<Page>





















                            ID BIOMEDICAL CORPORATION

                             ANNUAL INFORMATION FORM
                                  FOR THE YEAR
                             ENDED DECEMBER 31, 2004














                           Dated as of March 25, 2005


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                                                           TABLE OF CONTENTS



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<S>                                                                                                    <C>
TRADEMARKS AND TRADE NAMES...............................................................................5

THE COMPANY..............................................................................................6

BUSINESS OF ID BIOMEDICAL - GENERAL......................................................................7

VACCINES.................................................................................................8
   Marketed Products.....................................................................................9
         Fluviral........................................................................................9
         NeisVac-C......................................................................................10
   Clinical Development Programs........................................................................11
         Influenza Vaccines.............................................................................11
            Fluviral for the US market..................................................................11
            FluINsure, a Nasally-administered Influenza Vaccine.........................................11
            Cell Culture-Derived Influenza Vaccine......................................................14
            Preservative-Free Influenza Vaccine.........................................................14
         Subunit Vaccines...............................................................................16
         Development Programs...........................................................................16
            Group A Streptococcus (GrAS) StreptAvax(TM)Vaccine..........................................17
            Pneumococcal Group-Common Vaccine (PGCvax)..................................................20
            Adult Studies...............................................................................21
            Studies in the Elderly......................................................................21
            Children (Toddler) Study....................................................................22
            Children (infant) study.....................................................................23
         Adjuvant Technologies..........................................................................23
            Proteosome Technology.......................................................................23
            Emulsion-Based Technologies.................................................................25
         Preclinical/Research Programs..................................................................25
         Intramuscular Vaccines.........................................................................25
            Meningococcal Protein.......................................................................25
            Group B Streptococcal Vaccine...............................................................26
            Other Protein-based Subunit Vaccines........................................................26
         Intranasal Vaccines............................................................................26
            Respiratory Syncitial Virus (RSV)...........................................................26
            Measles.....................................................................................27
            Severe Acute Respiratory Syndrome Coronavirus (SARS)........................................28
            Group A Streptococcus.......................................................................28
            Bordetella Pertussis........................................................................28
            Allergy.....................................................................................28
            Autoimmune and Neurodegenerative Diseases...................................................29
         Vaccines against biological warfare agents.....................................................30
            Plague......................................................................................30
            Anthrax.....................................................................................31
   Business Strategy....................................................................................31
   Clinical and Regulatory Requirements.................................................................32
         Enhanced Surveillance for ORS in Canada (2000-2004)............................................34
         Clinical Programs..............................................................................35
         Preclinical/Research Programs..................................................................35
   Competition for Marketed Products and Clinical Programs..............................................35
         Influenza Vaccines.............................................................................35
         NeisVac-C......................................................................................37
         Group A Streptococcal (GrAS) Vaccines..........................................................37
         Pneumococcal Vaccines..........................................................................37
   Marketing, Distribution and Supply Agreements........................................................37
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<S>                                                                                                    <C>
         Fluviral.......................................................................................38
   US Marketing, Distribution and Product Purchase Agreements...........................................38
         NeisVac-C......................................................................................39
            Baxter Corporation ("Baxter")...............................................................39
            Canadian Government Contracts...............................................................39
   License and Acquisition Agreements...................................................................40
         Shire Purchase Agreement.......................................................................40
            Consideration...............................................................................40
         Intellivax International, Inc..................................................................41
         Walter Reed Army Institute of Research.........................................................41
         University of California, Los Angeles (UCLA)...................................................42
         University of Tennessee Research Corporation (UTRC)............................................42
         United States Army Medical Research and Material Command.......................................43
         Dynport Vaccine Company, LLC...................................................................43
         National Research Council of Canada............................................................43
         National Institute for Biological Standards and Controls ("NIBSC").............................43
   Loan Facility Agreements.............................................................................44
         Shire LLC Credit Facility......................................................................44
         Second City Capital Partners LLC ("Second City") Loan Agreement................................44
         Innovatech.....................................................................................44
         Government Loan................................................................................45
   Other Agreements.....................................................................................45
         Technology Partnerships Canada Agreements......................................................45
            IDBQ TPC....................................................................................45
            ID Biomedical TPC...........................................................................45
         Alexandria Real Estate Equities, Inc. (ARE)....................................................46
   Patent Protection....................................................................................46
         Patents and Patent Applications................................................................46
   Legal Proceedings....................................................................................47
         Innovatech.....................................................................................47

GENE-BASED TESTING......................................................................................48
         Cycling Probe(TM)Technology....................................................................48
         Product Development Program....................................................................48
         Business Strategy..............................................................................48
         License and Acquisition Agreements.............................................................48
            Applied Biosystems..........................................................................48
            Takara Biomedical Group.....................................................................49
         Patents and Other Intellectual Property........................................................49

FACILITIES AND HUMAN RESOURCES..........................................................................49
         1630 Waterfront Center 200 Burrard Street, Vancouver, British Columbia.........................49
         2323, Du Parc Technologique Blvd, Quebec City, Quebec..........................................49
         525 Cartier Blvd West, Laval, Quebec...........................................................50
         7150 Frederick Banting, Suite 200 Ville St. Laurent, Quebec....................................50
         Institut national de la recherche scientifique (INRS) - 531 des Prairies Blvd., Laval, Quebec..50
         19204 North Creek Parkway, Bothell, Washington.................................................50
         30 Bearfoot Road, Northborough, Massachusetts..................................................50
         6996 Columbia Gateway Drive, Suite 103 Columbia, Maryland......................................50

AUDITORS, TRANSFER AGENT AND REGISTRAR..................................................................51

DESCRIPTION OF SHARE CAPITAL............................................................................51
         Common Shares..................................................................................51
         Preference Shares..............................................................................51
         Shareholder Rights Plan........................................................................51
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<S>                                                                                                    <C>
         Share Purchase Warrants........................................................................52

MARKET FOR SECURITIES...................................................................................52
         Trading Price and Volume on the TSX............................................................52

DIRECTORS AND OFFICERS..................................................................................52

Cease Trade Orders, Bankruptcies, Penalties or Sanctions................................................56

COMMITTEES OF THE BOARD OF DIRECTORS....................................................................56
         Charter of the Audit Committee.................................................................57
            Limitation..................................................................................59
         Corporate Governance Committee.................................................................59
         Compensation Committee.........................................................................59

RISK FACTORS............................................................................................59
   Risks Related To Our Financial Condition.............................................................60
   Risks Related to Marketed Products...................................................................62
   Risks Related To the Development and Commercialization of Our Products...............................63

   Risks Related To Owning Our Shares...................................................................74

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS...............................................74

DIVIDEND POLICY.........................................................................................74

OFF-BALANCE SHEET TRANSACTIONS AND CONTRACTUAL COMMITMENTS..............................................75

PRINCIPAL ACCOUNTANT FEES AND SERVICES..................................................................75

INTERNAL CONTROLS - REPORT FROM MANAGEMENT..............................................................75

CODE OF ETHICS..........................................................................................76

CRITICAL ACCOUNTING ESTIMATES...........................................................................76

ADDITIONAL INFORMATION..................................................................................76

CAUTION REGARDING FORWARD-LOOKING STATEMENTS............................................................77

GLOSSARY OF TECHNICAL TERMS.............................................................................79

EXHIBIT 1...............................................................................................83
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                           TRADEMARKS AND TRADE NAMES




Throughout this Annual Information Form:

Fluviral, StreptAvax, FluINsure, PGCvax, Proteosome, Protollin, Cycling Probe
Technology, NspA, and Sip are trade names and trademarks owned by ID Biomedical
Corporation.

NeisVac-C is a trademark owned by Baxter  International,  Inc. and is used by ID
Biomedical under license in Canada.

FluMist, Adjumer, Fluzone, Mutagrip, Vaxigrip, Fluarix, Influvac, Fluvirin,
Begrivac, Fluad, Inflexal, Menjugate, Meningitec, Menactra, Pneumovax23,
Prevnar, Pentacel and other mentioned brands are trade names and trademarks
owned by their respective owners.

The various brands, trademarks and trade names may or may not be designated with
symbols such as(R), or(TM).


                                      -5-
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                                   THE COMPANY

ID Biomedical Corporation (IDB) was incorporated under the COMPANY ACT (British
Columbia) on March 4, 1991. IDB has five wholly owned subsidiaries: ID
Biomedical Corporation of Vancouver (IDBV); ID Biomedical Corporation of
Washington (IDBW); ID Biomedical Corporation of Quebec (IDBQ); ID Biomedical
Corporation of Maryland (IDBM) and ID Biomedical Corporation of Northborough
(IDBN). References herein to the "Company" may refer individually or
collectively to ID Biomedical Corporation, IDBV, IDBW, IDBQ, IDBM and/or IDBN.

IDBV was incorporated under the CANADA BUSINESS CORPORATIONS ACT on December 16,
2004. The primary focus of IDBV is to own and manage the Company's Quebec based
real estate properties. IDB holds 100% of the voting securities of IDBV.

IDBW was incorporated under the laws of the State of Delaware on March 9, 1993
under the name of ID Vaccine Corporation. ID Vaccine Corporation changed its
name to ID Biomedical Corporation of Washington on December 29, 2000. The
primary focus of IDBW is the development of the StreptAvax vaccine, the
Company's vaccine against Group A Streptococcus; the scale-up of the Company's
Proteosome protein adjuvant/delivery technology; the management of the Company's
Good Manufacturing Practices (GMP) pilot manufacturing facility in Bothell,
Washington; the production of the plague vaccine antigen; and the development of
other biodefense related vaccine programs. IDB holds 100% of the outstanding
voting securities of IDBW.

In May 2001, IDB acquired Montreal, Quebec based IDBQ and its Baltimore,
Maryland subsidiary, IDBM (see "Vaccines - License and Acquisition Agreements").

IDBQ was incorporated under the CANADA BUSINESS CORPORATIONS ACT on June 13,
1991 under the name of Dialab Consultants en Services Diagnostiques Inc. and, on
July 18, 1997, changed its name to Intellivax International, Inc. Intellivax
International, Inc. subsequently changed its name to ID Biomedical Corporation
of Quebec on April 15, 2002. The primary focus of IDBQ is the development of the
Company's FluINsure intranasal influenza vaccine; the research and development
of the Proteosome protein adjuvant/delivery technology; and the research and
preclinical development of respiratory vaccines based on the Proteosome platform
technology. IDBV holds 100% of the outstanding voting securities of IDBQ. IDBQ
holds 100% of the outstanding voting securities of IDBM.

On September 9, 2004, IDB completed a transaction by which it acquired the
vaccine assets of Shire Pharmaceuticals Group plc, ("Shire"), with facilities
located in Quebec City and Laval, Quebec (see "Vaccines - License and
Acquisition Agreements"). The principal subsidiary holding the Shire vaccine
assets was Shire BioChem Inc. The real property acquired in this transaction was
transferred to IDBV and all other assets were assigned to IDBQ, with the
exception of intellectual property, which was assigned to IDB. Most of the
employees have become employees of IDBQ. Since this acquisition, the focus of ID
Biomedical and IDBQ has been expanded to include the commercial operations
associated with the Company's injectable influenza vaccine, Fluviral, as well as
various research and development activities related to certain clinical and
preclinical development programs being developed under an agreement with
Technology Partnerships Canada (see "Other Agreements").

On September 9, 2004, the Company also acquired all issued and outstanding
shares of Shire BioChem Inc.'s wholly owned subsidiary Shire Biologics Inc.,
located in Northborough, Massachusetts. Shire Biologics Inc. was incorporated
under the laws of the State of Delaware on June 17, 1998. On September 10, 2004,
Shire Biologics Inc. changed its name to ID Biomedical Corporation of
Northborough. IDBW holds 100% of the outstanding voting securities of IDBN. The
primary focus of IDBN is managing a large-scale pilot manufacturing plant at the


                                      -6-
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Northborough site; assisting on various activities associated with obtaining US
licensure of the Company's injectable influenza vaccine, Fluviral; and
conducting certain technical aspects for the late-stage development activities
associated with some of the Company's pipeline vaccine programs, such as
StreptAvax, a vaccine against Group A Streptococcus, and PGCvax, a vaccine
against STREPTOCOCCUS PNEUMONIAE.

IDBM was incorporated under the laws of the State of Maryland on May 11, 1995
under the name of Intellivax, Inc. and subsequently changed its name to ID
Biomedical Corporation of Maryland on July 12, 2002. The primary focus of IDBM
is managing the Company's US clinical and regulatory affairs. IDBQ holds 100% of
the outstanding voting securities of IDBM.

Unless otherwise noted, all financial references in this Annual Information Form
are in Canadian dollars.

                       BUSINESS OF ID BIOMEDICAL - GENERAL

ID Biomedical Corporation ("ID Biomedical" "IDB" or the "Company") is an
integrated biotechnology company dedicated to the development of innovative
vaccine products. It operates in research, development, manufacturing, sales and
marketing from its facilities in Canada and the United States.

 ID Biomedical currently has two products marketed in Canada:

         Fluviral, an injectable influenza vaccine, licensed and sold in Canada,
         and in clinical development for potential approval to enter the US
         market; and,

         NeisVac-C, a vaccine for Meningococcal Group C disease, which is
         distributed by the Company in Canada on behalf of Baxter Corporation.

ID Biomedical is also developing vaccines targeted at prevention of different
diseases, as well as vaccines targeting biological warfare agents. The Company's
lead products in clinical development are:

         FluINsure, a non-live intranasally delivered vaccine for the prevention
         of influenza (flu), which has successfully completed several Phase II
         clinical trials and its first (non-pivotal) field efficacy study;

         StreptAvax, a subunit injectable vaccine for the prevention of diseases
         caused by Group A Streptococcus in children, which is in Phase II
         clinical development; and

         PGCvax (Pneumococcal Group Common Vaccine), a subunit injectable
         vaccine for the prevention of diseases caused by STREPTOCOCCUS
         PNEUMONIAE (pneumococcus), which is in Phase I testing in infants and
         the elderly.

The Company also has a number of research and early stage development programs
that include the possible development of intranasal vaccines for respiratory
viruses, respiratory bacteria, and bioterror agents. The Company's research and
preclinical programs also include projects for intramuscular (injectable)
vaccines against meningococcal diseases, Group B Streptococcus, and HAEMOPHILUS
INFLUENZAE.

ID Biomedical also owns the Proteosome adjuvant/delivery technology, a
proprietary technology suitable for stimulating immune responses in the
respiratory tract via nasal administration. The Proteosome technology is a
component of FluINsure and the nasally administered vaccines being developed in
our preclinical research programs.



                                      -7-
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In addition to the Company's main vaccine business, it also owns and licenses
rights to a proprietary genomics analysis system referred to as Cycling Probe
Technology ("CPT").

                                    VACCINES

Vaccination is one of the most cost-effective forms of disease control. The
market for vaccines has been steadily growing over the last several years.
Worldwide, the estimated market has grown from about US$1.6 billion in 1990 to
approximately US$6.5 billion in 2001, or about 15% annually over that time. The
industry is dominated by four companies: Sanofi Pasteur, GlaxoSmithKline, Merck
& Co., and Wyeth, Inc. (formerly American Home Products). In order to make
inroads in this industry, companies must rely on new technologies and innovative
vaccine design strategies, or mergers and acquisitions.

The influenza (flu) vaccine marketplace is important to ID Biomedical.
Currently, our largest selling product is Fluviral, an injectable influenza
vaccine marketed in Canada. The Company believes there is a potential
significant opportunity for this product in markets outside of Canada,
particularly in the United States. In addition, our most advanced product in
development is FluINsure, an intranasal influenza vaccine. Both of these
products are described in this Annual Information Form.

According to a variety of estimates, influenza accounts for approximately US$5
billion in direct medical costs and about US$12 billion in lost productivity of
infected workers each year. According to the World Health Organization (WHO),
influenza afflicts 70 - 150 million people annually and accounts for 125,000
deaths each year in North America and Europe. Relative to healthy adults, the
mortality rate of flu is believed to be higher for people over 65 years of age
and for those with chronic illnesses. In addition, the burden of disease due to
influenza in infants and pre-school age children is increasingly being
recognized. As a result young children are being added to populations advised to
receive annual influenza immunization in both Canada and the United States.

An international network of laboratories monitors the emergence and spread of
new epidemic and pandemic strains of influenza. The network was established in
1947 and now includes three WHO Collaborating Centers and approximately 120 WHO
National Laboratories. The network's objective is to detect the emergence and
spread of influenza virus changes over time (a phenomenon called "antigenic
drift") that relate to changes in the hemagglutinin (HA) surface glycoprotein.
This information is used to signal the need to update the strains contained in
the influenza vaccine as often as annually. Additionally, the US Centers for
Disease Control (CDC) supports a surveillance program for year-round influenza
isolation in six cities in China, where many pandemic and epidemic strains have
first appeared.

The WHO issues an annual recommendation in February regarding which influenza
viruses are likely to infect the population in the coming year, and thus should
be represented in the flu vaccine. In the United States, the CDC and Center for
Biologics Evaluation and Research (CBER) of the US Food and Drug Administration
(FDA) hold a joint meeting in late February to discuss the WHO recommendations,
evaluate their own data, and select influenza vaccine strains for US
manufacturers. Both the WHO and US recommendations for annual flu vaccine
production (which generally are identical), include the three strains predicted
to be the most likely to cause influenza for the upcoming season. Current
vaccines have been shown to provide 70-90% protection against influenza
infection in people under the age of 65. The CDC recommends influenza vaccines
for elderly and high-risk individuals, and recently extended its recommendation
to include those 50 and older. The CDC has also set a target to have 150 million
Americans vaccinated annually against influenza by 2010. Health Canada
recommends influenza vaccination for persons over 64 or with chronic illnesses,
and also encourages the vaccine for the general population.



                                      -8-
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The manufacture of the influenza vaccine each year requires access to the
influenza strains identified by the WHO. Wild type vaccine strains tend to grow
slowly in the laboratory and are difficult to manufacture on a large scale. To
speed up the process, genes encoding hemagglutinin (HA) and neuraminidase (NA)
from the selected strains are inserted into an egg-adapted form of influenza
virus that will grow rapidly in the laboratory. The fast-growing viruses are
then used to infect embryonated chicken eggs. After multiple replications, the
allantoic fluid of the eggs is collected, the virus is concentrated and
inactivated, and the viral proteins are partially purified. The viral proteins
are then split and the three monovalent strains are formulated as a trivalent
vaccine.

Producing influenza vaccine in chicken eggs is a time consuming task that must
be carefully managed to avoid bacterial contamination. The manufacturing season
typically runs from February through July of each year. After a manufacturer has
produced and released vaccine from production, it must still be cleared by
health agencies prior to being sold to the public. In Canada, release testing is
completed by Health Canada and in the US similar testing is done by CBER.
Obtaining product release by the appropriate governmental regulatory agency can
add weeks to the production cycle. This is important because influenza is a
seasonal business and most product must be in the hands of customers by October
or November. Delivering product early in the season can be advantageous from a
competitive perspective. Likewise, being late in delivery to distributors or to
end users can be a competitive disadvantage.

Although influenza vaccine production in eggs can be time consuming and
difficult, it is important to note that the production process is well
controlled and significant manufacturing problems relating to the worldwide
production of flu vaccine are rare. In 2004, however, Chiron Corporation
experienced significant problems with its production of annual influenza vaccine
resulting in approximately 48 million doses of vaccine being withheld from the
market. These doses were destined for the US marketplace and represented about
50% of what health officials expected to use that year in the US. As of this
Annual Information Form, the Company and others in the industry expect Chiron to
re-enter the US market in time for the 2005/06 season.

While this situation highlights the risk of flu vaccine manufacturing, this
particular instance created a potential opportunity for ID Biomedical as the US
government became keenly aware of the risks associated with having too few
licensed suppliers on the market (in 2004, for example, only two manufacturers,
Chiron and Sanofi Pasteur, were licensed to sell influenza vaccine in the US).
As a result, the US government has encouraged potential manufacturers such as
IDB, to enter the US market. While this is a positive development, if too many
additional flu vaccine suppliers enter the market, then an oversupply situation
could result in the future, which could negatively impact pricing of influenza
vaccines.

