has contracted  with POI to do a Phase III clinical trial
          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 next few
          years depending on the recruitment of patients.

     (c)  Development  and License  Agreement  between CIMYM Inc.,  CIMAB SA and
          Oncoscience  AG,  dated  November 5, 2003.  See  "Business - Licensing
          Arrangements - Out-Licensing - TheraCIM".

     (d)  License  Agreement  between CIMYM Inc. and CIMAB SA, January 24, 2001.
          See "Business - Licensing  Arrangements  - In-Licensing - Licenses for
          TheraCIM, RadioTheraCIM, TGFa and HER-1".

     (e)  License Agreement between YM BioSciences Inc.  (formerly known as York
          Medical  Inc.),   University  of  Manitoba  and  The  Manitoba  Cancer
          Treatment  and Research  Foundation,  carrying on its  undertaking  as
          Cancercare Manitoba, dated November 2, 2000. See "Business - Licensing
          Arrangements - In-Licensing - License for Tesmilifene".

     (f)  License Agreement between YM BioSciences Inc.  (formerly known as York
          Medical Inc.) and Biostar Inc. dated October 11, 2000. See "Business -
          Licensing Arrangements - In-Licensing - License for Norelin".

     (g)  License  Agreement  between YM  BioSciences  Inc.  (formerly  known as
          Yorkton Medical Inc.) and CIMAB SA, dated May 3, 1995. See "Business -
          Licensing   Arrangements  -  In-Licensing  -  Licenses  for  TheraCIM,
          RadioTheraCIM, TGFa and HER-1".

     (h)  Licensing  Bonus Pool Plan dated March 31, 2004. See  "Compensation  -
          Licensing Bonus Pool".

     (i)  Lease Amending and Extension Agreement between 1411029 Ontario Limited
          and YM BioSciences Inc. dated January 15, 2003. See "Property,  Plants
          and Equipment - Facilities".

     (j)  License,  Development,  Manufacturing  and Supply Agreement between YM
          BioSciences Inc., CIMYM,  Inc.,  Tarcanta,  Inc.,  Tarcanta,  Ltd. and
          CIMAB  dated July 13,  2004.  "Business  -  Licensing  Arrangements  -
          Out-Licensing".

                                      -62-
<PAGE>

 In the ordinary course of our business,  the  Corporation  enters into licenses
 for products which we develop,  however,  because of the  immateriality of such
 licenses to the  Corporation,  they are not  referenced  here. The licenses for
 these products are more fully described in this annual  information  form under
 the heading "Business Overview - Licensing Arrangements".


                             ADDITIONAL INFORMATION

Additional  information,  including  directors'  remuneration and  indebtedness,
principal  holders  of  the  Corporation's   securities,   options  to  purchase
securities  and  interests  of  insiders in  material  transactions,  if any, is
contained in the Corporation's  information  circular for its most recent annual
meeting of  shareholders  that  involved  the  election  of  directors  and that
additional  financial  information is provided in the Corporation's  comparative
financial statements for its most recently completed year.

When securities of the Corporation are in the course of distribution pursuant to
a short form  prospectus,  or when a preliminary  short form prospectus has been
filed in respect of the Corporation's  securities,  the Corporation will provide
the  following  documents to any person or company upon request to the Corporate
Secretary of the Corporation:

     1.   a copy of this Annual  Information  Form,  together with a copy of any
          document  or the  pertinent  pages  of any  document  incorporated  by
          reference in this Annual Information Form;

     2.   a copy of the Financial  Statements of the Corporation,  together with
          the accompanying  auditors' report as well as copies of any subsequent
          interim financial statements that the Corporation has filed;

     3.   a copy of the  Corporation's  information  circular  in respect of its
          most recent annual meeting of shareholders  that involved the election
          of  directors or one copy of annual  filing  prepared in stead of that
          information circular, as appropriate; and

     4.   a copy of any other  document that is  incorporated  by reference into
          the preliminary short form prospectus or the short form prospectus.

At any other time, a copy of the documents  referred to in  subsections  1, 2, 3
and 4 above may be obtained  from the  Corporate  Secretary of the  Corporation,
however,  a reasonable  fee may be charged if the request is made by a person or
company who is not an a shareholder of the Corporation.