                                MARKETED PRODUCTS

FLUVIRAL

Fluviral is a conventional split-viron, inactivated flu vaccine delivered by
injection. In Canada, it is indicated for active immunization against three
strains of influenza virus, which are updated annually based on the
recommendations of regulatory agencies and the WHO. It is offered in a 10-dose
vial or in a 0.5 mL single-dose pre-filled syringe. Fluviral was first launched
in Canada in 1992.

Each year up to 7 million people get influenza in Canada, and as many as 1,500
or more of these individuals will die. Annual influenza vaccination plays an
important role in protecting individuals from influenza. In high-risk
populations (people with chronic diseases, elderly, infants), the influenza
vaccine has a substantial positive impact on health and well-being and can be
shown to



                                      -9-
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reduce rates of hospitalizations and death during the annual influenza epidemic.

The Company has a leading position in Canada and currently supplies
approximately 75% of the Canadian public flu vaccine market. Under contracts
with the Canadian government, the Company has committed to supply the Canadian
government with as many as 12 million doses in any given year through 2011. In
2004, ID Biomedical shipped approximately 8.9 million doses to the Canadian
public and private markets, which as a result of the vaccine shortage in the
United States, was more than normal. During a typical year, the Company expects
to ship between 7 and 8 million doses to the Canadian market.

Fluviral is also approved in a small number of international markets (such as
Mexico, China, Taiwan, Hungary, Argentina) but the Company has not had, and does
not expect, material sales in any of these markets or any other markets outside
of Canada, with the exception of the United States, which the Company is
targeting as a major potential future market opportunity for the Fluviral
vaccine. Fluviral has not been approved for sale in the US.

In addition to supplying flu vaccine on an annual basis, the Company has also
entered into an agreement with the Canadian government to supply flu vaccine in
the event of a pandemic (see "Marketing, Distribution and Supply Agreements -
Fluviral - Annual and Pandemic Supply of Influenza Vaccine to the Canadian
Government"). Under this contract the Company has certain rights and obligations
related to its ability to rapidly deliver to the Canadian government
approximately 32 million doses of flu vaccine or a single monovalent dose for
each Canadian resident in the event of a pandemic.

Approximately 40 million doses of Fluviral have been distributed throughout
Canada over the last several years.

NEISVAC-C

NeisVac-C (meningococcal group C - tetanus toxoid conjugate vaccine) was first
approved for commercialization in Canada in January 2002 as a three-dose
regimen. On May 5, 2004, the Company received the approval from Health Canada of
a new NeisVac-C two-dose regimen for infants aged two to twelve months.
NeisVac-C is the only two-dose meningitis C vaccine available for children (two
months - one year of age) in Canada. It is a one-dose regimen for children older
than one year and adults. The Company distributes the vaccine in Canada on
behalf of Baxter Corporation, the developer and manufacturer of the vaccine (see
"Marketing, Distribution and Supply Agreements - NeisVac-C").

NeisVac-C vaccine is indicated for the active immunization of children from two
months of age and older as well as adolescents and adults for the prevention of
invasive disease caused by NEISSERIA MENINGITIDIS serogroup C. NeisVac-C vaccine
has been shown to be immunogenic in infants, children, adolescents and adults,
and it also confers immunologic memory (for potential long-term protection) in
all age groups, including infants and toddlers, who are the hardest hit by this
disease. This vaccine comes in a liquid formulation provided in pre-filled
syringes to facilitate administration and to reduce the time required by health
care centers to vaccinate patients.

In September 2004, the Company was selected to supply meningitis C vaccine to
the Canadian government under a two year contract with the potential for a third
year (see "Marketing, Distribution and Supply Agreements - NeisVac C").



                                      -10-
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                          CLINICAL DEVELOPMENT PROGRAMS

INFLUENZA VACCINES

FLUVIRAL FOR THE US MARKET

The Company is actively discussing a development strategy with the United States
Food and Drug Administration (FDA) and is currently carrying out clinical trials
in the US for possible future market introduction of an injectable influenza
vaccine (see "Vaccines - Clinical and Regulatory Requirements"). The Company
also entered into distribution and purchase agreements with three parties
related to sales of product in the US. The rights that may be afforded to ID
Biomedical under these agreements are contingent upon the Company obtaining FDA
approval of Fluviral (see "Vaccines - Marketing, Distribution and Supply
Agreements"). If the Company is unable to obtain FDA approval by a date certain,
then these agreements may be terminated.

FLUINSURE, A NASALLY-ADMINISTERED INFLUENZA VACCINE

The Company's intranasal flu vaccine is based on combining partially-purified,
egg-derived flu antigens with Proteosome proteins (see "Adjuvant Technologies -
Proteosome Technology") derived from the outer membrane of NEISSERIA
MENINGITIDIS. The Proteosome proteins are known to have adjuvant properties and
to enhance immunogenicity via mucosal delivery routes. The influenza antigen,
such as that produced by IDBQ, is complexed to Proteosome proteins to form the
basis of the Company's intranasal flu vaccine product. Immune responses against
the hemagglutinin protein or HA are believed to correlate with protection
against influenza infection and include (but are not limited to) the
hemagglutination-inhibiting antibodies found in the bloodstream after
immunization with an influenza vaccine, as well as antibodies secreted from the
mucosal lining of the respiratory tract.

Historical clinical development of the intranasal influenza vaccine included
completion of two studies of a prototype monovalent vaccine as a means of
evaluating the safety and immunogenicity of the intended trivalent product
(i.e., a vaccine immunizing against the same three strains of influenza virus as
with current injectable flu vaccines) in three doses. These trials were
conducted in 2001 by a collaborator at the University of Rochester, and showed
the monovalent prototype vaccine at all doses to be safe and well tolerated and
to induce immune responses of a type widely considered by the scientific
community to correlate with protection in a significant proportion of the test
subjects.

Also in 2001, expanded human safety and immunogenicity studies were initiated
with the prototype intranasal flu vaccine, including a mixed population of
healthy adult volunteers with and without prior immunity to the flu vaccine
strain. On October 18, 2001, positive preliminary results showed that both the
one- and two-dose regimes of the prototype vaccine generated similar magnitudes
of immune responses to the targeted strain and the vaccine was well tolerated
and elicited both mucosal and systemic immune responses.

As a consequence of these successful results, the Company initiated testing of a
trivalent (covering three strains) Proteosome-based intranasal flu vaccine,
referred to as FluINsure vaccine. This Phase I Clinical Trial was undertaken at
the Clinical Trials Research Center (CTRC) at Dalhousie University in Halifax,
Nova Scotia. The study protocol was designed to test four different dosing
regimens of FluINsure vaccine. In April 2002, the Company announced that a
preliminary analysis of safety and serum immunogenicity data showed that the
desired immune response endpoints of the trial had been achieved and there were
no safety concerns in the 78 volunteers that received the vaccine. As a result,
a Phase II Clinical Trial Application was submitted and a "No Objection"
response was granted by the Biologics and Genetic Therapies Directorate of the
Heath Products and Foods Branch of Health Canada. In September 2002, enrollment
of a total of 99 healthy adult volunteers in two different Phase II Clinical
Trials was



                                      -11-
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completed. These Phase II trials were randomized, double-blind and concurrent
placebo-controlled studies. On December 3, 2002, positive results from the Phase
II clinical trials were confirmed to be consistent with the results of both the
prototype monovalent and the trivalent Phase I study, showing that the product
was immunogenic via the nasal route. The FluINsure vaccine continued to exhibit
a favorable safety and tolerability profile, with no serious adverse events and
only mild and transient nasal stuffiness and/or runny nose being associated with
the active vaccine when compared to a placebo nasal spray.

In October 2002, the Company received a favourable response from the Medicines
Control Agency of the United Kingdom with regard to its application to conduct a
Phase II human "challenge" study of the FluINsure vaccine. A Clinical Trial
Exemption (CTX) was granted, effective as of October 17, 2002, which allowed the
Company to pursue its planned Phase II safety, immunogenicity, and challenge
study in London, UK. In this study, volunteers were vaccinated with either
active FluINsure vaccine or a placebo and then intentionally exposed to live
influenza viruses to determine if immune responses to the FluINsure vaccine
translate into protection against clinical illness.

On November 26, 2002, the human influenza challenge trial began. A total of 75
healthy adult volunteers received the FluINsure vaccine or a placebo in this
randomized, double-blind and concurrent placebo-controlled study. The study
subjects were divided into three approximately equal groups, with one group
receiving placebo, one group receiving a single-dose regimen (30 ug) of the
FluINsure vaccine, and one group a two-dose regimen (30 ug x 2) of the FluINsure
vaccine. All study subjects were pre-screened to ensure that they did not have
pre-existing protective levels of antibodies to the challenge strain.

On or about forty days post-immunization (January 3, 2003), study subjects were
admitted to an isolation unit for observation. Two days later, those who were
free of any confounding symptoms of other viral respiratory infections were
challenged intranasally with a strain of the influenza virus. The study subjects
were then observed for clinical symptoms, examined daily, and had nose and
throat secretion samples taken to detect and quantify any influenza virus
present. The study participants were also measured for their mucosal and
systemic antibody responses to the vaccine.

In February 2003, the Company reported positive results from this trial.
Influenza-like illness was observed in approximately half of placebo recipients
who received the challenge virus, a level consistent with that anticipated.
There was a statistically significant trend toward decreased illness in the
active vaccine recipients (p = 0.03). Two-dose recipients demonstrated 86%
protection against any illness (an overall 71.4% protective efficacy versus
placebo) and 100% protection against fever and systemic symptoms. These levels
of protection are similar to those observed in this model with other vaccines
known to have field efficacy. Protection in the one-dose recipients was at a
lower level, but several secondary endpoints suggested that disease was
ameliorated in this group as well. The data strongly supported the two-dose
regimen and were sufficiently encouraging for the Company to pursue further
evaluation of the one-dose regimen.

In May 2003, the Company initiated a second challenge study of similar design,
but included an additional treatment group that received two doses of vaccine at
a reduced dose level (15 ug x 2). Preliminary results of this study were
reported in September of 2003, and complete results were described in November
of 2003. Results were consistent with the prior study. The one-dose group showed
75% vaccine efficacy against febrile illness, while both two-dose groups (which
were indistinguishable) showed 100% efficacy. Considering both challenge trials
together, there was statistically-significant (p < 0.05) efficacy of FluINsure
against febrile illness, any systemic illness, any clinical illness associated
with laboratory confirmation of influenza virus infection, and febrile illness
associated with laboratory confirmation of influenza virus infection. The latter
endpoint is important, since the regulatory authorities are likely to consider
prevention of febrile illnesses with confirmation of virus infection a primary
outcome in field efficacy trials. An



                                      -12-
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additional analysis of pooled data from the two challenge studies demonstrated
that both serum and nasal mucosal antibody responses were independently and
additively contributory to protection against laboratory-confirmed influenza.

In October 2003, the Company initiated a field trial that enrolled 1,349 healthy
adult subjects at 28 sites in seven Canadian provinces. This randomized,
double-blind, placebo-controlled field trial evaluated one- and two-dose
FluINsure regimens for efficacy in reducing influenza illness relative to a
placebo. Additionally, the trial was designed to evaluate the performance of a
variety of clinical endpoints and diagnostic methods for subsequent use in
pivotal trials. Enrollment was completed on November 20, 2003 and follow-up was
completed in May 2004.

In July 2004, preliminary results were announced from the field efficacy study,
which were further amplified in January 2005. The tolerability of the vaccine
was not significantly distinguishable from placebo. Throughout the study period,
there was no statistically significant difference in the overall incidence of
adverse events reported between the vaccine and placebo groups, and there was no
significantly increased rate of any particular class of adverse events in
vaccine recipients versus placebo recipients. Both active treatment groups
showed strong immune responses. Increases in serum hemagglutination-inhibiting
(HAI) were highly significant (p = 0.001 vs. placebo recipients) for all three
vaccine viruses (A/H1N1, A/H3N2, and B) and were statistically indistinguishable
among vaccinees who received two doses and those who received a single dose of
FluINsure. In addition, significant rises (p < 0.001) in salivary secretory IgA
specific for the vaccine viruses were also found for all three vaccine viruses
among subjects who received the active vaccine, but not those who received
placebo. Salivary secretory IgA responses were not significantly different
between subjects who received the two dose regimen vs. one dose regimen. In the
study one dose of the FluINsure vaccine was slightly more efficacious in
preventing illness than two doses of the FluINsure vaccine, but there was no
statistically significant difference between the two regimens. The one-dose
regimen showed 67% efficacy (3/451 vs. 9/443 placebo) against clinical illness
confirmed by culture to be due to influenza virus. Efficacy in the pooled
vaccinated groups (7/904 vs. 9/443) was statistically significant relative to
placebo (p = 0.045). When using fever as a requirement for the definition of
clinical illness, one dose of the FluINsure vaccine provided 100% efficacy. This
efficacy performance was very encouraging, because the A/H3N2 influenza antigen
in 2003-04 FluINsure was (in common with all other influenza vaccines) a
relatively poor antigenic match for the A/H3N2 influenza strain which was
responsible for the majority of disease in the 2003-04 season.

To test the breadth of the technology and to improve future strategic alliance
possibilities, the Company has obtained commercial supplies of influenza virus
or egg-derived flu vaccines from three different commercial suppliers in
addition to the antigen produced by IDBQ (formerly the Shire flu production
facility) and successfully formulated each in an intranasal flu vaccine. In
addition to different suppliers, the Company has successfully produced a number
of development lots containing the influenza virus strains from at least four
different years. As a result, the Company believes the Proteosome technology
will be compatible with, and exert its adjuvant effect on, influenza antigen
produced by any supplier; and it will be effective from year to year even though
as noted above, the influenza antigen composition may change.

A key strategic advantage of the acquisition of the vaccine assets of Shire by
the Company was the ability to obtain influenza vaccine antigen for the
Company's intranasal flu vaccine program.

The Company began human testing of FluINsure vaccine incorporating influenza
antigens prepared in its newly-acquired Quebec City facility in November 2004.
This trial, termed a "re-immunization study," is being carried out in Canada
among volunteers who participated in the 2003-04 efficacy trial. The study is
intended to demonstrate that the vaccine is safe and gives a strong immune
response in persons who have previously received the vaccine (i.e. in 2003). The
Company expects to have preliminary data from this trial in spring 2005. The
Company also expects to initiate studies in late 2005 with a preservative free
formulation and unit-dose device delivering the FluINsure vaccine, and to
initiate clinical trials in teenagers.



                                      -13-
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Because of the constantly-changing nature of influenza antigens, there can be no
absolute assurances that this success will be replicated in the future from year
to year for all three required strains (see "Risk Factors"). As experience with
an ever-increasing variety of influenza strains accumulates, however, confidence
that the Proteosome technology is adaptable to all potential influenza strains
will progressively increase. In the event the Company is not successful in
achieving an adjuvant effect using Proteosome proteins with antigens of future
years or supplied by one or more particular flu vaccine manufacturers, then this
will likely limit the Company's ability to enter into worldwide strategic
alliances with such manufacturers or to commercialize the Proteosome-based flu
vaccine. Failure in the testing or production of the FluINsure vaccine with
antigen produced by IDBQ could be especially damaging to this potential product
opportunity.

Further, intranasal vaccines will likely be carefully regulated by health
authorities due to concerns that nasal administration can affect neurological
tissues. An intranasal vaccine marketed in Switzerland by Berna Biotech AG
caused such a reaction and was required to be pulled from the market. The
Company expects, therefore, that safety studies with this product will be
extensive, even though FluINsure does not contain the toxin that was present in
the Berna product and was believed to be responsible for the safety concerns.

CELL CULTURE-DERIVED INFLUENZA VACCINE

The influenza vaccines currently on the market are produced from viruses grown
in eggs. While egg-derived vaccines are considered highly effective, public
health officials see a need for an alternative manufacturing technology. Growing
virus in mammalian cells, as opposed to eggs, using cell culture production
technology, may offer such an alternative.

The cell-culture production technology of the Company offers potential
flexibility in terms of production. Cell culture technology has the potential to
enhance production capacity and consistency and to reduce the time required to
produce influenza vaccine, thereby potentially allowing a manufacturer to meet
the additional time pressure for production of a vaccine in the event of a
pandemic.

From the health-care perspective, the proposed advantages of a cell
culture-derived product include a potential for improved protection, since
cell-grown viruses may antigenically more closely resemble the wild strains
found in nature than those grown in eggs. In addition, the egg protein free cell
culture vaccine may be made available to those who have egg protein allergies
for whom the conventional egg-grown vaccine is inappropriate. Additionally, the
cell culture technology would provide the potential ability to grow a pandemic
avian viral strain that might be lethal or deleterious to eggs. There is
currently a risk that a highly virulent avian pandemic strain may destroy the
viability of eggs, thereby preventing vaccine production.

On September 29, 2004 ID Biomedical was awarded a US$9.5 million grant from the
US National Institutes of Health (NIH) to further develop and scale-up
production of its cell culture-based influenza vaccine. IDB's proprietary cell
culture-based manufacturing process is being developed as a possible future
replacement to the classical egg-based manufacturing process currently used by
all flu vaccine manufacturers, including the Company. This NIH grant allows IDB
to further develop and conduct early-stage human trials of its cell
culture-based influenza vaccine, both pandemic and conventional and enables IDB
to continue this development toward a commercial process that could produce a
vaccine with a safety and immunogenicity profile that meets clinical and
regulatory requirements. It is important to note, however, that the cell culture
influenza vaccine program is early stage and the Company does not expect to
commercialize a flu vaccine based on this technology for several years, if ever.

PRESERVATIVE-FREE INFLUENZA VACCINE

Injectable vaccines must be sterile (free of viable microbials) at the time they
are administered in order to be safe and non-reactogenic. For this reason,
vaccines for many years have been



                                      -14-
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manufactured or formulated with preservatives, which are compounds that kill or
prevent the growth of microorganisms, particularly bacteria and fungi. They are
used in vaccines to prevent microbial growth in the event that the vaccine is
accidentally contaminated, as might occur with repeated puncture of multi-dose
vials. Indeed, preservatives were initially added to vaccines following episodes
during the early part of the twentieth century in which contaminated vaccine
from multi-dose vials caused infections leading to disease and death of the
vaccine recipients. The use of preservatives in multi-dose vaccines is now a
requirement in the Code of Federal Regulations (21 CFR 610.15(a)). In some
cases, preservatives are also added during manufacture to prevent microbial
growth, particularly when vaccines are produced in a non-sterile medium, such as
eggs.

Thimerosal is a mercury-containing organic compound (approximately 50% mercury
by weight). Since the 1930s, it has been widely used as a preservative in a
number of biological and drug products, including many vaccines. Since its
introduction, it has been considered safe and effective. However, over the past
several years, an increasing concern of the theoretical potential for
neurotoxicity of even low levels of organomercurials and the increased number of
Thimerosal-containing vaccines that had been added to the infant immunization
schedule raised concerns about the use of Thimerosal in vaccines and other
products, especially in pediatric populations. To date, studies endorsed by
independent advisory groups continue to show no association between exposures to
Thimerosal in vaccines with adverse medical consequences. However, because of
continuing concerns, the FDA has worked with, and continues to work with,
vaccine manufacturers to reduce or eliminate Thimerosal from vaccines.

Thimerosal is currently added at two points during the process for manufacturing
Fluviral. It is first introduced along with formaldehyde to the influenza virus
after harvesting from eggs in order to assist in viral inactivation and to
control microbial growth. Most of this Thimerosal is removed during downstream
processing steps, with only a residual amount remaining in the monovalent bulk
formulations. Thimerosal is then added to a final concentration of 0.01% (50
(mu)g/0.5 mL dose) during formulation of the trivalent vaccine as a
preservative, as required for all multi-dose products.

The Company has a long term program to reduce or eliminate Thimerosal.
Elimination of Thimerosal from Fluviral is being approached in two stages. The
first stage will be the introduction of a formulation with a reduced
concentration of Thimerosal. For this product, Thimerosal will still be added at
the inactivation step, but will not be added at its current concentration during
the trivalent formulation step. After downstream processing, the residual
concentration of Thimerosal with no further addition at formulation is 3-4
(mu)g/mL (1.5-2.0 (mu)g/0.5 mL dose). This formulation has been produced and
packaged in single-dose syringes (which do not require preservative). It has
been shown to be comparable in stability and immunogenicity to the current
full-Thimerosal formulation. The single-dose Thimerosal-reduced product will be
available in limited supply in Canada in 2005-6. An evaluation is also underway
to determine whether a formulation with reduced Thimerosal may still have
sufficient preservative capability to be presented in a multi-dose format. This
evaluation is being carried out at Thimerosal concentrations in the trivalent
vaccine of 4-10 (mu)g/mL (2-5 (mu)g/0.5 mL dose). Following further preservative
and stability testing, clinical testing of this formulation may begin in 2006.

The second stage in the elimination of Thimerosal from Fluviral will be the
development of a completely Thimerosal-free product. For this formulation,
Thimerosal would not be used at any point during the process. Optimization of
inactivation parameters for the UV and formaldehyde steps, as well as better
overall process control and compliance, may make it possible to achieve good
control of microbial growth without adding Thimerosal during formaldehyde
treatment. Because of the amount of development and testing to be done to
qualify and approve these products, introduction of Thimerosal-free Fluviral is
not anticipated for several years.



                                      -15-
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SUBUNIT VACCINES

IDB established its subsidiary, IDBW, in March 1993 to develop and commercialize
subunit vaccines (protein or peptide-based) for the prevention and treatment of
human infectious diseases. One of the strategic advantages of the acquisition of
the Shire vaccine business was that the Northborough, MA subsidiary (now
referred to as IDBN) was also focused on subunit vaccine technology.

Vaccines have historically been made from live organisms that have been altered
to reduce their virulence, either by altering them genetically or by
inactivating them by physical or chemical means. Subunit vaccines differ from
traditional vaccines in that subunit vaccines consist only of proteins or other
components of the organism rather than the whole, living or inactivated
organism. The Company believes there are several possible advantages to subunit
vaccine technology compared to vaccines made from whole organisms:

o        subunit vaccines selectively boost immune responses to the molecules
         most relevant to protective immunity, which may induce a higher level
         of immune protection than a vaccine based on a whole altered organism;

o        subunit vaccines contain only one or a limited number of molecules or
         molecular fragments, which may lead to a lower risk of toxicity than
         vaccines containing whole pathogens, because the latter may contain
         large numbers of different molecular species;

o        subunit vaccines offer the potential to be closely monitored for
         quality standards due to the limited heterogeneity of the subunit
         product(s); and

o        subunit vaccines, which are non-living, can neither cause disease in
         people with compromised immune systems, nor be transmitted to contacts
         or interact with other bacteria or viruses circulating in the
         environment.

The Company's strategy in this business segment is to develop vaccines for
diseases associated with potentially significant market opportunities. The
Company seeks to work with leading collaborators who have either
proof-of-principle and proprietary technology that the Company can access
through technology licensing agreements, or who can otherwise assist the Company
in preclinical development and/or clinical testing of the Company's vaccine
candidates. In addition, the Company intends to seek strategic alliances with
larger vaccine or biopharmaceutical companies to complete clinical testing,
obtain regulatory approvals, and to manufacture, distribute and sell its
products on a worldwide basis. For certain geographic regions, such as North
America, the Company may elect to complete some or all of these development
activities and retain certain commercialization rights and obligations.

DEVELOPMENT PROGRAMS

In addition to the Fluviral vaccine and FluINsure vaccine, the Company's product
candidates currently in clinical development are: StreptAvax vaccine, a group A
streptococcal vaccine; and Pneumococcal Group Common Vaccine, or PGCVax, a
vaccine to protect against diseases caused by STREPTOCOCCUS PNEUMONIAE. The
Company's preclinical or research vaccine programs primarily target respiratory
diseases and biological warfare agents and include both injectable products and
mucosally-delivered intranasal products based upon the platform Proteosome
adjuvant/delivery technology for subunit vaccines. In addition, the Company has
developed proprietary technologies and core competencies in subunit vaccine
development. These technologies include ID CX5, a proprietary protein expression
system to clone and express recombinant proteins in potentially highly efficient
yields.



                                      -16-
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GROUP A STREPTOCOCCUS (GRAS) STREPTAVAX(TM) VACCINE

GrAS is a major public health problem throughout the world. Approximately 25 to
35 million physician office visits for suspected pharyngitis, or strep throat,
occur each year in the United States alone. Although laboratory tests
subsequently establish that less than 30% of these cases result from GrAS
infection, the majority of patients receive antibiotics. The high disease
incidence and current clinical practice result in significant health care costs,
lost time from school, and loss of parental productivity, and the overuse of
antibiotics - which can contribute to the evolution of antibiotic resistance.
The course of GrAS pharyngitis is not markedly influenced by antibiotic
treatment in most children. However, treatment is viewed as critical to both
reduce spread to other children and, most importantly, prevent the
post-infectious sequelae of GrAS infections. The most important of these
sequelae is acute rheumatic fever, which places patients at risk for chronic
heart disease. GrAS also causes a variety of other human diseases and conditions
including impetigo (a minor skin infection), necrotizing fasciitis (so-called
"flesh-eating disease", which has 10-15% mortality and is disfiguring in
survivors), toxic shock syndrome, pyoderma (boils and abscesses), and a very
aggressive pneumonia.

The M protein is a cell surface molecule that is a major virulence factor of
GrAS. There are over 115 different serotypes of GrAS, each with its own specific
M protein sequence. The classical data of Rebecca Lancefield demonstrated, in
the mid 20th century, that antibodies to the M proteins were predictive of
resistance to disease, and anti-M protein antibodies are a well-accepted
correlate of protection. Unfortunately, development of M protein-based vaccines
has been slowed by concerns that M protein-based vaccines might also induce
auto-immunity and cause acute rheumatic fever or other post-streptococcal
diseases. While it is clear that parts of the M protein can cause animals to
produce immune responses that cross-react with human tissues, the evidence that
this can occur, and cause human disease, in the context of human vaccinations is
weak - and relates to a single report in the 1970's. Dr. James Dale, of the
University of Tennessee, has shown that the portion of the M protein that
elicits immune responses cross-reactive with human tissues can be separated from
the portion that is responsible for immune responses that protect against
infection. Dr. Dale's technology, which involves the construction of recombinant
proteins that are believed to contain only the potentially protective part of
any M protein, without the part that can elicit cross-reactive responses to
human tissue, has been exclusively licensed by the Company and is the basis of
StreptAvax vaccine.

The Company initially developed a prototype GrAS vaccine that was designed to
cover six of the M protein serotypes (hexavalent) that have been associated with
rheumatic fever, invasive disease and strep throat. Work on the prototype GrAS
vaccine was conducted with Dr. Dale at the University of Tennessee. IDBW has
been able to show that the prototypic GrAS vaccine formulated for human use
produced a functional antibody response against GrAS in animal models.
Additional testing also indicated that no toxicity was associated with the
vaccine and that the antibodies that were produced by the vaccine did not bind
to any of a variety of human tissues known to be affected by post-streptococcal
syndromes, including heart, brain, joint cartilage and kidney.

In October 1997, IDBW entered into an agreement with the United States National
Institutes of Health (NIH) to collaborate on the human testing of the prototype
GrAS vaccine. Under the agreement, IDBW manufactured and supplied the prototype
GrAS vaccine to the NIH's National Institute of Allergy and Infectious Diseases
(NIAID) for initial safety testing in humans. On May 6, 1999, NIAID filed an
Investigational New Drug (IND) application with the FDA. On June 9, 1999 the IND
was approved, and on October 6,, 1999 the NIAID began Phase I human safety
trials at its Vaccine and Treatment Evaluation Units (under contract with the
University of Maryland).

The Phase I protocol for the hexavalent prototype vaccine required sequential
testing of the vaccine in three different doses of 50, 100 and 200 micrograms.
First, the lowest dose of the vaccine (i.e. 50 micrograms) was tested in
approximately 10 healthy adult volunteers. The results of these tests were then
brought before a Data and Safety Monitoring Board (DSMB) organized



                                      -17-
<Page>

for this clinical trial by the NIH. The DSMB recommended to the FDA that testing
at the 100 microgram level be permitted and on February 9, 2000 the FDA notified
the NIH and the Company that testing of the vaccine at the 100 microgram level
in approximately ten different volunteers (and no less than five individuals)
may proceed. This process was repeated with the safety and toxicity data from
those receiving the 100 microgram dose, and a recommendation from the DSMB, and
ultimate clearance from the FDA to test the vaccine at the 200 microgram dose
was received. Testing of the vaccine at the 200 microgram dose was initiated in
2002 and completed uneventfully. Thus, the prototype testing was completed and
at all three doses no safety or toxicity issues were apparent. Of importance,
the prototype vaccine induced no antibodies that cross-reacted with human
tissues and no clinical evidence of any post-streptococcal disease such as
rheumatic fever.

Additional testing has been completed to date by the Company in Canada but there
can be no assurances that studies with a GrAS vaccine that covers a greater
number of serotypes (i.e., more than the six covered in the prototype) will be
allowed to proceed in the US or other countries, or that the results from any
such testing will correlate or correspond with those generated in testing the
prototype vaccine.

In October 1999, the Company announced that it had, in collaboration with the
original inventor of the vaccine, cloned protective M-derived antigens from 26
distinct serotypes of GrAS, creating a vaccine composition covering more
serotypes than the prototype vaccine. On January 8, 2001, the Company announced
that it filed an application with the then Health Protection Branch of Health
Canada, to conduct a Phase I/II Clinical Trial of the Company's 26-valent
vaccine, which has been trademarked StreptAvax vaccine. On March 21, 2001, the
Company received a "No Objection" letter from the Biologics and Genetic
Therapies Directorate of the Health Products and Foods Branch of Health Canada.
The Phase I portion of the Clinical Trial was completed with 30 healthy adult
volunteers each having received the full course of three injections. The results
of the Phase I Clinical Trial showed StreptAvax vaccine to be well-tolerated by
all volunteers in the study, with no significant safety issues and no evidence
of untoward auto-immune reactions. The vaccine induced a strong antibody
response to each of the 26 peptides included in the vaccine. Volunteers had a
significant response to a median of 23 of the 26 peptides, and the overall
geometric mean increase in antibodies across all serotypes was 12.6-fold.
Importantly, a statistically-significant (p < 0.001) increase in the killing of
GrAS bacteria when exposed to white blood cells and the volunteer's
post-immunization serum was seen for every GrAS serotype in the vaccine. Based
on the results of the Phase I study, the Company received approval from Health
Canada to proceed to a Phase II Clinical Trial. The Phase II trial is expected
to test the vaccine in both adults and children. The adult Phase II component,
which has been largely completed, was a randomized, double-blind active
comparator-controlled trial designed to enroll approximately 70 volunteers to
receive the StreptAvax vaccine and 20 additional volunteers to receive a
licensed hepatitis A vaccine on an identical schedule to provide comparative
data regarding safety.

In August 2004, the Company announced that a preliminary immune response
analysis of the expanded Phase II study had been completed and was consistent
with earlier data. Subsequently, in January 2005, the Company reported that
among the 70 subjects who received StreptAvax, there was a statistically
significant (p < 0.0001) increase in serum antibodies to every one of the M
protein serotypes included in the vaccine. The average increase in antibody
levels across the population of StreptAvax recipients was 11.3 fold for each
vaccine peptide (highly similar to the phase I experience). Viewed as
individuals, StreptAvax recipients responded to a median of 25 (91%) of the
different streptococcal peptides in the vaccine, and each peptide elicited a
significant immune response in a median of 87% of vaccinees. By way of contrast,
the group of 20 subjects who received hepatitis A vaccine had no significant
antibody increase against any of the streptococcal peptides.

In these studies, there have been no vaccine-related serious adverse events. No
subject in the Phase II Clinical Trial has developed antibodies that
cross-reacted with human tissues, one of the



                                      -18-
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primary safety endpoints of the Phase II studies. No subject has shown clinical
evidence of acute rheumatic fever or another post-streptococcal complication.
Detailed safety comparisons with a comparator vaccine included in the trial (the
hepatitis A vaccine) will be available later in 2005, after the formal
unblinding of the investigator and clinical team.

Based on the cumulative safety and immunogenicity results of the adult Phase I
and II studies, the Company expects to confer with both Health Canada and the
FDA and then carry out initial Phase II studies at two to three different doses
in children ages 2-6 years. Until results from these studies are known, it is
not possible for the Company to accurately predict the clinical trial strategy
that may be employed following this clinical testing.

The Company believes that the selection of M protein serotypes represented in
the StreptAvax vaccine will allow the Company to meet its overall objective of
developing a GrAS vaccine that covers the majority of serotypes believed to be
important in the epidemiology of human disease associated with GrAS. However, it
is not currently known how many serotypes must be covered by a vaccine to
significantly reduce GrAS disease. A database of GrAS serotypes causing invasive
disease historically collected and maintained by the US Centers for Disease
Control (CDC) suggests that some serotypes are much more common than others, and
that it may be possible to design a multivalent GrAS vaccine that covers a
significant portion of disease causing serotypes in the United States with far
fewer M proteins than are in circulation (some of which may not be currently
responsible for causing any, or very little, disease). In addition to the
serotype data available from the CDC, the Company sponsored an epidemiology
study by Dr. Stan Shulman of Northwestern University Medical School and
Children's Memorial Hospital, to collect and study GrAS serotypes from various
regions of the United States and Canada from the 2000 through 2003 calendar
years. In this study, Dr. Shulman received approximately 100 disease-causing
GrAS isolates from a panel of paediatricians treating suspected GrAS pharyngitis
in 10 different geographical regions throughout North America (for a total of
approximately 1000 samples in each year of the study). At an October 2001
meeting of the Infectious Disease Society of America, Dr. Shulman presented data
from this study completed at that time and showing that a majority of
GrAS-related disease was caused by a minority of known GrAS serotypes. Predicted
coverage of pharyngitis-causing strains by StreptAvax vaccine was in excess of
86%. The Company contracted with Dr. Shulman for a continuation of this study,
with additional samples and epidemiological analysis completed in 2003. The data
from this continuation did not materially differ from previously data. The
expanded study included the addition of at least 2 collection centers in Canada.
Due to the success of these studies, the US National Institutes of Health has
agreed to assume the funding of Dr. Shulman's efforts relative to the US
epidemiology of GrAS disease, such that a continuing database will be available.

Although there can be no assurances that the pattern of circulating GrAS
serotypes will remain the same in the future or that this study or future
studies will accurately predict the actual prevalence of circulating GrAS
serotypes in North America, or further that this will translate to the
distribution of GrAS disease in other parts of the world, the Company believes
the study was designed appropriately and that the results support the
feasibility of a multivalent GrAS vaccine, such as the StreptAvax vaccine. It
should be noted that there are other multivalent vaccines to protect against
different bacteria that have been successfully commercialized and have been
effective in reducing disease burden, even though they cover only a minority of
possible serotypes or strains of the targeted bacteria. Prevnar, the recently
introduced vaccine to protect against pneumococcal disease in children, is one
such example. In addition, there can be no assurance that the benign clinical
safety behaviour of StreptAvax will persist in future studies. Because M
protein-based GrAS vaccines have been suspected of causing rheumatic fever in
the past, and because rheumatic fever does occur at a very low rate among North
American children, it is possible that a child who receives StreptAvax may
fortuitously develop rheumatic fever, or an illness resembling rheumatic fever,
and cause trials to be halted. The Company will mitigate this possibility by
careful design of clinical trials with adequate controls and expert input, but
can offer no assurance that regulatory safety concerns will not arise in the
future.



                                      -19-
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PNEUMOCOCCAL GROUP-COMMON VACCINE (PGCVAX)

The need for pneumococcal vaccines is emphasized by both the natural history of
fatal infections and the emergence of antibiotic resistance among pneumococci.
STREPTOCOCCUS PNEUMONIAE is a leading cause of bacterial meningitis, sepsis,
pneumonia, and otitis media. Persons particularly at high risk include the
elderly, children under the age of 2 years, the immunocompromised and some
particular ethnic groups such as African Americans, American Indians, and Alaska
Natives. Risk of long-term sequelae is significant, corresponding to
neurological deficiencies such as hearing impairment from recurrent otitis
media, learning disabilities and brain damage.

In the United States, infections from S. PNEUMONIAE have been responsible for
100,000-135,000 hospitalizations for pneumonia, 6 million cases of otitis media
and over 60,000 cases of invasive disease annually, including 3,300 cases of
meningitis. It is also the most common cause of severe adult community-acquired
pneumonia. With regards to children under the age of 5, where the disease is
attacking a relatively naive immune system, invasive pneumococcal disease has
accounted for approximately 200 deaths annually. In this same age group, over
700 cases of meningitis, 13,000 blood infections and over 5 million cases of
otitis media have been reported annually. In the developing world, figures are
even more alarming, causing up 1,200,000 deaths annually in children less than 5
years of age.

On the other hand, the resistance of S. PNEUMONIAE to antibiotics is found
mainly in children less than 5 years of age and is associated with a lower
response of antibiotics for pneumococcal infections and higher morbidity.
Therefore, vaccination is the best means of prevention of pneumococcal disease.

Currently available marketed vaccines include both Polysaccharide (PS) and
Polysaccharide-conjugates. The lack of immunogenicity of pneumococcal PS in
infants has been recognized as an important limitation of PS-derived vaccines,
which was the reason for the development of PS conjugates. However PS conjugates
have their own limitations: complexity of manufacturing process, coverage
limited to the serotypes included in the vaccine and serotype replacement. Also
the distribution of S. PNEUMONIAE serotypes varies according to population and
age and some serotypes predominant in the developing world are not included in
the currently available conjugate vaccine.

For all these reasons there is a need for a different approach to prevent S.
PNEUMONIAE diseases. Vaccines comprised of conserved and surface-expressed
proteins appear to be the best candidates in order to overcome the limitations
of PS and PS-conjugate vaccines. Proteins expressed independent of pneumococcal
serotype may be able to overcome the limitations in serotype distribution of
PS-conjugate vaccines and in serotype replacement, as well as the responses
observed in immunocompromised and immunologically immature individuals for
polysaccharide vaccine.

BVH3/11V (the protein antigen in "Pneumococcal Group Common Vaccine" or PGCvax)
has the potential to be such a vaccine. It is a recombinant chimeric protein and
has been derived from two native proteins (BVH-3 and BVH-11-2) expressed on the
surface of S. pneumoniae. They are widely distributed, highly conserved, and
surface-exposed across strains from all 90 serotypes. Numerous pre-clinical
studies including passive and active challenge animal models have shown that
BVH3/11V induces protective antibodies.

Toxicological studies to confirm the safety profile of both adjuvanted
(aluminum) and aqueous formulations of BVH3/11V were conducted in New Zealand
white rabbits and Sprague-Dawley rats. There were no unexpected or significant
safety issues.

Clinical studies have been performed in healthy young adults, elderly and
toddlers population. Their primary objective has been to evaluate safety, local
and systemic tolerance and immunogenicity of different doses and frequency of
administration. The evaluation of safety was



                                      -20-
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based on local injection site reactions such as redness, swelling, pain at the
injection site as well as systemic tolerance such as temperature and any other
reported systemic manifestations. Evaluation of immunogenicity has been
evaluated by measuring specific antibody levels by ELISA and by functional or
biological assays.