All requests for the above-mentioned documents must be addressed to:

YM BioSciences Inc.
5045 Orbitor Drive
Building 11, Suite 400
Mississauga, Ontario
L4W 4Y4

                                      -63-
<PAGE>


Attention:      Secretary
Telephone:      (905) 629-9761
Fax:            (905) 629-4959
e-mail:         ir@ymbiosciences.com
Web Page:       www. ymbiosciences.com

                                      -64-
<PAGE>



                                  Schedule "A"

                               YM BIOSCIENCES INC.

                             AUDIT COMMITTEE MANDATE

1.   General

The board of directors (the "Board") of YM BioSciences Inc. (the  "Corporation")
has delegated the  responsibilities,  authorities and duties  described below to
the audit committee (the "Audit  Committee").  For the purpose of these terms of
reference,  the  term  "Corporation"  shall  include  the  Corporation  and  its
subsidiaries.

The Audit Committee shall be directly  responsible for overseeing the accounting
and financial reporting processes of the Corporation and audits of the financial
statements  of the  Corporation,  and the  Audit  Committee  shall  be  directly
responsible for the appointment,  compensation, and oversight of the work of any
registered external auditor employed by the Corporation (including resolution of
disagreements  between  management of the Corporation  and the external  auditor
regarding financial  reporting) for the purpose of preparing or issuing an audit
report or related work. In so doing,  the Audit  Committee  will comply with all
applicable Canadian and United States securities laws, rules and guidelines, any
applicable  stock exchange  requirements or guidelines and any other  applicable
regulatory rules.

2.   Members

The Audit Committee shall be composed of a minimum of three members.  Members of
the Audit  Committee  shall be appointed  by the Board.  Each member shall serve
until such  member's  successor is appointed,  unless that member  resigns or is
removed by the Board or  otherwise  ceases to be a director of the  Corporation.
The Board shall fill any vacancy if the membership of the Committee is less than
three  directors.  The Chair of the Committee may be designated by the Board or,
if it does not do so, the members of the  Committee may elect a Chair by vote of
a majority of the full Committee membership.

All members of the Audit  Committee  must  satisfy the  independence,  financial
literacy and experience  requirements  of applicable  Canadian and United States
securities   laws,   rules  and  guidelines,   any  applicable   stock  exchange
requirements  or  guidelines  and any  other  applicable  regulatory  rules.  In
particular:

     (a)  each member shall be "independent"  and "financially  literate" within
          the meaning of Multilateral Instrument 52-110 "Audit Committees";

     (b)  at least one  member  must be  "financially  sophisticated"  under the
          rules of the American Stock Exchange; and

                                      -65-
<PAGE>

     (c)  at least one  member  must be an "audit  committee  financial  expert"
          within the  meaning of that term  under the United  States  Securities
          Exchange Act of 1934, as amended,  and the rules adopted by the United
          States Securities and Exchange Commission thereunder.

3.   Meetings

The Audit  Committee  shall  meet at least  quarterly  at such times and at such
locations as the Chair of the Audit  Committee  shall  determine,  provided that
meetings  shall  be  scheduled  so  as  to  permit  the  timely  review  of  the
Corporation's  quarterly and annual financial  statements and related management
discussion  and analysis.  The external  auditor or any two members of the Audit
Committee  may also request a meeting of the Audit  Committee.  The Chair of the
Audit Committee shall hold in camera  sessions of the Audit  Committee,  without
management present, at every meeting.

The Audit Committee  shall submit the minutes of all meetings to the Board,  and
when requested to, shall discuss the matters  discussed at each Audit  Committee
meeting with the Board. NTD: Confirm how much procedural detail to include.

4.   Committee Charter

The Audit  Committee  shall have a written charter that sets out its mandate and
responsibilities  and the Audit Committee shall review and reassess the adequacy
of such charter at least  annually or otherwise,  as it deems  appropriate,  and
propose recommended changes to the Board.

5.   Duties of the Audit Committee:

The Audit Committee shall have the following duties:

Financial Information and Reporting

1.   The Audit Committee shall review with management and the external  auditor,
     and recommend to the Board for approval,  the annual and interim  financial
     statements of the Corporation and related  financial  reporting,  including
     management's discussion and analysis and earnings press releases.

2.   The Audit Committee shall review with management and the external  auditor,
     and  recommend to the Board for approval,  any financial  statements of the
     Corporation  which have not previously been approved by the Board and which
     are to be included in a prospectus or other public  disclosure  document of
     the Corporation.