ADULT STUDIES

The initial study of PGCvax was conducted in a healthy adult population in the
United States in 105 subjects, 18-40 years of age. This randomized,
double-blind, controlled, dose-escalation study evaluated two PGCvax dose
levels, 45ig and 90ig. The comparator was Pneumovax23. The primary objective of
the study was clinical safety (reported adverse events (AEs), clinical
laboratory results and physical examination findings). Regarding safety, results
indicate that two intra-muscular administrations of low- and high-dose PGCvax
(45ig and 90ig), appeared to be safe and well-tolerated. Four hundred eighty-six
(486) vaccine-emergent AEs were reported by 80 (76%) of the 105 subjects. The
majority of AEs were mild to moderate in intensity. AE incidence was highest in
the PGCvax arm of the expanded dose group (90(mu)g), with 26 subjects (87%)
reporting 155 (32%) adverse events. Injection site pain was reported by the
greatest number of subjects (56%), followed by decreased arm mobility in the
injected arm, injection site swelling and injection site erythema. Headache,
myalgia, nausea and fatigue were other vaccine-emergent adverse events
experienced by =>10% of subjects in this study. All reported AEs resolved by the
time of the conclusion of the study. No subjects receiving PGCvax experienced a
Serious Adverse Event (SAE). Although homology searches with BVH3/11V sequence
have not revealed any significant homology with human myosin or related
proteins, based on a theoretical concern, studies were conducted for any
potential cross-reactivity of anti-BVH3/11V antibodies to human cardiac myosin.
ELISA tests using human myosin protein and cardiac markers were done. They all
were negative in the groups who received PGCvax.

Immunogenicity response was measured by determining antibody response to
BVH3/11V and its constituent proteins (BVH3V and BVH11V). PGCvax was
immunogenic, eliciting antibodies that were reactive with BVH3V and BVH11V in
98.5% of the subjects. Two doses of PGCvax were more immunogenic than one.
Geometric mean titers (GMTs) after two injections seem similar in all dose
groups; however the percentage of responders tended to be higher in the 90(mu)g
group.

A second adult study was conducted as a follow up to the initial study. The
primary objective was to evaluate the safety and local tolerance of a third dose
of PGCvax vaccine given 6 months after first injections either with the
low-(45(mu)g) and high-(90(mu)g) dose levels or with Pneumovax 23. Thirty-one
(31) subjects were provided a third dose of PGCvax vaccine; five (5) subjects
from the 45(mu)g PGCvax group, fifteen (15) subjects from the 90(mu)g PGCvax
group and eleven (11) subjects from Pneumovax23 group, depending on their
previous injection. Study enrollment has been completed and the 6-month subject
follow-up period is currently in progress.

General safety data were good, no SAE related to the vaccine was reported.
Anti-myosin antibodies were investigated as in the previous trial and no
significant levels were induced in subjects. In terms of immunogenicity, the
90ug PGCvax group showed the most significant response with 67% of subjects
having a =4 fold response in the BVH3/11V ELISA.

STUDIES IN THE ELDERLY

An initial study was undertaken to evaluate the safety, tolerance and
immunogenicity of PGCvax versus active comparator in healthy elderly adults, 60
to 74 years of age. The study was a randomized, single center, double-blind
trial with a total of 60 subjects recruited. Subjects were randomized to one of
4 groups (15 subjects per group) receiving 2 doses of either 22.5(mu)g or
45(mu)g or 90(mu)g of PGCvax vaccine, or one dose of the comparator vaccine,
Pneumovax23. The primary objective was to evaluate the safety and local
tolerance. The secondary objective was to evaluate the immunogenicity of the
vaccine by assessment of ELISA and functional assays on sera



                                      -21-
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samples collected 28, 56, 84 and 224 days following vaccine administration.
Enrollment has been completed and the study is currently in the six-month
follow-up period. Preliminary results obtained to date are summarized in the
following.

Regarding safety, incidence of site injection reactions was comparable among all
study groups, although a greater number of subjects in the comparator
Pneumovax23 group experienced injection site erythema. The incidence of certain
AEs, particularly myalgia (16.7%), arthralgia (10%) and reduced limb mobility
(8.3%), appeared to increase slightly with PGCvax; however, the majority of
events occurring within 1 to 3 days were mild or moderate in intensity and
resolved within 2 to 7 days without treatment. No SAEs have been reported. No
subjects developed significant increases of anti-myosin antibodies during the
immunization period (Day 0-Day 84).

Regarding immunogenicity, the proportion of subjects demonstrating an
immunological response (defined as a =>4-fold post-immunization increase in
antibody concentration compared to pre-immunization levels) was greater after
the second injection for all three antigens tested.

A second Phase I study evaluating safety, tolerance and immunogenicity of the
PGCvax vaccine versus a comparator vaccine in an elderly group aged between 75
and 84 years was undertaken. The study was designed as an open-label
single-center dose-escalation study with a total of 60 subjects recruited.
Subjects have been randomized to one of 4 groups (15 subjects per group) to
receive two doses (at a 56-day interval between doses) of either 22.5(mu)g or
45(mu)g or 90(mu)g of PGCvax vaccine intramuscularly (deltoid muscle), or the
comparator vaccine, Pneumovax23. The primary objective of the study is to
evaluate the safety and local tolerance of the two administrations of PGCvax as
compared to Pneumovax23. The secondary objective is to evaluate the
immunogenicity of PGCvax vaccine by analyzing antibody responses in samples
collected 28, 56, 84 and 224 days following vaccine administration. The study is
currently in progress with the last subject visit scheduled during March 2005.
There have been no SAEs reported in this study to date.

The Company also initiated a randomized, single-center, double-blind clinical
trial of elderly subjects, exploring the safety and immunogenicity of an aqueous
formulation of PGCvax vaccine (45(mu)g) and a comparator, Pneumovax23. Subjects
have been randomized by age group to receive one of two treatments, 45(mu)g
PGCvax vaccine or the comparator vaccine, Pneumovax23. Subjects received two
intramuscular (i.m.) injections of PGCvax vaccine or the comparator at a 56-day
interval. Safety and local tolerance will be assessed. In order to facilitate
product development, an analysis of all Day 0 to Day 84 data will be conducted.
This study has been conducted in a manner comparable to protocols described
above. All study subjects have been enrolled and no SAE's have been reported in
this study.

CHILDREN (TODDLER) STUDY

A Phase 1 double-blind, randomized, controlled clinical trial evaluating the
safety and immunogenicity of a single dose of PGCvax versus an active comparator
Prevnar, was conducted in healthy toddlers aged 12-23 months in British
Columbia, Canada. Evaluation of PGCvax in this age group is a necessary step
prior to progressing to the target population, infants. A total of seventy-five
(75) toddlers were enrolled; 50 received PGCvax vaccine (90 mcg) and 25 received
the pneumococcal conjugate vaccine, Prevnar as control. Study enrollment has
been completed and the study is currently in progress, with commencement of the
Day 183 (six months) post vaccination subject visits.

Preliminary safety results from Day 0 to Day 28 indicate that PGCvax vaccine was
well-tolerated and considered to be safe in this toddler population. No subjects
discontinued the study as a result of an adverse event. No subject experienced
any fever at scheduled visits in either group. Fever was recorded in the daily
log for 7 (14%) of subjects in the PGCvax group and 2 (8%) in the Prevnar group
for the first 7 days following vaccine administration. Local tolerance reactions




                                      -22-
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recorded included redness, swelling and pain at the injection site. Redness was
reported by 27 (54%) subjects in the PGCvax group and by 12 (48%) subjects in
the Prevnar group. All but one of the reactions of redness were mild. One
incidence of moderate local redness was reported on Day 1 for a subject in the
Prevnar group. Swelling was reported in 3 (6%) subjects who received GCPV and in
4 (16%) subjects who received Prevnar; all were mild in intensity. Eight (8)
subjects (16%) in the PGCvax group and 10 (40%) subjects in the Prevnar group
reported mild pain; 1 (4%) subject in the Prevnar group reported moderate pain.
The most commonly reported vaccine-emergent AEs among those subjects who
experienced AEs was irritability (24/75; 32%), followed by diarrhoea (22/75;
29%) and rash (13/75; 17%). There were no statistically significant differences
between groups for the nature and frequency of these events. The frequencies of
irritability and diarrhoea were similar in both groups, (30% for PGCvax and 36%
for Prevnar; 26% for PGCvax and 36% for Prevnar respectively). There was
approximately a 2-fold difference between groups in the incidence of
erythematous rash, (12% for PGCvax and 28% for Prevnar). These most-frequently
occurring AEs were consistent with the known effects of the subject population
and the reference product. There were no SAEs reported. Regarding anti-Myosin
antibody follow up, this study demonstrated that no significant increase in the
levels of anti-human cardiac myosin antibody was associated with the
administration of either the PGCvax or Prevnar vaccines.

Regarding immunogenicity, subjects receiving PGCvax vaccine had an increase in
all ELISA titres, Day 28/Day 0 (post/pre ratios) with GMTs in the range of 7 -
8. Sixty-one (61%) to sixty-nine (69%) of PGCvax subjects demonstrated a 4-fold
increase in antibody titre, whereas none of the Prevnar recipients showed a
4-fold increase. Functional activities that were evaluated by
opsonophagocytosis, flow-based opsonization, and cell surface binding (staining)
to S. PNEUMONIAE are ongoing at the time of this report.

CHILDREN (INFANT) STUDY

This study will evaluate the safety, local and systemic tolerance of four
injections of PGCvax at 20(mu)g, 45(mu)g and 90(mu)g dose levels with or without
aluminum adjuvant,, as compared to the control meningococcal C vaccine,
Menjugate, in infants enrolled at 2, 4, 6 and 12-13 months of age. All local and
systemic events, adverse events and serious adverse events will be reported.
Infants will commence the trial at a lowest dose level (20ug with or without an
aluminum adjuvant). Following a safety review of the data from this dosage
level, subsequent subjects enrolled in this study will be randomized to receive
the next highest dose levels, 45ug and 90ug, in a similar manner. All infants
will receive the standard primary series vaccine, Pentacel in the opposite limb
at 2, 4 and 6 months of age. The secondary objectives will be to evaluate the
immunogenicity of PGCvax vaccine, as well to potentially generate preliminary
information on carriage rate in this age group. Each child will be followed
until 24 months of age. The study will be carried out in 2 sites in Canada and
Israel. It is anticipated to start enrollment in March 2005.

ADJUVANT TECHNOLOGIES

ID Biomedical has proprietary adjuvant technologies that are capable of
enhancing protective immune responses against vaccine antigens formulated with
them. The two types of adjuvant that the Company owns are Proteosome-based and
Emulsions.

PROTEOSOME TECHNOLOGY

The Company is working to develop mucosal delivery of subunit vaccines by nasal
spray. The focus of these activities is a proprietary platform vaccine delivery
and adjuvant technology, trademarked Proteosome technology, for the nasal
delivery of subunit vaccines.

The Company believes there are several potential benefits of Proteosome
technology-based vaccines, including:



                                      -23-
<Page>

     o    ease of administration - a needle-free vaccine delivery system;

     o    enhanced quality of the immune response by generating antibodies both
          systemically in the blood, and also at the mucosal surfaces through
          which most viruses and bacteria invade; and

     o    enhanced thermo-stability of Proteosome technology, which demonstrates
          excellent stability at refrigerated temperatures, and has shown the
          potential for room-temperature stability for some products.

The Company's proprietary Proteosome vaccine platform technology potentially
serves as both a vaccine adjuvant (stimulant of immune responses) and mucosal
delivery system that may enhance a vaccine's effectiveness and/or ease of use.
Proteosome proteins are purified from bacterial outer membranes of NEISSERIA
MENINGITIDIS and then combined with selected antigens (portions of target
microorganisms capable of eliciting protective immune responses) to create
Proteosome vaccines. When administered to the nasal mucosal via nasal spray,
Proteosome vaccines (e.g. FluINsure) have been shown in animal studies and in
Phase I and Phase II human clinical trials to have the potential to stimulate a
more comprehensive immunity profile (eliciting potentially both serum and
mucosal antibodies) than traditional injectable vaccines that stimulate only
serum antibodies.

This dual serum and mucosal response is due to the ability of Proteosome
vaccines to elicit immune responses in mucosal secretions as well as in the
blood, whereas injectable vaccines do not efficiently induce mucosal immune
responses. The Company believes this enhanced immune response or adjuvant
property results from certain components of the protein-based Proteosome
particle structures, including small amounts of lipopolysacharides. Mucosal
immune responses are potentially important because they are uniquely designed to
protect the body against invading bacteria, viruses and toxins before these
pathogens reach the internal organs. In contrast, systemic responses in the
blood begin to take effect only after infectious microorganisms have entered the
body. Therefore, mucosal immunity may be considered a "front line" of immune
defense, possibly stopping pathogens at mucosal surfaces. This gives mucosal
vaccines a potential advantage over traditional injectable vaccines, since the
pathway of entry of most infectious diseases is via mucosal surfaces. In
addition, mucosal vaccines provide the added convenience of ease of
administration over injectable vaccines (nasal spray vs. needle injection).

In addition to the potential of increased immune responses, other potential
advantages of intranasal vaccines based on the Proteosome technology include:
needle-free administration - which could lead to increased compliance and, in
the future, the potential for self-administration; safety - Proteosome particles
are designed to work with subunits (proteins or peptides) of infectious agents
that reduce safety concerns that are related to live vaccines; and stability -
Proteosome vaccines often exhibit improved storage temperature profiles compared
to the same antigens when not complexed with Proteosome particles.



                                      -24-
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Although adding other substances to a vaccine antigen may increase production
costs of the end product, Proteosome components have been shown in our pilot GMP
facility to be relatively inexpensive to manufacture. The materials used and the
simple and efficient design of the manufacturing process should allow for
cost-effective production, although the initial costs of constructing and
equipping a GMP facility for large-scale commercial manufacturing of Proteosome
proteins will be substantial. The actual per dose costs of Proteosome proteins
will depend on the amortization of such a plant and the equipment used in the
facility, as well as the associated costs of quality assurance, quality control,
and the other direct and indirect costs of manufacturing. Further, there can be
no assurance that the scale-up of the process will continue to be successful or
economically efficient.

EMULSION-BASED TECHNOLOGIES

Emulsions are oil-in-water formulations that comprise triglyceride cores and
phospholipid membranes with which vaccine antigens can be mixed or formulated.
Such complexes induce enhanced serum and mucosal immune responses when given
nasally and can be combined with Proteosomes to provide additive immune
responses against specific vaccine antigens. Unlike Proteosomes, emulsions
induce strong type 2 immune responses that may make these adjuvants suitable as
components of vaccines to treat autoimmune diseases as described in the
preclinical programs below.

PRECLINICAL/RESEARCH PROGRAMS

The Company's preclinical or research vaccine programs primarily target
respiratory diseases and biological warfare agents and some are based upon the
platform Proteosome adjuvant/delivery technology for subunit vaccines. The
Company's preclinical programs are very early in development and there can be no
assurances that any vaccine candidates will be successfully developed to the
point of human clinical testing (see "Risk Factors"). Furthermore, in some of
these research programs the Company does not control the production of antigens
that may be used in any final products that could be developed. There can be no
assurance that the Company will be successful in clinical studies or in
production and stability, or in obtaining these product supplies or that, once
obtained, the potential products will prove successful in combination with the
Proteosome technology. Antigen supply may be obtained, for example, by bulk or
large quantity purchases or through strategic alliances (see "Risk Factors").
Still further, some of these programs are being conducted by collaborators of
the Company. The Company assists in design of the research and produces various
vaccine formulations, but the ultimate testing of the vaccine candidates and the
timing of such testing is often controlled by our collaborators (see "Risk
Factors"). The Company's preclinical/research programs are as follows:

INTRAMUSCULAR VACCINES

MENINGOCOCCAL PROTEIN

Meningoccocal bacteria are a major cause of meningitis in infants. Licensed
capsular polysaccharide and protein-polysaccharide conjugate vaccines only
confer serotype-specific protection (A, C, W and Y). In addition, serotype B
polysaccharide is not appropriate since it is poorly immunogenic and could be
responsible for potential cross-reactivity of anti-group B polysaccharide
antibodies with mammalian cells. The worldwide market for meningococcal vaccines
is approximately $800 million, and there are a number of competing marketed and
developmental products from manufacturers such as Wyeth, Baxter Corporation,
Chiron Corporation, Sanofi Pasteur and GlaxoSmithKline (GSK). IDB is developing
a recombinant protein-based vaccine to prevent meningitis in infants and adults
caused by all meningococcal serotypes. The vaccine is based on a novel
neisserial surface protein (NspA) that is highly conserved across all NEISSERIA
MENINGITIDIS serotypes including serogroup B and that could be effective against
all twelve meningococcal serotypes. Animals immunized with the formulated NspA
vaccine produce serum bactericidal antibody and are protected against challenge
with the



                                      -25-
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bacteria. A prototype NspA formulation was previously evaluated in two separate
Phase I clinical studies however the Company has decided to undertake some
additional preclinical work, in order to reformulate the product to increase its
immunogenic potency and ability to induce surface-reactive antibodies.
Formulations of NspA are currently being optimized prior to clinical
development.

GROUP B STREPTOCOCCAL VACCINE

IDB is currently developing a protein-based vaccine candidate for the prevention
of diseases caused by Group B Streptococcus (GBS). It is based on a novel
antigen (rSip), which could be effective against all nine known GBS serogroups.
The vaccine is intended to be indicated for women of child-bearing age, pregnant
women, at-risk adults and seniors.

OTHER PROTEIN-BASED SUBUNIT VACCINES

ID Biomedical also has a number of early phase research interests related to
vaccine approaches for the prevention of other bacterial infections. These are
based on unique proteins that are conserved across the various bacterial strains
for the control of infections caused by non-typeable HAEMOPHILUS INFLUENZAE and
MORAXELLA CATARRHALIS. These programs are being partially supported by an
agreement with Technology Partnerships Canada (see "Other Agreements -
Technology Partnerships Canada Agreements").

INTRANASAL VACCINES

RESPIRATORY SYNCITIAL VIRUS (RSV)

RSV is the most common cause of respiratory hospitalizations in infants
especially those less than six months of age and is also recognized as a serious
cause of hospitalization due to pneumonia in the elderly. RSV disease is
seasonal, peaking in late winter or early spring. Infection with RSV causes
bronchiolitis, pneumonia and croup in infants and pharyngitis, wheezing and
pneumonia in adults.

It is becoming apparent that RSV may be as important as flu in causing seasonal
respiratory illness. The market for RSV vaccines may, therefore, be equivalent
or greater than that of the market for influenza vaccines. There is currently no
vaccine for RSV, however, a monoclonal antibody-based passive therapy (Synagis)
is available commercially for administration to high-risk premature babies born
between 20-26 weeks.

The lead vaccines for RSV in development by other companies are a
live-attenuated nasal vaccine similar to the live influenza vaccine. However,
the inability to obtain the correct balance between the degree of attenuation
and immunogenicity of the candidate live vaccines has hampered the development
of this vaccine for infants. Injectable subunit vaccines for RSV are also being
developed by certain companies, but these have been targeted initially for the
elderly because of previous experience with serious adverse reactions seen in
infants given formalin-inactivated injectable RSV vaccines.

The protective antigens for RSV are the F and G proteins, which are membrane
proteins similar to the hemagglutinin (HA) of influenza virus that is the
protective antigen in the Company's Proteosome-based FluINsure vaccine. On the
basis of our FluINsure vaccine experience, a nasal Proteosome-based vaccine for
RSV offers the advantage of a non-living subunit vaccine given via a
non-injectable route that is capable of inducing protective mucosal IgA and
serum antibodies. In addition, Proteosome vaccines induce type 1 immune
responses and are unlikely to be associated with the serious adverse reactions
generated by earlier inactivated RSV vaccines that have been correlated with the
production of type 2 immune responses.



                                      -26-
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The Company has initiated two separate collaborations with scientists at McGill
University in Montreal, and Dalhousie University in Halifax to evaluate the
potential of a Proteosome-based RSV vaccine.

At McGill the approach taken is similar to that for our influenza vaccine in
that detergent-split RSV will be prepared containing the protective membrane
proteins and formulated with Proteosome-based adjuvants. Unlike influenza or
allergy there are no commercially available RSV antigens. To date we have tested
several Proteosome-based candidate vaccines that have induced significant
increases in serum IgG and IgA in mucosal fluids of mice. Secreted cytokine
patterns in spleen and lung lymphocytes with RSV antigens suggest that the
Proteosome-RSV formulations drive the immune response toward a type-1 phenotype.
Production of the type 2 cytokine IL-5 is decreased compared to animals that
received RSV antigen alone. This is the preferred cytokine profile for avoiding
the harmful lung pathology observed with candidate RSV vaccines tested in humans
in the 1960's. Concurrently we are also developing processes for preparing large
quantities of purified RSV antigen using bioreactors for growing viruses.
Studies are in progress to evaluate the immunogenicity of Proteosome-RSV
vaccines prepared with these antigen preparations. Most of the work under this
collaboration is being funded by a grant to McGill University from the Canadian
Institutes for Health Research (CHIR). As an industrial partner under the grant,
the Company supplies Proteosome proteins and formulates vaccine candidates for
testing.

In collaboration with scientists at Dalhousie University, ID Biomedical is
evaluating Proteosome-based RSV vaccines prepared with a novel recombinant
fragment of the RSV G protein. The G protein contains specific amino acid
substitutions that suppress the ability of the protein to prime for deleterious
type 2 immune responses. The studies are being performed in mouse models of
immunogenicity, protection and lung pathology.

MEASLES

Measles is one of the most contagious human diseases. Despite the existence for
decades of a live-attenuated measles vaccine, measles is still responsible for
over 40 million infections, and approximately 800,000 deaths annually. Many of
these deaths occur in developing countries before the age of routine vaccination
(9 months of age). The main problem with the currently licensed live measles
vaccines is that they cannot protect children less than 6 months of age because
of interfering maternal antibodies. In addition, the current live measles
vaccines cannot be used in immunocompromised individuals who shed virus for
months and can suffer serious adverse reactions. It is widely believed that a
subunit vaccine for measles will be required in order for the proposed measles
eradication program to be successful. Like RSV, there are currently no licensed
subunit vaccines for measles and early development of vaccine candidates was
halted when formalin-inactivated measles virus vaccines resulted in serious AEs
known as `atypical measles' in individuals who were vaccinated and subsequently
exposed to live measles virus.

A scientific team at McGill University is evaluating nasal Proteosome-based
measles vaccines for their potential as a non-living, safe subunit nasal vaccine
for measles. This work is also sponsored under the CHIR grant referenced above.
Measles virus antigen containing the protective antigens H and F has been
prepared from bioreactor-grown measles virus and various Proteosome-measles
vaccines have been generated. When given intranasally to mice these vaccines
induced strong antibody responses in the serum and mucosal fluids that have
potent virus neutralizing ability. Characteristic of the Proteosome technology
the vaccine also elicited balanced cellular immune responses that were directed
away from a potentially deleterious type 2-biased response. A Proteosome-based
measles vaccine is currently being examined for its ability to protect monkeys
against live measles infection in collaboration with scientists at the
University of Maryland in a project funded by the Bill and Melinda Gates
Foundation.



                                      -27-
<Page>

SEVERE ACUTE RESPIRATORY SYNDROME CORONAVIRUS (SARS)

ID Biomedical has been awarded an approximately US$5 million grant from the
National Institutes of Allergy and Infectious Disease under the Challenge
Grants: Biodefense and SARS Product Development Program to develop a nasal
Proteosome-based subunit vaccine to protect against SARS. SARS is caused by the
human coronavirus that emerged in China in 2002 and 2004 and has been
responsible for more than 8,000 cases of respiratory disease and 774 deaths
world-wide. The high mortality rate of SARS (over 50% in subjects aged over 60
and more than 10% in younger people) and the fact that most of the world's
population is immunologically naive to the SARS virus highlights the potential
devastating impact that a SARS pandemic could have on human morbidity and
mortality. The aim of this project is to develop a nasal Proteosome-based
vaccine using a recombinant SARS S-protein, known to be a protective antigen for
most coronaviruses.

The relative paucity of SARS cases and the very low disease prevalence and its
erratic appearance worldwide would make it extremely difficult to conduct a
Phase 3 placebo controlled efficacy study, should one be required for licensure.

GROUP A STREPTOCOCCUS

In collaboration with the University of Tennessee, the Company is assessing the
feasibility of a nasally delivered vaccine for Group A Streptococcus. This
project is utilizing the Company's Proteosome-based adjuvants and recombinant
protein antigens from our injectable 26-valent Group A Streptococcal StreptAvax
vaccine. Results of this "second-generation" vaccine (to our StreptAvax vaccine)
to date indicate that M-protein-specific antibody responses are produced in mice
following nasal immunization. A Proteosome-based hexavalent M protein vaccine
prototype delivered via the intranasal route induced serum and salivary
antibodies that protected mice from infection with live Group A Streptococci. T
cell proliferative and cytokine assays using cells from lymph nodes and spleens
indicated the presence of hexavalent protein-specific T cells and a
type-1-weighted, mixed type 1/type 2 cytokine profile. The results suggest that
intranasal delivery of adjuvanted multivalent M protein vaccines induces
protective antibody responses and may provide an alternative to parenteral
vaccination.

BORDETELLA PERTUSSIS

Recognizing that BORDETELLA PERTUSSIS infects via the respiratory route and can
cause whooping cough, the Company is collaborating with Dalhousie University to
explore the feasibility of a nasal Proteosome-based vaccine for BORDETELLA
PERTUSSIS that may be the basis for a new generation of pertussis vaccines
capable of inducing protective immune responses in mucosal tissues as well as in
the blood. The current commercial vaccine is an injectable acellular vaccine
that induces antibody responses against the pertactin, fimbriae and toxin
components that correlate to some extent with clinical protection.
Immunogenicity studies have been initiated in mice with recombinant filamentous
hemagglutinin (FHA), the most important bacterial adherence factor associated
with B. PERTUSSIS, formulated with Proteosome-based adjuvants.
Proteosome-formulated FHA induced strong anti-FHA responses in serum following
intranasal immunization of mice and provided protection against aerosol
challenge with live B. PERTUSSIS.

ALLERGY

Currently, allergies are treated in two ways. If allergic persons are
symptomatic they are commonly treated with anti-inflammatory drugs or
anti-histamines. Additionally, people suffering from allergies to pollen such as
hay fever, or allergies to cat dander or house dust, can be treated with
desensitizing injections, which require many weeks of immunotherapy injections
followed by monthly injections for up to three years. Lack of patient acceptance
of such repetitive injections frequently impedes widespread use of this type of
immunotherapy.



                                      -28-
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The Company's goal is to develop Proteosome-based therapeutic vaccines that
control allergies against the major allergens and are delivered by a nasal spray
rather than by injections. Furthermore, using Proteosome-based technology to
rapidly induce therapeutic and protective types of immunity rather than allergic
responses may shorten the course of treatment required for effective
immunotherapy.

The first demonstration of the potential platform in allergy used birch tree
pollen, which causes hay fever. In our murine model system we have demonstrated
that the pro-allergic type 2 immune response (high IL-5) induced by the
commercial birch pollen extract can be converted to a potentially protective
non-allergic type 1immune response characterized by the production of interferon
gamma (IFN-(gamma)). This type of immune response is produced and maintained
even in animals that are already allergic to birch pollen allergen. Following
intradermal challenge of these mice with birch pollen allergen the skin test
reaction was suppressed by more than 50%. We have extended this work to
demonstrate that the same Proteosome birch pollen vaccines can protect allergic
mice against airway hyperresponsiveness in a mouse model of allergic asthma.
These results suggest that Proteosome-formulated allergens may be potential
therapeutic vaccines for allergic rhinitis and allergic asthma.

AUTOIMMUNE AND NEURODEGENERATIVE DISEASES

The Company is collaborating with a group at the Center for Neurologic Diseases,
Brigham and Women's Hospital, Harvard University to assess the potential of the
Company's Proteosome- and emulsome-based adjuvants to prevent and treat various
autoimmune diseases including Type 1 diabetes, multiple sclerosis (MS),
rheumatoid arthritis (RA), and atherosclerosis in addition to neurodegenerative
disorders such as Alzheimer's disease in animal models. The experiments are
evaluating the formulations given via the nasal and oral routes in the
appropriate animal models. Particular attention will be placed on
adjuvant/antigen formulations that induce type 2 immune responses since these
have been implicated in protection against autoimmune disease.

Results to date have shown that type 2 immune responses can be generated against
various analogues of myelin basic protein (including Copaxone (Cop-1) - a
licensed injectable immunotherapy for MS) formulated with the Company's
emulsion-based adjuvants. Myelin-basic protein is a candidate auto-antigen that
is a target for autoimmune responses that are implicated in MS. Studies are
being performed to examine these vaccine formulations for protection in a mouse
model for MS.

For Alzheimer's disease the Harvard group is evaluating a treatment that
involves activation of microglial cells, the "scavengers" of the brain that are
implicated in the clearance of amyloid protein that accumulates in the brain
with onset of symptoms. Reduction in brain amyloid protein has been associated
with improved cognitive function in animal models of Alzheimer's. Studies have
demonstrated that non-specific activation of microglial cells by nasal treatment
of mice with a Proteosome-COP-1 cocktail reduces amyloid deposition in the
hippocampus region of the brain by 83%.



                                      -29-
<Page>

The scientists at Harvard are also assessing the ability of the Company's
adjuvants to suppress inflammatory responses in heart tissue to reduce
infarctions linked to myocardial ischemia-reperfusion - the most common cause of
death in the western world. In a mouse model of heart disease nasal treatment
with emulsomes together with the heart muscle protein troponin significantly
reduced heart tissue damage by 50% in this model. Further studies are comparing
the effects of therapeutic vs. prophylactic treatment with the emulsion-based
troponin formulations on heart tissue damage.

VACCINES AGAINST BIOLOGICAL WARFARE AGENTS

PLAGUE

The plague, also known as the "Black Death," is caused by the YERSINIA PESTIS
bacterium. In past centuries, there have been over 150 recorded epidemics and
pandemics of the plague, including a pandemic that killed about one-third of the
population of Europe and England. Plague pneumonia is highly contagious because
large numbers of plague bacteria can rapidly spread person-to-person through
coughing and because the initial symptoms are similar to the flu. Plague is a
high priority target bioterrorist disease (Category A threat) since lethal
amounts of bacteria that cause plague pneumonia can readily be spread through
the air. There is no effective vaccine against the pneumonic form of plague
since the injected formalin-killed, whole-cell vaccine made many years ago does
not protect against inhaled exposure to plague bacteria and has, in any event,
recently been withdrawn from the market.

The nasal delivery of the Company's Proteosome-based vaccines is thought to
potentially induce protective immune responses at the mucosal surfaces of the
respiratory tract as well as in the bloodstream. Hence, the Company's Proteosome
based vaccine delivery systems and adjuvants may be suited to the development of
a vaccine to protect against inhaled acquisition of plague pneumonia.

In November 2001, the Company initiated collaboration with the United States
Army Medical Research and Material Command (USAMRMC) to develop a nasal vaccine
to prevent plague Pneumonia. Under this collaboration, USAMRMC supplied plague
antigen protein and clones for a recombinant fusion protein containing two
plague antigens considered to be protective against plague disease (F1 and V).
The Company produced and tested immunogenicity in mice of Proteosome-based nasal
sub-unit plague vaccines containing F1V. These animals were then shipped to
USAMRMC in Frederick, MD in order to test for vaccine-induced protection against
plague pneumonia. In October 2002, the Company announced that the results of the
pre-clinical studies were encouraging and based on these results this
collaboration was extended to continue further development of this vaccine
candidate. Specifically, mice immunized nasally with a Proteosome-based sub-unit
plague vaccine containing purified recombinant antigen developed high levels of
anti-plague antibodies in the blood as well as in respiratory lavage fluids and
also elicited a high degree of protection against death in animals challenged
with an aerosol containing a large inoculum of lethal plague bacteria.

These studies will be further expanded to compare several formulations of
Proteosome-based nasal plague vaccines. Much of this work is being funded by the
National Institutes of Health in accordance with a three year US$8 million grant
awarded to the Company in September 2004. The NIH-funded program includes
preclinical and early stage clinical trials in which the vaccine's safety and
immunogenicity will be studied. The long-term objective is to advance a
recombinant sub-unit nasal plague vaccine to licensure in the United States.

In January 2003, the Company announced it was awarded a subcontract from DynPort
Vaccine Company, LLC (DVC) to clone, express and produce a recombinant
injectable plague antigen (F1V, as above) using the expertise and proprietary
recombinant technologies of the Company (although the antigen is not proprietary
to the Company). This DVC project, which was expanded in December 2003,
currently contains eight major elements of work by IDBW relating to



                                      -30-
<Page>

manufacture of F1V bulk drug substance as follows: 1) F1V assay development and
qualification to measure and analyze the product (including identity assays,
quantity assays, purity assays, stability and other assays), 2) Optimization of
F1V production, 3) Optimization of F1V recovery, 4) Optimization of F1V
purification, 5) Manufacture of three F1V demonstration runs at scale, 6)
Manufacturing process transfer of F1V manufacture documents, 7) cGMP Manufacture
of three lots of F1V and 8) Stability studies on the F1V bulk drug substance and
two manufacturing intermediates at several temperature storage conditions over
two years. A plague vaccine from this subcontract entered clinical trials in the
US in January 2005. The clinical trials are being managed by DVC.

ANTHRAX

Anthrax is a serious disease caused by the spore-forming bacterium, BACILLUS
ANTHRACIS. The spores can easily be dispersed, and following their inhalation,
the initial symptoms of infection are very similar to those of other respiratory
diseases like colds and flu, leading to its classification as a Category A
threat. In late 2001, powdered anthrax was deliberately spread via the US mail
system, causing 22 cases of infection, half of which were inhalational anthrax.
About half of those infected died despite prompt and intensive medical
intervention. Protection against inhaled anthrax may benefit from an immune
response in the respiratory tract so the Company is assessing the potential of
an intranasal Proteosome-based Anthrax vaccine.

Sera from mice immunized intranasally with a recombinant PA (the so-called
Protective Antigen from Anthrax) formulated with Protollin, a Proteosome-based
adjuvant, were analyzed for anti-PA antibodies and the titers compared with
those elicited by intramuscular injection of the same antigen adsorbed onto
Alhydrogel. The level of antibodies capable of neutralizing PA-mediated cell
death elicited by both the intranasal and injected vaccines was identical.
Significantly, only the intranasal vaccine elicited high titer antibody
responses in lungs, and importantly, these antibodies also had neutralizing
activity. The vaccine will be assessed in a guinea pig challenge model in
collaboration with the US Army Medical and Material Command (USAMRMC).

                                BUSINESS STRATEGY

Our strategy is to develop vaccines for diseases with significant market
opportunities or those that will readily demonstrate the benefits of our
Proteosome technology. Key elements of our strategy include:

o    obtain FDA approval to market and sell Fluviral in the US, thus taking
     advantage of the distribution and product purchase agreements we already
     have in place for this market;

o    demonstrate the safety and effectiveness of our clinical programs such as:
     StreptAvax vaccine, FluINsure vaccine, and PGCvax, at least through Phase
     II clinical trials;

o    establish strategic alliances with international vaccine or
     biopharmaceutical companies to support pivotal clinical trials of our
     development programs (except for Fluviral, which we expect to take to
     licensure without a development partner at least for the US market), assist
     in obtaining regulatory approvals, and to manufacture (except for our
     influenza products and Proteosome proteins), distribute and sell these
     vaccine products on a worldwide basis;

o    manufacture our influenza vaccines, including Proteosome proteins relating
     to FluINsure, on a commercial scale to obtain transfer pricing or
     marketing/distribution arrangements;

o    either alone or in collaboration with third parties, develop new product
     candidates in preclinical and early human studies such as nasal,
     Proteosome-based vaccines; and



                                      -31-
<Page>

o    acquire new technologies and products that target large potential market
     opportunities.

In the area of biological warfare agents, the Company's strategy is to seek
funding from external sources, such as the US government or other organizations,
to establish proof-of-principle for vaccines against bioterrorism or biowarfare
agents based upon the Company's Proteosome and/or subunit vaccine technologies.
The Company believes the successful implementation of this strategy could
provide funding for the purchase of equipment and other infrastructure
requirements that can be beneficial to the Company's commercial programs. In
addition, by testing the Company's Proteosome adjuvant/delivery technology or
further developing our subunit vaccine technologies in these externally funded
programs, we can leverage our investments and potentially increase the value of
our platform technologies.

                      CLINICAL AND REGULATORY REQUIREMENTS

The discovery, development, manufacturing and marketing of vaccine products are
subject to regulation by governmental agencies in Canada, the United States and
other jurisdictions. These agencies regulate the testing, manufacture, safety,
labelling, storage, record keeping, approval, advertising, promotion and in some
jurisdictions, pricing of vaccine products.

After completion of early stage research work to explore feasibility, a new
vaccine must pass through a number of testing stages prior to approval for
marketing. The first step is preclinical testing. This stage typically involves
testing the vaccine candidate's pharmacology (immunogenicity) and toxicity in
animals; followed by demonstration that the vaccine can protect animals against
disease caused by the target microbe if a suitable animal model exists.
Successful results can lead to an Investigational New Drug (IND) submission in
the US or a Clinical Trial Application (CTA) in Canada, which is reviewed in
detail by regulatory authorities before granting approval to proceed with
clinical trials in humans. The second stage involves three phases of clinical
testing, each of which may involve several different clinical trials. In Phase
I, the vaccine's safety and tolerability in a small number of healthy subjects
is assessed. In Phase II, the vaccine's safety is further assessed in a larger
number of subjects, usually representing one or more populations for which the
vaccine is eventually intended. Different doses and regimens are often evaluated
at this stage, and the immune response to the vaccine is measured as a surrogate
for potential efficacy. In some exceptional cases, such as influenza and some
other respiratory and enteric infections, human challenge models may be
available for Phase II studies. In Phase III, there are carefully controlled
clinical trials in which the vaccine is administered to a large number of
subjects in the target population to definitively demonstrate the vaccine's
efficacy in preventing the disease of interest. The design of Phase III trials
is developed in close consultation with regulatory authorities. If designed
properly, Phase III clinical trials program should include a number of subjects
sufficient to demonstrate not only that the vaccine is efficacious, but also
that it is acceptably safe for the intended recipients. Because
naturally-occurring disease is not totally predictable, there can be no
guarantee that a particular Phase III trial, however well designed, will fulfill
all objectives, that the disease incidence during the course of the trial will
be as high as predicted or that the trial will be designed in such a way as to
ensure that these objectives are met. In addition, since vaccines are intended
to be given to healthy recipients, often children, the phase III safety database
required of vaccines is usually quite large, typically 15,000 - 30,000 or more
subjects with attendant very high costs. Following Phase III, depending upon the
results obtained, the vaccine sponsor may submit to the appropriate regulatory
agency an application for marketing approval, which is referred to as a
Biologics License Application (BLA) in the United States, a New Drug Submission
(NDS) in Canada, and a Marketing Authorisation Application (MAA) in the European
Union.

Success in one phase of testing is not necessarily predictive of success
(whether testing for safety or efficacy) at the next phase, nor is it certain
that a product will be able to be advanced in a sequential, timely, or
straightforward fashion from one phase to the next. Failure at one stage



                                      -32-
<Page>

or phase of clinical testing, however rectified, may prevent further testing or
advancement of the product to other phases. In addition to showing safety and
efficacy, the manufacturer of a new vaccine must demonstrate in detail to
regulatory authorities that the raw materials and methods used to produce the
vaccine are well understood and controlled, that the vaccine product is
consistent from lot to lot, and that all the testing methods used are valid and
reproducible.

Typically, regulatory approval, if granted, for vaccine products is costly,
requires very large clinical trials and extensive manufacturing validation, and
may take a number of years to obtain (see "Risk Factors"). Because the Company
has made and is continuing to make substantial investments in property, plant
and equipment related solely to our ability to produce significant doses of flu
vaccine almost entirely for the US market, the clinical and regulatory
requirements for entering the US market cannot be understated.

Among the other requirements for BLA approval is the requirement that
prospective manufacturers conform to the Good Manufacturing Practices (the
"GMP") regulations specifically for biological drugs, as well as for other
drugs. In complying with the GMP regulations, manufacturers must continue to
expend time, money and effort in production, recordkeeping and quality control
to assure that the product meets applicable specifications and other
requirements. The FDA periodically inspects biological drug product
manufacturing facilities in order to assure compliance with applicable GMP
requirements. Failure to comply with the GMP regulations subjects the
manufacturer to possible FDA regulatory action, such as the suspension of
manufacturing, product recall or seizure, injunction and criminal prosecution.
There can be no assurance that the Company will be able to maintain compliance
with the GMP regulations on a continuing basis. Failure to maintain such
compliance could have a material adverse effect on the Company's business,
financial condition and results of operations (see "Risk Factors").