3.   The Audit Committee shall consider and be satisfied that adequate  policies
     and procedures are in place for the review of the Corporation's  disclosure
     of  financial  information  extracted  or  derived  from the  Corporation's
     financial  statements  (other than disclosure  referred to in clause (a)(i)
     above), and periodically assess the adequacy of such procedures.

Internal Controls

4.   The  Audit  Committee  shall  review,  as  appropriate,  the  Corporation's
     internal system of audit controls and the results of internal audits.

                                      -66-
<PAGE>

5.       The  Audit  Committee  shall  establish  procedures  for  the  receipt,
         retention and treatment of any complaint regarding accounting, internal
         accounting   controls  or  auditing  matters;   and  the  confidential,
         anonymous  submissions by employees of concerns regarding  questionable
         accounting or auditing matters.

External Auditors

6.   The Audit Committee  shall be directly  responsible for overseeing the work
     of the external  auditor engaged for the purpose of preparing or issuing an
     auditor's report or performing  other audit,  review or attest services for
     the  Corporation,   including  the  resolution  of  disagreements   between
     management and the external auditor regarding financial reporting.

7.   The external  auditor shall report  directly to the Audit Committee and the
     Audit Committee should have a clear understanding with the external auditor
     that  such  external   auditor  must  maintain  an  open  and   transparent
     relationship with the Audit Committee, and that the ultimate accountability
     of the external auditor is to the shareholders of the Corporation.

8.   The Audit Committee shall recommend to the Board the external auditor to be
     nominated  for the purpose of preparing  or issuing an auditor's  report or
     performing other audit, review or attest services for the Corporation;  and
     the compensation of the external auditor.

9.   The Audit  Committee  will  ensure the  rotation  of  partners on the audit
     engagement team of the external auditor in accordance with applicable law.

10.  The Audit  Committee  shall meet with the  external  auditor,  as the Audit
     Committee  may deem  appropriate,  to consider  any matter  which the Audit
     Committee or external  auditor  believes should be brought to the attention
     of the Board or the shareholders of the Corporation.

11.  The Audit  Committee  shall meet with the  external  auditor,  as the Audit
     Committee  may deem  appropriate,  to review and  discuss a report from the
     external auditor at least quarterly regarding:

     (a)  all critical accounting policies and practices to be used

     (b)  all  alternative   treatments  within  generally  accepted  accounting
          principles  for policies and practices  related to material items that
          have been discussed with  management,  including the  ramifications of
          the  use of  such  alternative  disclosures  and  treatments,  and the
          treatment preferred by the external auditor, and

     (c)  other material written communications between the external auditor and
          management,  such as any  management  letter or schedule of unadjusted
          differences.

                                      -67-
<PAGE>


Pre Approval of Non-Audit Services

12.  The Audit Committee shall pre-approve all non-audit services to be provided
     to the Corporation or its subsidiary entities by the Corporation's external
     auditor.

Complaints procedure

13.  The Audit Committee shall establish  procedures for the receipt,  retention
     and  treatment  of  complaints   received  by  the  Corporation   regarding
     accounting,  internal  accounting  controls,  or auditing matters;  and the
     confidential,  anonymous  submission  by  employees of the  Corporation  of
     concerns regarding questionable accounting or auditing matters.

14.  The Audit  Committee  shall  review and  approve the  Corporation's  hiring
     policies regarding partners, employees and former partners and employees of
     the present and former external auditor of the Corporation.

Reporting

15.  The Audit  Committee  shall report  regularly to the Board about any issues
     that arise with respect to the quality or  integrity  of the  Corporation's
     financial statements, the Corporation's compliance with legal or regulatory
     requirements,  the performance and independence of the external auditor, or
     the internal audit function.

6.   Authority to engage independent counsel and advisors

The Audit  Committee has the authority to engage  independent  counsel and other
advisors as it determines  necessary to carry out its duties, to set and pay the
compensation  for  any  advisors  employed  by  the  audit  committee,   and  to
communicate directly with the internal and external auditors.

The Corporation shall provide  appropriate  funding,  as determined by the Audit
Committee, in its capacity as a committee of the board of directors, for payment
of  compensation  (a) to the  external  auditors  employed by the issuer for the
purpose  of  rendering  or  issuing  an audit  report,  and (b) to any  advisers
employed by the Audit Committee.

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