ID Biomedical manufactures its Fluviral vaccine at its modern facility in Quebec
City and an older facility (used for upstream processing) in Laval, Canada. The
Quebec City plant is being expanded. Once a current expansion is completed and
validated, the Company may cease to use the Laval facility for any influenza
vaccine production. The Company's injectable flu vaccine production capacity is
expected to be approximately 22 million doses in 2005 and is anticipated to
increase to 50 million doses by 2007. Achievement of the increase in production
capacity will require significant investment by the Company and there can be no
assurance the expanded capacity will be completed on time, within budget or in
accordance with regulatory guidelines that will allow licensure of the facility,
particularly in accordance with FDA standards (see "Risk Factors").

In addition to expanding the capacity of its main influenza production facility
at Quebec City, ID Biomedical has made minor modifications to its current
manufacturing process and these will be implemented in 2005 and beyond. The
Company believes that these changes meet all current FDA requirements for
influenza vaccines but there can be no assurances this is the case until the
Company receives FDA approval of its BLA covering the product, manufacturing
process and quality programs, as well as the production facilities. Further, the
Company cannot be certain the modified manufacturing process when scaled to
produce tens of millions of doses per year will produce vaccine ultimately
acceptable to the Canadian government or if the change in production will affect
yields at large scale.

The Company may be able to obtain an accelerated, provisional approval to market
Fluviral in the US based upon an immunogenicity study. If so, the Company will
then be required by the FDA to conduct at least one major efficacy trial
relating to Fluviral and its ability to protect against influenza illness as a
confirmatory study to the immunogenicity study. The Company expects to conduct
the immunogenicity and safety study in 2005 and the efficacy study in 2005 and
2006. There can be no assurances that either of these studies will be
successful. In fact, no current injectable flu vaccine has been tested under
current FDA standards for efficacy or immunogenicity. It is possible that all 3
strains of the Company's product (or any flu vaccine for that matter) may not be
deemed to be immunogenic in accordance with standards set by the



                                      -33-
<Page>

FDA. Further, the product may be immunogenic, but then fail to achieve efficacy
standards set by the FDA. There can be no assurance, however, that the ultimate
study will be successful in terms of proving efficacy (see "Risk Factors: Risks
Related to the Development and Commercialization of Our Products"). Safety data
will also be required and is expected to come from the 2005 efficacy study, as
well as other smaller studies to be conducted in the US prior to the in-season
efficacy study.

ENHANCED SURVEILLANCE FOR ORS IN CANADA (2000-2004)

Even after winning regulatory approval, the Company is required to collect
ongoing post-marketing data to monitor the safety of the products. For example,
this is the case with the Company's Fluviral vaccine in Canada. With regard to
post marketing information on Fluviral, in October 2000, the vaccine adverse
event surveillance system in Canada received reports of individuals who
developed red eyes and respiratory symptoms shortly after influenza vaccination.
Health Canada initiated an enhanced surveillance program for these adverse
events that were termed the "oculo-respiratory syndrome" (ORS). The initial
definition of ORS was an adverse event constellation that was characterized by
bilateral red eyes (with or without discharge, itchiness, or edema), and at
least one respiratory symptom (cough, sore throat, difficulty breathing, chest
tightness or wheezing), which symptoms occurred within 3 to 24 hours of
immunization and resolved completely within 48 hours.

The case definition of ORS has been changed on three occasions during the years
following its description. Changes in the definition of ORS have included
relaxation in the onset and resolution times, additions to the list of
constituent symptoms, and deletion of the requirement for more than one symptom.
The repeated changes, while a well-meant attempt to detect a post-vaccinal
complication, diluted the validity of ORS as an entity. ORS as currently defined
is any one of nine symptoms, several of which are quite common in the
fall-winter respiratory illness season. While it is clear that the constellation
of events originally described as "classic ORS" does indeed occur, this is
consistently a minority of reported "ORS" cases and, despite considerable notice
and enhanced surveillance in Canada, is declining with time.

During the 2000-01 season 2,450 influenza vaccine-associated adverse events were
reported to Health Canada. Of these, 71% reported ocular or respiratory
symptoms. Nine hundred and sixty (960) reports fulfilled the then-current case
definition of ORS; of these 925 (96%) of cases occurred following Fluviral
administration. Of the 960 cases, 74% were female and of these, 71% were between
30 and 59 years of age. 24 % of subjects with ORS consulted a health care worker
and 11 subjects were hospitalized. There were no deaths in association with ORS.
The syndrome was generally mild and self-limiting.

Two clinical studies were conducted with Fluviral before its release for the
2001-02 season. Notably, almost all reports from these studies were mild and
there was no overall evidence of symptoms interfering with daily activities
following vaccine treatment. On the basis of these results, it was recommended
that persons previously affected with ORS should be warned of a possible risk of
recurrence, but that recurrences would likely be mild and well-tolerated.
Fluviral was released for general use in 2001-02.

Two retrospective studies of ORS were conducted during the 2001/02 season and
have since been published. Their results are mutually supportive. One survey
conducted in the province of Quebec attempted to determine the incidence of ORS
in subjects receiving either Fluviral or another licensed influenza vaccine.
Subjects underwent scripted telephone interviews and the diagnosis of ORS was
based on the 2001 Health Canada case definition. Of the 2070 eligible
participants, 1006 (48.6%) received Fluviral and 1065 (51.4%) received another
product. The incidence of ORS was 5.6% and 4.8%, in Fluviral and comparator
recipients, respectively (p = 0.49). Of 57 subjects who had ORS during the
2000/01 season, the incidence of ORS was 35% and 23%, in Fluviral and comparator
recipients, respectively. The authors concluded that the risk of ORS was similar
between the two vaccines and that this risk may be present and similar with



                                      -34-
<Page>

any influenza vaccine.

The second survey was conducted in British Columbia in May 2002 and targeted
subjects who had reported any type of adverse event associated with influenza
vaccine during the 2000-01 season. Of the 561 participants, 202 were
revaccinated in 2001. Of the 122 subjects who had experienced potential ORS
during the 2000/01 season, six (5%) had symptoms consistent with ORS following
vaccination in 2001. This frequency of "ORS" complaints did not differ from that
in the general re-vaccinated population (4%), and ORS in both groups comprised
almost exclusively single-symptom reports (i.e., not a syndrome). Of note, this
study evaluated subjects who received almost exclusively a vaccine other than
Fluviral, and validated the approximate 5% rate of any one "ORS" symptom in
recipients of any influenza vaccine as reported in Quebec.

Health Canada surveillance statistics show that the Canada-wide incidence of ORS
has progressively decreased since recognition in 2000-01, and that approximately
2/3 of the "syndrome" is in fact not classical ORS but a single symptom.

Based on the foregoing, the Company concludes:

     o    Ocular and respiratory adverse events in association with influenza
          vaccination can be associated with any influenza vaccine (and similar
          events have been reported previously in Europe with other vaccines).

     o    The syndrome when it occurs is mild and transient.
          Vaccine-attributable rates of 2.9 to 5% can be solicited under
          clinical trial or targeted survey conditions, but cases severe enough
          to be spontaneously reported follow = 0.026% of doses.

     o    Despite enhanced surveillance, a liberalized case definition, and
          increased public and provider awareness, the rate of ORS in 2001
          through 2004 has been reduced and continues to decline.

CLINICAL PROGRAMS

For clinical and regulatory information relating specifically to our FluINsure,
StreptAvax, and PGCvax vaccines please see sections entitled "Products" and
"Development Programs" previously reported in this Annual Information Form.

PRECLINICAL/RESEARCH PROGRAMS

It is too early in product development to be able to accurately determine what
specific or unique clinical and/or regulatory processes may be relevant to any
of the Company's preclinical or research programs. The specific issues will be
largely driven by the characterization and consistency of the Proteosome
technology for intranasal vaccines, and also by the ultimate antigen source
election and other issues related to our injectable vaccine programs.

             COMPETITION FOR MARKETED PRODUCTS AND CLINICAL PROGRAMS

INFLUENZA VACCINES

The market for influenza vaccines is highly competitive and the creation of new
and improved flu vaccines (whether intranasal or otherwise) is under active
development. The Company is not aware of all potentially competitive programs
and their current stage of development, but is aware of at least the following
influenza vaccines and influenza vaccine development programs:



                                      -35-
<Page>

<Table>
<Caption>
------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                                         <C>
COMPANY                                     TECHNOLOGY / BRAND NAME                     ESTIMATED STAGE OF
                                                                                        DEVELOPMENT
------------------------------------------------------------------------------------------------------------------
MUCOSAL VACCINES
------------------------------------------------------------------------------------------------------------------
Antigenics Inc.                             QS21                                        Phase I
------------------------------------------------------------------------------------------------------------------
MedImmune, Inc.                             Cold-Adapted Live Attenuated Virus          Approved in US
                                            (FluMist)
------------------------------------------------------------------------------------------------------------------
Chiron Corporation                          LT-K-63 (CT analog)                         Preclinical
                                            MF 59 (emulsion)                            Phase II
------------------------------------------------------------------------------------------------------------------
Corixa Corporation                          MPLA-AF (Monophosphoryl Lipid A /           Research
                                            Dipalmitoylphosphatidyl choline)
------------------------------------------------------------------------------------------------------------------
Coley Pharmaceutical Group                  CpG motifs                                  Preclinical
------------------------------------------------------------------------------------------------------------------
Innovax (Elan and Endorex JV)               Liposomes (Orasomes)                        Research
------------------------------------------------------------------------------------------------------------------
Lyfaproun                                   Mono - and di-glycerides                    Phase I
------------------------------------------------------------------------------------------------------------------
Merck & Co., Inc.                           Plasmid DNA-based vaccine                   Phase I
------------------------------------------------------------------------------------------------------------------
Norwegian Health Authority                  OMP from Neisseria bacteria + detergent     Phase I
------------------------------------------------------------------------------------------------------------------
Berna Biotech AG                            Liposomes (Virosomes)+ E. coli Labile       Licensed in Switzerland
                                            Toxin                                       (removed from market)
------------------------------------------------------------------------------------------------------------------
West Pharmaceuticals Services Inc.          Chitosan delivery technology                Phase I/II
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
INJECTED VACCINES IN DEVELOPMENT
------------------------------------------------------------------------------------------------------------------
Avant Immunotherapeutics (licensed to       Adjumer (Plyphosphazine Copolymers and      Phase II
Aventis Pasteur)                            Micromer)
------------------------------------------------------------------------------------------------------------------
Corixa Corporation                          Monophosphoryl Lipid A (MPLA)               Preclinical
------------------------------------------------------------------------------------------------------------------
Novavax, Inc.                               Liposome Novasomes                          Preclinical
------------------------------------------------------------------------------------------------------------------
PowderMed Ltd.                              Transdermal Powder-Form Needle-Free         Research
                                            Vaccination
------------------------------------------------------------------------------------------------------------------
Iomai Corporation                           Transdermal delivery via a skin patch       Research
------------------------------------------------------------------------------------------------------------------
Protein Sciences Corporation                Cell culture or recombinant protein         Phase II
                                            production of flu antigen
------------------------------------------------------------------------------------------------------------------
INJECTED LICENSED VACCINES
--------------------------------------------------------------------------------------- --------------------------
Sanofi Pasteur                              Fluzone / Mutagrip/Vaxigrip
------------------------------------------------------------------------------------------------------------------
GlaxoSmithKline Inc.                        Fluarix
------------------------------------------------------------------------------------------------------------------
Solvay S.A.                                 Influvac
------------------------------------------------------------------------------------------------------------------
Chiron Corporation                          Fluvirin/ Begrivac/Fluad
------------------------------------------------------------------------------------------------------------------
Berna Biptech AG                            Inflexal
------------------------------------------------------------------------------------------------------------------
</Table>


                                      -36-
<Page>

<Table>
<Caption>
------------------------------------------------------------------------------------------------------------------
<S>                                      <C>
Others (e.g. CSL in Australia; Biken,
Denka Seiken, and others in Japan)
------------------------------------------------------------------------------------------------------------------
</Table>


NEISVAC-C

NeisVac-C is a Meningococcal group C conjugate vaccine, indicated for the
prevention of Meningitis Serogroup C in children, 2 months of age and older.

This vaccine is in direct competition with Menjugate from Chiron Corporation and
Meningitec(R) from Wyeth Corporation. Combination serogroup meningitis vaccines
have been approved in some countries but are not yet available in Canada. Sanofi
Pasteur's Menactra for A/C/Y/W at present is indicated for 11 years of age and
above. Sanofi Pasteur's quadrivalent A-C-Y-W conjugate vaccine has received a
positive recommendation from an Advisory Committee in the US for pediatric use.

GROUP A STREPTOCOCCAL (GRAS) VACCINES

The Company is not aware of any GrAS vaccines other than its own that are
currently undergoing clinical testing in humans. However, the Company is aware
of other competing preclinical academic/commercial research programs by The
Rockefeller University and Siga Technologies; the University of Minnesota and
Wyeth Corporation; and Baxter Corporation.

PNEUMOCOCCAL VACCINES

There are two principal competitor vaccines to Pneumococcal Group Common Vaccine
(PGCvax). Both of these vaccines are licensed and available for sale in many
markets worldwide.

Prevnar, a 7-valent conjugate vaccine produced by Wyeth Corporation for the
pediatric indication is one of the best selling (revenue wise) vaccines in the
world. Wyeth Corporation's estimated sales are in excess of US$1billion and are
actually limited by production capacity issues as opposed to demand. There are
on-going programs for the development of 9-valent and 11-valent conjugate
vaccines at Wyeth Corporation, GlaxoSmithKline, and Sanofi Pasteur.

Pneumovax is a 23-valent polysaccharide vaccine produced by Merck & Co. Inc. The
indication for this product is for the elderly, protecting primarily against
pneumonia.

Sanofi Pasteur, Wyeth Corporation and GlaxoSmithKline have been developing
protein-based group common vaccines.

                  MARKETING, DISTRIBUTION AND SUPPLY AGREEMENTS

The Company is presently marketing and distributing the Fluviral influenza
vaccine in Canada and has developed a strategy, more fully described below, to
potentially market and distribute influenza vaccine in the United States. The
Company also distributes in Canada a meningococcal C vaccine on behalf of Baxter
Corporation ("Baxter").

In the Canadian market, the Company's sales and marketing team consists of five
full-time, employees. The team is responsible for sales and marketing of the
Fluviral influenza vaccine and the NeisVac C vaccine, as well as the
distribution of these products and customer service.



                                      -37-
<Page>

Following at least early clinical development and, assuming favourable results
are achieved, the Company may seek one or more strategic alliances for the
further development, regulatory approval, manufacturing, distribution and sale
of its non-flu vaccine products. There can be no assurances the Company will be
able to finalize such strategic alliances on terms favourable to the Company, or
on any terms (see "Risk Factors").

FLUVIRAL

ANNUAL AND PANDEMIC SUPPLY OF INFLUENZA VACCINE TO THE CANADIAN GOVERNMENT

In September 2001, through the acquired vaccine of Shire, the Company signed
a ten year contract with the Canadian Government to assure a state of
readiness in the case of an influenza pandemic (worldwide epidemic) and to
provide influenza vaccine for all Canadian citizens in such an event. The
concept of a state of readiness against an influenza pandemic requires the
development of sufficient infrastructure and capacity in Canada to provide
for domestic vaccine needs in the event of an influenza pandemic. IDB is
committed to providing 32 million doses of single-strain (monovalent)
influenza vaccine within a production period of 16 weeks. The Company has
begun the process of expanding its production capacity in order to meet this
objective within a five-year period ending January 2007. The Company is also
committed to certain capital expenditures for the purpose of achieving the
level of pandemic readiness required in the contract. At the end of the
contract, IDB is committed to buy back any unused and unexpired materials and
capital assets reimbursed by the Canadian government (at net book value) that
can be used for production of trivalent vaccine or other products.

In addition, under the same contract, the Company has agreed to supply the
government of Canada with approximately 50% of its annual influenza vaccine
requirements over a ten-year period ending March 2011. Subject to mutual
agreement, the contract can be renewed for a further period of between one and
ten years.

In June 2003, the Company entered into a second agreement for a five year period
(through March 2008), whereby the Canadian government agreed to increase its flu
vaccine purchases by additional 25% of the total public market, resulting in a
total of approximately 75% of the government's influenza vaccine purchases to be
awarded to the Company.

           US MARKETING, DISTRIBUTION AND PRODUCT PURCHASE AGREEMENTS

In December 2004, the Company signed long term marketing, distribution and
minimum purchase agreements for its Fluviral influenza vaccine for the United
States market with three of the largest influenza vaccine wholesalers in the
United States: Henry Schein, Inc.; AmerisourceBergen Corporation's Specialty
Group; and McKesson Medical-Surgical Inc. Under the terms of the agreements,
each of the distributors agreed to purchase a minimum number of doses of
Fluviral vaccine from IDB beginning upon United States Food & Drug
Administration (FDA) clearance. The purchases will begin the year of FDA
approval (so long as such approval occurs by April 1 of any given year prior to
2008) and will end after the 2014/2015 flu season. If the Company does not
receive initial FDA approval by December 31, 2007, then the distributors each
have a certain period of time to terminate the agreements with no further
obligation to the Company.

It is the expectation of the parties that IDB's Fluviral will be licensed in the
US by at least April 1, 2007, in time for the 2007/08 influenza season, meaning
the vaccine production and purchase transaction will cover a total of at least 8
influenza seasons.

Purchases to be made under the agreements will be a non-returnable basis, and
are contingent upon FDA clearance of the product in accordance with industry
standard practices for each season and overall licensure in advance of the
2008/09 flu season as discussed above. The Company has agreed to use
commercially reasonable efforts to obtain FDA approval by at least



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the 2008/2009 influenza season. The Company has not provided any assurance under
the agreements that it will obtain such approval, nor has it warranted or
represented that it will be successful in scaling up production or manufacturing
vaccine in quantities to meet the minimum purchase requirements in any given
year. The Company must use commercially reasonable efforts to obtain FDA
approval as soon as reasonably practical and to supply the minimum quantities
contemplated under the agreements.

There are limited circumstances under which the Company's distribution partners
may terminate their obligations under the agreements. Each party has the ability
to terminate the agreement if initial FDA approval is not obtained by at least
December 31, 2007. These are time limited options that must be exercised within
the time allowed. In addition, in two of the agreements the distribution
partners may terminate the agreements (after a specified period of negotiation)
if a new influenza vaccine product based on novel technology (not currently
available) is introduced and captures a specified percentage or more of the US
market, unless IDB also offers these distribution partners a product competitive
to such new influenza product. In the case of one agreement, the distribution
partner may not terminate the agreement but may reduce its annual minimum
purchase requirements under the agreement if a new influenza vaccine product
based on novel technology (not currently available) is introduced and captures a
specified percentage or more of the US market and IDB is not offering a product
competitive to such new influenza product.

The other principal risk associated with these agreements is the Company's
ability to successfully produce influenza vaccine each year and to have the
product released by the FDA for export to the US by at least October 31 of each
flu season. If the Company successfully achieves these goals, then the
distribution partners must purchase at least the minimum doses of flu vaccine
from the Company in each year of the contracts. There are no product return
provisions related to the partner's ability to sell the product or related to
the market price of influenza vaccines, although the Company has the option to
terminate the agreements if the price to be paid to the Company by the
distributors drops below a certain price (although IDB may choose to continue to
supply product at the lower prices). The Company currently does not foresee any
material risk in the creditworthiness of any of the three distribution partners,
but an inability to pay for product is always a potential risk in product supply
and distribution arrangements. The amount paid to the Company is based upon a
revenue sharing formula that is the same in each contract.

NEISVAC-C

BAXTER CORPORATION ("BAXTER")

In September 2001, the Company, through the acquired vaccine business of Shire,
entered into an exclusive distribution agreement with Baxter to sell and
distribute the NeisVac-C vaccine in the Canadian market. The agreement
expires on December 31, 2012 unless terminated by either party as a result of
a material breach of the contract.

CANADIAN GOVERNMENT CONTRACTS

In September 2004, the Company was selected to supply meningitis C vaccine to
the Canadian government over the next two years. The Canadian government has
retained an option to purchase additional product from the Company in the third
and final year of the contract. This contract was awarded by Public Works Canada
on behalf of Canada's provinces health ministries, with the exception of Quebec.
The Company expects to deliver approximately one million doses of NeisVac-C
vaccine over the first two years of the contract. A failure by Baxter to deliver
the product to the Company could result in the Company breaching its obligations
under the Canadian government contracts.



                                      -39-
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                       LICENSE AND ACQUISITION AGREEMENTS

SHIRE PURCHASE AGREEMENT

On September 9, 2004, the Company acquired the assets of the vaccine business
previously carried on by Shire BioChem, Inc., on behalf of its parent, Shire
Pharmaceuticals Group, plc. The transaction included the purchase of all of the
issued and outstanding shares of Shire BioChem's wholly-owned subsidiary Shire
Biologics Inc. ("Shire Biologics").

Through this acquisition, IDB has acquired, among other things:

(a)      an antigen supply for IDB's intranasal FluINsure vaccine, which is
         currently in clinical trials;

(b)      an injectable flu vaccine (known as Fluviral) licensed in Canada and
         other countries and under development for the US market;

(c)      an agreement with the Canadian government (see "Annual and Pandemic
         Supply of Influenza Vaccine to the Canadian Government") which provides
         that the Canadian government will buy Fluviral for public use and will
         pay a certain percentage of required capital investments to develop
         sufficient infrastructure and capacity to guarantee a supply of
         Fluviral for the entire population of Canada in the event of a
         pandemic;

(d)      an agreement with Technology Partnerships Canada (see "Technology
         Partnerships Canada Agreements") pursuant to which this Canadian
         federal government agency agrees to provide funding for the development
         of a portfolio of pipeline vaccine candidates;

(e)      a 120,000 square foot influenza vaccine manufacturing facility and
         fill/finish plant in Quebec City, Quebec that is currently being
         expanded to 200,000 square feet;

(f)      a 68,000 square foot vaccine research center in Laval, Quebec;

(g)      a 60,000 square foot fully integrated vaccine development and pilot
         manufacturing facility in Northborough, Massachusetts;

(h)      a pipeline of vaccine candidates targeting various diseases, and;

(i)      a skilled and experienced workforce.

The acquired vaccine business generated sales of approximately $36 million in
2003, primarily from the sale of Fluviral vaccine to the Canadian government.

CONSIDERATION

The total purchase price for the acquisition was US$120,000,000. The purchase
price was paid as follows:

         (a)      US$30,000,000 in cash was paid to Shire at closing;

         (b)      US$30,000,000 in cash was paid at closing to an escrow agent
                  to hold in trust. On the first anniversary of the closing
                  date, the US$30,000,000 will be paid by the escrow agent to
                  Shire. All interest which accrues on this amount while it is
                  held in escrow will be paid to IDB on the first anniversary of
                  the closing date; and

         (c)      a total of 4,931,864 subscription receipts were issued by IDB
                  to Shire at closing.



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                  Beginning on January 10, 2005 and continuing until July 9,
                  2006, each subscription receipt is exercisable for one common
                  share of IDB at no additional consideration. During the first
                  four months after closing, IDB had the right in certain
                  circumstances to require Shire to deliver the subscription
                  receipts back to IDB (for cancellation) in return for a cash
                  payment of US$60,000,000. IDB exercised this right and paid
                  Shire US$60 million in cash on January 7, 2005.

Under the terms of the agreement, IDB is required to reimburse Shire for the net
operating working capital at June 30, 2004 and the net cost of operating the
vaccines business from June 30, 2004 until closing (September 9, 2004). These
adjustments are detailed in the financial statements.

Under the term of the agreement an affiliate of Shire has provided IDB with a
funding facility of up to US$100 million, which can be drawn down over a 4 year
period ending September 9, 2008 (see "Shire LLC Credit Facility"). This facility
can be used by IDB to fund development of injectable flu vaccine outside of
Canada and pipeline products within the vaccines business acquired from Shire.
IDB has agreed to pay Shire royalties on certain product sales and minimum
principal and interest payments relating to flu vaccine uses. Other than the
minimum payments, the Company is not obligated to repay the amounts advanced
under the funding facility, unless there are related product sales subject to
royalties as provided in the agreement.

For more information relating to this transaction, please refer to the business
acquisition report dated November 23, 2004 prepared and filed by IDB in respect
of the transaction, which is incorporated by reference herein. A copy of this
report is available at www.sedar.com.

INTELLIVAX INTERNATIONAL, INC.

On May 15, 2001, the Company closed a transaction under a Share Purchase
Agreement in which it acquired 100% of the outstanding shares of Intellivax
International, Inc. of Montreal, Quebec (now referred to as IDBQ) and its wholly
owned subsidiary in Baltimore, Maryland, Intellivax, Inc. (now referred to as
IDBM), for consideration of 4,000,000 common shares of the Company. These shares
were held in escrow, with the majority released in four instalments. The dates
of these share releases were November 15, 2001, May 15, 2002, November 15, 2002
and May 15, 2003.

As a result of this acquisition, the Company acquired the nasal influenza
FluINsure vaccine; the proprietary Proteosome platform technology for the
potential nasal delivery of vaccines; a large portfolio of intellectual
property; and a skilled and experienced work force.

WALTER REED ARMY INSTITUTE OF RESEARCH

Dr. George Lowell, currently the Company's Chief Scientific Officer, Biodefense,
previously entered into an exclusive license agreement with the Walter Reed Army
Institute of Research (WRAIR) granting Dr. Lowell a worldwide, exclusive
license, with the right to sublicense, to several patents and pending patent
applications covering the Proteosome technology that Dr. Lowell had invented
while employed by WRAIR. Dr. Lowell subsequently assigned his rights in the
license agreement and to future inventions to IDBM, who subsequently assigned
its rights outside the US, and sublicensed its US rights, to IDBQ. WRAIR
approved all such assignments and sublicenses.

Under the Lowell/WRAIR agreement, as amended, the exclusive license covers all
potential uses of the Proteosome technology (as well as certain co-exclusive
rights to another adjuvant system known as "Sub-micron Emulsions or Solid Fat
Nanoemulsions"), with the exception of certain limited formulations of
Proteosome for targeting a vaccine against sepsis. IDBQ (on behalf of Dr.
Lowell) is required to use reasonable efforts to develop and commercialize the
licensed patents in



                                      -41-
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accordance with a commercial development plan. The agreement also allows any
sublicensee's efforts to fulfill this requirement. Upon any sublicense of the
patents (other than to an affiliated company) IDBQ is to pay WRAIR a sublicense
fee of US$25,000. In addition, IDBQ is to pay WRAIR milestone payments that
could total as much as US$110,000 per licensed product, as well as royalties on
eventual product sales. In 2003 the Company paid WRAIR milestone payments
totalling US$35,000. WRAIR has reserved the right to practice the patents under
the agreement for US governmental purposes in accordance with Title 35 US Code
Section 203. In the event IDBQ breaches the agreement and fails to cure any such
breach, WRAIR may terminate the agreement.

In addition to the exclusive license agreement, WRAIR and IDBM subsequently
entered into a series of Co-operative Research and Development Agreements
(CRADAs) to develop vaccines against infectious diseases, the most comprehensive
of which was a CRADA to develop a vaccine against shigellosis. Although this
research collaboration was successful in developing a candidate vaccine that was
tested in Phase II human clinical trials (and fulfilled the primary component of
the development plan under the license), the Company does not believe
significant commercial potential exists for such a vaccine. Given its limited
resources, the Company has elected to postpone efforts to further develop a
shigellosis vaccine based on the Proteosome technology and will instead focus
current resources on those products that are believed to offer better or more
immediate commercial potential.

UNIVERSITY OF CALIFORNIA, LOS ANGELES (UCLA)

IDBW and UCLA entered into a licensing agreement pursuant to which IDBW was
granted an exclusive, worldwide royalty-bearing license to use certain patented
technology of UCLA for the development of vaccines and immunotherapeutics
against MYCOBACTERIUM TUBERCULOSIS (TB). UCLA also granted to IDBW exclusive,
worldwide license rights to a vaccine against LEGIONELLA PNEUMOPHILA
(Legionnaires disease) developed by UCLA. The rights to the LEGIONELLA
PNEUMOPHILA vaccine were terminated and returned to UCLA in 1998. Under the
agreement, IDBW has paid UCLA license issue fees and milestone payments.
Additional milestone payments are due relating to the commercial development
phases of a subunit TB vaccine, as well as royalties to UCLA on product sales.
The parties have also agreed that IDBW will receive a percentage of licensing
income (up to a maximum amount) that UCLA may obtain in the future from
licensing a non-subunit TB vaccine that IDBW is not interested in
commercializing. In 2002 IDBW terminated its rights and obligations to certain
pending patent applications while retaining its rights and obligations to
several issued patents. The Company does not believe there is a high probability
that UCLA will successfully license this non-subunit technology (which is based
upon a recombinant version of the existing TB vaccine, BCG (Bacillus
Calmette-Guerin)) to a commercial partner.

UNIVERSITY OF TENNESSEE RESEARCH CORPORATION (UTRC)

IDBW and UTRC entered into a licensing agreement pursuant to which IDBW was
granted an exclusive, worldwide license to use certain patented technology of
UTRC for the development of vaccines and immunotherapeutics against GrAS. Under
this agreement, IDBW paid UTRC an upfront license fee and is required to make
further payments when it reaches three specified milestones relating to the
commercial development of the GrAS vaccine, as well as an annual license
maintenance fee. These milestone payments are payable in IDBW common shares. On
October 6, 1999, IDBW reached the first such milestone under the UTRC agreement
(removal of all FDA conditions for the initiation of human testing) and issued
to UTRC 408,163 common shares of IDBW in satisfaction of the first milestone
payment of US$1 million. On August 20, 2003 IDBW executed an amendment to the
licensing agreement. Upon signing the amendment, UTRC returned 408,163 shares of
IDBW common stock and IDBW paid UTRC US$250,000 in cash and provided UTRC
US$250,000 worth of common stock of the Company (equalling 18,948 shares at the
time of the amendment). The amendment also provides that all future milestone
payments, if milestones are achieved, will be paid in common shares of the
Company. The second milestone



                                      -42-
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payment of US$1.5 million in common shares of the Company is due upon the
initiation of Phase III Clinical Trials of a GrAS vaccine covered by UTRC's
patented technology. In addition, upon FDA approval of the GrAS vaccine, UTRC
will receive a milestone payment in the Company's common stock equal to 1% of
the then fully diluted capital stock (less shares reserved under the Company's
employee stock option plan) of the Company. There are no royalties due under
this agreement, however, IDBW must use diligent efforts to develop and
commercialize a GrAS vaccine covered by UTRC's patents in order to maintain its
rights under this agreement.

UNITED STATES ARMY MEDICAL RESEARCH AND MATERIAL COMMAND

In November 2001, the Company initiated collaboration with the United States
Army Medical Research and Material Command (USAMRMC) to develop a nasal vaccine
to prevent plague pneumonia. Under this collaboration, USAMRMC will supply
plague antigens and the Company will produce one or more different formulations
of Proteosome-based nasal vaccines for testing by USAMRMC. Each party is
covering its own expenses associated with this early-stage program. Under the
agreement, the Company has retained the option to negotiate for a commercial
license to any inventions that may result from the collaboration.

DYNPORT VACCINE COMPANY, LLC

In January 2003, the Company was awarded a subcontract from Dynport Vaccine
Company, LLC (DVC), relating to the development of a second-generation, subunit
injectable plague vaccine. The subcontract provides the Company with
approximately US$6 million to clone, express and produce under current Good
Manufacturing Practices a subunit recombinant plague vaccine antigen suitable
for clinical trials. In December 2003, the Company entered into agreements to
receive additional funding commitments from DVC for up to approximately US$4.5
million for further process development and manufacturing activities related to
producing a subunit recombinant plague antigen under current Good Manufacturing
Practices. Full funding of the contract requires continued sponsorship of DVC by
the United States Department of Defense. Neither party can guarantee that such
continued support will occur.

NATIONAL RESEARCH COUNCIL OF CANADA

The Company is the exclusive Canadian intellectual property rights holder of the
underlying technology related to NeisVac-C. The Company's rights thereto stem
from (i) an original License Agreement by and between Canadian patents and
development Ltd ("CDPL") and IAF BioChem International Inc. ("BioChem") dated
July 27th, 1987; (ii) on January 9th, 1990 BioChem assigned its right in the
License Agreement mentioned in (i) to North American Vaccine Inc. ("NAVA") with
the exception of the Canadian rights which BioChem retained; (iii) on June 27th,
2000 Baxter acquired NAVA and NAVA assigned its worldwide rights in the License
Agreement mentioned in (i) to Baxter. This assignment excluded the Canadian
rights which were retained by BioChem and sold to the Company under the Shire
transaction referred to above. The Company has an obligation to pay a three
point five percent (3.5%) royalty to the National Research Council of Canada on
products sold in Canada covered by the agreement.

NATIONAL INSTITUTE FOR BIOLOGICAL STANDARDS AND CONTROLS ("NIBSC")

In December 2004 the Company entered into a Material Transfer Agreement with
NIBSC under which NIBSC has provided to the Company access to a reversed genetic
version of the avian flu viral strain (rH5N1). The Company will use the NIBSC
material for research purposes only including the production of seed stocks and
production of pilot lots for eventual clinical trials. The Company's commercial
application and future use of the rH5N1 strain use will have to take into
account intellectual property rights held by at least one third party pertaining
to the reverse genetics technology which converts the wild H5N1 strain into a
less pathogenic version (rH5N1) more susceptible of growth in eggs.



                                      -43-
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                            LOAN FACILITY AGREEMENTS

SHIRE LLC CREDIT FACILITY

In conjunction with the acquisition of the vaccine business of Shire
Pharmaceuticals Group, plc, Shire LLC has made available to the Company a US
$100 million credit facility that can be drawn down over a 4 year period ending
September 9, 2008. This facility can be used by IDB to fund development of
injectable flu vaccine outside of Canada and pipeline vaccine products within
the vaccines business acquired from Shire. This facility will be repayable out
of income, if any, generated by IDB on future non-Canadian injectable flu
vaccine and other pipeline vaccine product sales or licensing of these products
to third parties, subject to certain minimum annual repayments in respect of the
net present value of US$30 million of the minimum required drawings related to
flu purposes. Except for the minimum annual payments related to flu purposes,
none of the money under the funding facility will be repaid to Shire if IDB, for
any reason, is unable to commercialize any of the pipeline products or an
injectable flu vaccine outside of Canada. At closing, Shire elected to write-off
US$70 million of the funding facility in accordance with Generally Accepted
Accounting Principals because repayment was uncertain. Likewise, because
repayment is uncertain, the Company will account for a portion of the
transaction as debt (that portion of the funds used to develop influenza
vaccines) on its balance sheet, and a portion of the transaction as revenue
(that portion related to the development of the pipeline programs). This revenue
will be recognized on the income statement based on the percentage-of-completed
contracts method.

SECOND CITY CAPITAL PARTNERS LLC ("SECOND CITY") LOAN AGREEMENT

In 2004 the Company entered into the Loan Agreement with Second City pursuant to
which Second City loaned the Company US$60,600,000. The proceeds of the loan
were used by the Company to repurchase the approximately 4.9 million
subscription receipts previously issued to Shire BioChem, Inc.

The Company closed the transaction with Second City on January 7, 2005 and
repurchased the subscription receipts from Shire.

Under the agreement, the Company issued to the lenders warrants to acquire an
aggregate of 1.2 million common shares of the Company with an exercise price of
US$16.91 per share. The warrants will expire two years after issuance. The loan
is backed by certain assets of the Company, a US$20 million Letter of Credit,
and financial covenants. The principal amount will bear interest at an annual
rate of 8%. The principal plus any unpaid and accrued interest becomes due and
fully payable in 18 months.

INNOVATECH

The Company is a party to a Financial Contribution Agreement between Societe
Innovatech Quebec et Chaudiere-Appalaches ("Innovatech") and IAF BioVac Inc., a
predecessor in title to Shire BioChem, Inc. ("SBI") dated April 18th, 1995 as
amended and/or supplemented (the "Loan Agreement"), which Loan Agreement was
transferred to the Company as part of the acquisition of the Shire vaccine
business. Under the Loan Agreement, Innovatech agreed to loan to SBI up to
$5,000,000 to assist in the development of certain specific vaccines. In
consideration of the Loan Agreement, the Company must pay to Innovatech a 2%
royalty on net sales of what the Loan Agreement defines as Retained R&D
Projects. The total royalty that may be paid is capped at a total amount of
$10,000,000. The Company has not yet paid any royalty to Innovatech as the
Retained R&D Projects are still in development and have, therefore, generated no
sales. It should be noted that Innovatech has recently initiated a claim against
both the Company and SBI (see "Legal Disputes").



                                      -44-
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GOVERNMENT LOAN

The term loan from the Quebec provincial and Canadian federal governments
("Government loan") was provided to assist the Company in financing the costs of
setting up the Quebec City operations. The Government loan is unsecured and
non-interest bearing and is repayable in annual installments of $990,001 through
2005.

The loan contains certain restrictive covenants, the most significant of which
requires the Company to (i) build a vaccine production facility in Quebec City,
Quebec, (ii) retain corporate existence for the duration of the loan, (iii)
properly insure the Quebec City facility, and (iv) refrain from selling or
otherwise disposing of the Quebec City facility. Any breaches of these covenants
would require immediate repayment of the total amount of the loan.

                                OTHER AGREEMENTS

TECHNOLOGY PARTNERSHIPS CANADA AGREEMENTS

Technology Partnerships Canada (TPC) is a program run by the Canadian Ministry
of Industry that invests in research, development and innovation in order to
encourage private sector investment and to maintain and grow the technology
base, capabilities and employment of Canadian industry. The Company is currently
a party to two different TPC agreements, one of which was assigned to ID
Biomedical as a result of the Shire vaccine asset purchase.

IDBQ TPC

Under the terms of an agreement entered into by IDBQ with TPC on October 18,
2000 (prior to IDB's acquisition of Intellivax on May 15, 2001), IDBQ agreed to
receive a financial contribution of up to a maximum amount of $5,938,680 over a
period of three years ending March 31, 2003 for the development of mucosal
Proteosome vaccines against infectious diseases in humans and animals. This
contribution represents 25.6% of the expected project costs. IDBQ and TPC agreed
to extend the work period under the agreement until March 31, 2004. The work
period is now expired.

IDBQ is committed to pay royalties based on its recognized gross revenues
stemming from the commercialization of certain of the mucosal Proteosome
vaccines for infectious diseases against humans and animals until December 31,
2012, of up to a maximum payment of $10,800,000.

In 2003, the Company recorded an amount of $1,762,482 as a reduction of the
related research and development expenses. To date, IDBQ has claimed all of the
$5,938,680 available under the agreement.

Under the terms of an agreement, as amended on March 17, 2004, the Company
agreed to issue Technology Partnerships Canada 91,659 IDB common share purchase
warrants. Each common share purchase warrant entitles the holder to one common
share of the Company for a subscription price of $16.01 and is exercisable by
the holder for five years.

In the event the Company would be in default under the agreement, remedies could
vary from the suspension of financial contribution by TPC, to the transfer of
intellectual property rights developed under the agreement from the Company to
TPC. In lieu of the various default remedies, the Company also has the option of
paying liquidated damages up to a maximum amount of $19,950,000.

ID BIOMEDICAL TPC

In March 2000, the Shire BioChem, Inc. entered into a funding agreement with
TPC, relating to the research and development of recombinant protein vaccines.
This agreement was assigned to



                                      -45-
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the Company as part of the vaccine asset acquisition between the Company and
Shire. Under the terms of this agreement, TPC agreed to a total contribution not
to exceed $80,000,000 over a period of 7 years ending March 2008. Such
contribution is repayable to TPC in the form of royalties on the net sales value
(gross invoiced amounts less discounts, taxes and delivery costs) of the
products that may be developed under the TPC agreement. The Company is obligated
to pay such royalties equal to 1.82% of such net sales through December 31,
2016. No amounts have been accrued with respect to this obligation as the
conditions for repayment have not yet been met. As a condition of the TPC
agreement, the Company has an obligation to begin construction of a vaccine
research facility in Canada. The Company met this obligation by construction of
the vaccine research center in Laval, Quebec. The facility was largely completed
in December 2004.

Since the inception of this agreement, $22,945,855 of these contributions have
been requested, and funding of $15,952,707 has been received.

ALEXANDRIA REAL ESTATE EQUITIES, INC. (ARE)

In December 2004, the Company signed agreements with ARE for the sale and
leaseback of two facilities owned by the Company: the newly constructed Vaccine
Research Centre in Laval, Quebec; and the vaccine development facility in
Northborough, Massachusetts. The total purchase price for both buildings to be
paid at closing to the Company is approximately $50,000,000. All conditions
precedent to closing of the transactions were satisfied and the transaction
closed on March 3, 2005. As a part of the transaction, ID Biomedical will lease
each of these properties from ARE or an affiliated company for a period of 15
years. In addition, at each site, the Company has secured three, five-year
options to extend each of the leases beyond the original term.

INSTITUT NATIONAL DE LA RECHERCHE SCIENTIFIQUE ("INRS") RESEARCH CHAIR

The Company has entered into a commitment with the INRS to sponsor a research
program to be conducted by INRS. The program will be agreed upon by the parties
and will target vaccine research that is of commercial interest to the Company.
The Company has agreed to fund the program at $200,000 per year over a 5 year
period beginning January 1, 2005, for total funding not to exceed $1 million.

                                PATENT PROTECTION

A vital part of the Company's business strategy is to protect its products and
technologies through the use of patents, proprietary technologies and
trademarks, to the extent available. Success will depend, in part, upon the
ability to obtain and enforce strong patents, to maintain trade secret
protection and to operate without infringing the proprietary rights of others.
Current IDB policy is to seek patent protection for proprietary technology,
including recombinant protein technology and vaccines whenever and wherever
possible.

PATENTS AND PATENT APPLICATIONS

As of March 3, 2005, the Company has approximately 118 issued patents and 208
pending applications in the US, Canada, the EC, Japan, Australia and selected
countries worldwide. These include patents and applications relating to genes,
nucleotide sequences, proteins, polypeptides, recombinant amino acid sequences,
vaccines, formulations, processes and therapeutic and prophylactic methods.

The United States government owns many of the patents and pending patent
applications that are directed to the Proteosome technology. The Company has
acquired from the US government (as represented by WRAIR) the exclusive,
worldwide license under these patents and patent applications to develop,
manufacture, use and sell Proteosome vaccines as claimed in these



                                      -46-
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patents and pending applications (See "License and Acquisition Agreements").
Employees of IDBQ and IDBM have also filed certain improvement patent
applications, and ownership of these applications has been assigned to the
Company in accordance with the Company's employment agreements. In addition, as
the Proteosome technology is combined with certain antigens, the Company
believes new intellectual property may be created as novel vaccine formulations.
For example, IDBQ filed a patent application in several economically important
countries that is directed to the combination of influenza antigens with
Proteosome proteins. In January 2004, this patent was issued in the United
States, with an expiration date of February 15, 2021. The Company has also
recently filed patent applications with claims directed to certain respiratory
antigens utilizing Proteosome proteins as well as Proteosome proteins complexed
or mixed with certain antigens related to biological warfare agents.

The Company has filed US and Canadian patent applications with claims directed
to a recombinant protein expression system developed by IDBW and referred to as
ID CX5. The Company believes this system has certain advantages over other
protein expression technologies in terms of protein folding and production
yields. The Company uses this technology in the production of StreptAvax and the
recombinant plague antigen.

UTRC owns the patent rights to several US and international issued patents that
are directed to all or a portion of the GrAS vaccine that is licensed to the
Company under a license agreement between UTRC and IDBW (see "License and
Acquisition Agreements"). In addition, there are pending US and international
patent applications included within the rights licensed to IDBW per the
agreement. For example, in January 2004, a US patent was issued covering key
components of the GrAS vaccine technology. This patent will expire September 10,
2018. Further, any improvement patents or new GrAS vaccine inventions that may
in the future be developed by Dr. James Dale are also licensed to IDBW under the
agreement.

The Company has several pending US applications and corresponding foreign
filings pending in several countries relating to the S. PNEUMONIAE vaccine or
PGCvax. These patent applications cover isolated polynucleotides and
polypeptides as well as recombinant and chimeric polypeptides, processes,
vaccines, methods for therapeutic and prophylactic treatment and vaccine
compositions.

In general, the Company will file patent applications in the US, Canada, the EU
and selected countries to protect its pipeline or research programs.

On February 17, 2005 the European Patent Office informed the Company of the
filing of a Notice of Opposition by GSK against the granting of the Company's
European Patent entitled "Improved Methods for the Production of Non-Covalently
Complexed and Multivalent Proteosome Sub-Unit Vaccines." This opposition
principally relates to the scope of currently allowed product-by-process claim
25, and, in particular, as it concerns preparation of outer membrane vesicle
(OMV) bleb compositions derived from Neisseria meningitidis. This is one of
several patents that cover Proteosome-based vaccines. The Company is contesting
the basis of the opposition.

                                LEGAL PROCEEDINGS

INNOVATECH

On June 29, 2004 Societe Innovatech Quebec et Chaudieres Appalaches
("Innovatech") initiated in Superior Court of the judicial district of Quebec
City a Motion for Declaratory Judgment against Shire BioChem, Inc. as defendant
and the Company's affiliate, ID Biomedical Corporation of Quebec, as a joined
party. Innovatech is asking the Courts to rule as to whether or not one of the
vaccines in development by the Company is subject to eventual royalty payments
upon commercialization. Innovatech's claim relies on a 1995 Financial
Contribution Agreement with a



                                      -47-
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predecessor in title to Shire BioChem, Inc., which has been transferred to the
Company as part of the assets of the vaccine business acquired from Shire.

The dispute is connected to the interpretation, nature and scope of the
Financial Assistance Program managed by Innovatech. The question Innovatech has
put forth for ruling is whether or not the Company's PGCvax (STREPTOCOCCUS
PNEUMONIAE vaccine) in development is a product covered under the 1995 funding
agreement.

Both Shire BioChem, Inc. and the Company are contesting the Innovatech claim.
Should the Courts rule in favor of Innovatech, the Company will have an
obligation to pay Innovatech a royalty of 2% on the future net sales, if any, of
the PGCvax.

                               GENE-BASED TESTING

CYCLING PROBE(TM) TECHNOLOGY

Our Cycling Probe Technology (CPT) is a proprietary method of signal
amplification of a nucleic acid target where the target catalyzes the enzymatic
conversion of a complementary labelled nucleic acid probe into fragments that
can be detected. This catalytic reaction is generally completed in less than 90
minutes.

The Company has developed several formats for CPT.

PRODUCT DEVELOPMENT PROGRAM

Currently, CPT is at an early stage of development and must overcome issues
associated with sample preparation, non-specific cleavage and ease of detection
to increase sensitivity and specificity, which are required to lead to its
potential widespread use in the diagnostic industry. In 2002, the Company began
to wind down its internal research and development efforts to improve CPT and in
2003 these efforts ceased. Instead, the Company will seek to license CPT to
third parties to perform these efforts and to develop products based on the
technology.

BUSINESS STRATEGY

The Company's strategy in gene-based testing is to license CPT on a nonexclusive
or limited exclusive basis to as many companies as possible in the diagnostic
and genomic industries. There can be no assurance that CPT-based products will
be marketed in a commercially successful way by the Company or by other
companies, and/or that additional third parties will be interested in further
developing CPT under license or co-development arrangements with the Company.
Although in the past a significant portion of the Company's revenues have been
from licensing of genomic analysis technologies, including CPT, the Company does
not expect to receive significant revenues from these activities in the future.

LICENSE AND ACQUISITION AGREEMENTS

APPLIED BIOSYSTEMS

In June 2000, the Company entered into an agreement with Applied Biosystems
Group (formerly "PE Biosystems"). Under this agreement, Applied Biosystems
received a worldwide, non-exclusive license granting Applied Biosystems access
to the Company's intellectual property relative to CPT. This license allows
Applied Biosystems to use the intellectual property to develop, manufacture and
sell assays to detect nucleic acid sequences. Under the agreement, Applied
Biosystems will pay a royalty to the Company based on certain future product
sales. A portion of a US $5 million up front



                                      -48-
<Page>

payment can be used to offset any such royalties. In 2004, a payment for the
maintenance of its right to use IDB's CPT was made by Applied Biosystems.

TAKARA BIOMEDICAL GROUP

In January 2002, the Company entered into an agreement with Takara Biomedical
Group, a wholly owned subsidiary of Takara Shuzo Company, Ltd. Under this
agreement, the Company granted Takara a worldwide non-exclusive license to
patent rights pertaining to CPT in exchange for financial consideration from
Takara. In 2002, the Company received upfront and milestone payments totalling
US$5 million. The financial terms of the license agreement include royalties on
product sales. The Company received a milestone payment and limited royalty
payments from this agreement in 2004.

PATENTS AND OTHER INTELLECTUAL PROPERTY

The Company holds directly, or has license rights to, a number of issued patents
pertaining to CPT. Patents directed to CPT have been issued by the US Patent and
Trademark Office (USPTO) and corresponding Patents have also been issued in
Canada, Japan, Australia, and several European countries.

                         FACILITIES AND HUMAN RESOURCES

The Company has a modern manufacturing facility in Canada and fully-integrated
R&D capabilities in Canada and the US. The Company's manufacturing sites are
used for the upstream (i.e. egg processing) and the downstream processing of
influenza vaccines. IDB's research capabilities include recombinant DNA and
molecular biology, protein modeling and engineering, and protein purification
and formulation. The Company's development capabilities include process and
formulation development, pilot plant operations and engineering, as well as
clinical development and regulatory affairs and quality operations.

As of Februrary 28, 2005, the Company had 617 employees.

1630 WATERFRONT CENTER 200 BURRARD STREET, VANCOUVER, BRITISH COLUMBIA

The Company's headquarters are located in a leased 2,906 square foot office
facility in Vancouver, British Columbia. Four employees are located at this
facility. The lease expires on February 28, 2009.

The Company's manufacturing facilities are located in Quebec City and Laval,
Quebec. Its research and development facilities are located in Bothell,
Washington; Northborough, Massachusetts; and Laval, Quebec. The Company also
leases offices for some of its clinical and regulatory affairs staff in
Columbia, Maryland.

2323, DU PARC TECHNOLOGIQUE BLVD, QUEBEC CITY, QUEBEC

The Quebec City facility houses manufacturing and packaging operations for
Fluviral in addition to a pilot plant for influenza vaccine process development.
The facility encompasses 119,000 sq. ft., being expanded to approximately
200,000 sq. ft., and is located on 600,000 sq. ft. of land. The facility and
land are owned by the Company. The Quebec City plant houses QC laboratories, a
pilot plant, warehouses, vaccine production lines, administrative offices and
mechanical space. It also has fermentation, purification, formulation and
filling/packaging suites. The facility has three major production lines which
are used for the down-stream processing of influenza vaccines. There are
currently 231 employees located at this facility.




                                      -49-
<Page>

525 CARTIER BLVD WEST, LAVAL, QUEBEC

The Laval facility is a 68,000 square foot state-of-the-art vaccine research
center which has recently completed construction. This facility contains bench
space, containment laboratories and administrative offices. There are 132
employees located at this facility.

On January 4, 2005 the Company announced that it signed agreements with
Alexandria Real Estate Equities, Inc. for the sale and leaseback of the Laval
Vaccine Research Centre (see "Other Agreements".)

7150 FREDERICK BANTING, SUITE 200 VILLE ST. LAURENT, QUEBEC

The Ville St. Laurent location is a leased 15,400 square foot facility of which
approximately 9,000 square feet accommodate research, including the areas of
chemistry, molecular biology, vaccine formulation and process development. The
lease on this facility expires on October 13, 2013. With the completion of the
vaccine research center in Laval, all employees from this facility have moved to
the Laval location. The Company is actively looking to sub-lease this facility.

INSTITUT NATIONAL DE LA RECHERCHE SCIENTIFIQUE (INRS) - 531 DES PRAIRIES BLVD.,
LAVAL, QUEBEC

The Laval facility is 12,000 square foot up-stream influenza processing facility
that is leased from INRS. This facility also houses administrative offices,
in-process QC laboratory, maintenance and storage areas. There are 82 employees
located at this facility.

The lease with INRS expires December 31, 2005. The Company has the ability to
extend the lease with two, one-year options expiring December 31, 2007. At the
conclusion of this lease the Company expects that its expanded Quebec City
facility will have the capability to complete all upstream influenza processing
and that this facility will not be re-leased unless additional manufacturing
capacity is required.

19204 NORTH CREEK PARKWAY, BOTHELL, WASHINGTON

The Bothell location is a leased 28,647 square foot facility and houses ID
Biomedical of Washington. Approximately 11,000 square feet accommodate research
and development, including the areas of microbiology, protein chemistry,
molecular biology, quality control, quality assurance, chemistry and
fermentation. Included within this facility is a pilot manufacturing suite that
the Company believes will allow it to produce clinical-grade materials in
accordance with Good Manufacturing Practices up to and including Phase II human
clinical trials. There are currently 87 employees located at this facility. The
lease on this facility expires on January 1, 2012.

30 BEARFOOT ROAD, NORTHBOROUGH, MASSACHUSETTS

The ID Biomedical of Northborough location is a 60,000 square foot fully
integrated vaccine development and pilot manufacturing. There are currently 70
employees located at this facility.

On January 4, 2005 the Company announced that it signed agreements with
Alexandria Real Estate Equities, Inc. for the sale and leaseback of the
Northborough facility (see "Other Agreements").

6996 COLUMBIA GATEWAY DRIVE, SUITE 103 COLUMBIA, MARYLAND

The ID Biomedical of Maryland location is a leased 3,284 square foot facility
that houses the Company's clinical and regulatory affairs group. There are
currently 11 employees located at this facility. The lease on this facility
expires on June 30, 2008.



                                      -50-
<Page>

                     AUDITORS, TRANSFER AGENT AND REGISTRAR

Our auditors are KPMG LLP, located at 777 Dunsmuir Street, Vancouver, British
Columbia, V7Y 1K3

Our transfer agent and the registrar for our common shares is Computershare
Trust Company of Canada at its principal offices in Vancouver, British Columbia
and Toronto, Ontario.

                          DESCRIPTION OF SHARE CAPITAL

The Company's authorized capital consists of 200,000,000 common shares without
par value, 100,000,000 Class "A" Preference Shares with a par value of Cdn$10
each and 100,000,000 Class "B" Preference Shares with a par value of Cdn$50
each. As of March 25, 2005, 42,804,128 common shares and no Class "A" Preference
Shares or Class "B" Preference Shares were issued and outstanding.

COMMON SHARES

Holders of our common shares are entitled to one vote per common share on all
matters that may be brought before them. Holders of our common shares are,
subject to the rights of holders of our preference shares, entitled to receive
dividends when declared by our board of directors and to receive a PRO RATA
share of our assets available for distribution to shareholders in the event of
liquidation, dissolution or winding up. There are no redemptions, conversion or
pre-emptive rights attached to our common shares.

PREFERENCE SHARES

Our Class "A" Preference Shares and Class "B" Preference Shares may, from time
to time, be issued in one or more series, and our board of directors is
authorized to create and attach special rights and restrictions to a series of
shares. In the event that we are liquidated, dissolved or wound up, or in the
event of any distribution of our assets for the purpose of the winding-up of our
affairs, holders of our preference shares are entitled, unless otherwise
provided in the special rights and restrictions attached to the shares, after
the payment of unpaid dividends, to be paid the amount of capital paid up per
share from our assets before the holders of our common shares receive any
assets. All of our Class "A" Preference shares and Class "B" Preference shares
rank equally as to dividends or return of capital on winding up or otherwise.
The holders of Class "A" Preference shares and Class "B" Preference shares are
not entitled to vote at any general meeting of our shareholders unless expressly
provided as a special right.

SHAREHOLDER RIGHTS PLAN

In 1996, the Company implemented a shareholder rights plan. Under the terms of
the plan, if any shareholder becomes a beneficial holder of 20% or more of our
common shares, other than pursuant to a permitted bid, all shareholders, other
than the beneficial holder in question, are given the right to acquire more of
our common shares at significant discounts to the then current market price of
those shares.

The purpose of the rights plan is to ensure that all shareholders receive equal
treatment in the event of a takeover bid and to ensure that we have sufficient
time to properly assess any such bid and to explore other alternatives to
maximize shareholder value. At our 2002 annual meeting, shareholders approved
the extension of the rights plan for a period of three years until the date of
our annual general meeting in 2005.



                                      -51-
<Page>

SHARE PURCHASE WARRANTS

On October 28, 2003, the Company completed a unit offering of 5,800,000 units at
a price of US$17.37 per unit, resulting in gross proceeds of US$100,746,000
($131,906,738 CAD). Each unit consisted of one common share and one-half of one
common share purchase warrant. Each whole common share purchase warrant entitles
the holder to purchase one common share for a subscription price of US$25.00 and
is exercisable by the holder for four years.

Under the terms of an agreement entered into between IDBQ and Technology
Partnerships Canada, as amended on March 17, 2004, the Company agreed to issue
Technology Partnerships Canada 91,659 common share purchase warrants. Each
common share purchase warrant entitles the holder to purchase one common share
of the Company for a subscription price of $16.01 and is exercisable by the
holder for five years.

                              MARKET FOR SECURITIES

The Company's common shares are traded on the Toronto Stock Exchange (TSX) in
Canada under the symbol "IDB", on The NASDAQ National Market in the United
States under the symbol "IDBE".

The common shares commenced trading on TSX on October 24, 1995 and the common
shares commenced trading on The NASDAQ National Market on September 25, 2000.

On December 14, 2000, the Company was added to the Toronto Stock Exchange 300
Composite Index and the S&P/TSE Canadian SmallCap Index.

TRADING PRICE AND VOLUME ON THE TSX

<Table>
<Caption>
DATE                                       AVERAGE HIGH    AVERAGE LOW        AVERAGE CLOSE      VOLUME 100S

<S>                                           <C>            <C>                 <C>                <C>
January, 2004                                 $ 16.32        $ 15.64             $ 15.95             95,364
February, 2004                                  15.10          14.44               14.74             59,696
March, 2004                                     14.89          14.37               14.60             34,788
April, 2004                                     14.96          14.40               14.64             63,742
May, 2004                                       13.63          13.05               13.30             50,266
June, 2004                                      13.60          13.25               13.43             47,172
July, 2004                                      12.63          11.88               12.38             79,495
August, 2004                                    14.74          14.18               14.49             38,432
September, 2004                                 16.70          16.20               16.44             62,600
October, 2004                                   19.52          18.61               19.07             98,745
November, 2004                                  20.47          19.35               19,86            106,968
December, 2004                                  20.13          19.44               19.64            103,290
</Table>



                             DIRECTORS AND OFFICERS

The following table shows the full name, municipality of residence, position
with the Company and principal occupations of each of the directors and officers
of the Company.



                                      -52-
<Page>


<Table>
<Caption>
                                                                                             NUMBER AND % OF
NAME AND                                                                                     SECURITIES
MUNICIPALITY          POSITION WITH         PRINCIPAL                                        BENEFICIALLY
OF RESIDENCE          COMPANY               OCCUPATION                DIRECTOR SINCE         OWNED
------------          -------------         ----------                --------------         ---------------
<S>                   <C>                   <C>                       <C>                    <C>
Dr. Richard           Chairman of Board     Retired; Formerly         October 15, 1996       103,399
Bastiani(1)(3)        of Directors          President of Dendreon
Los Gatos, Ca                               Corp. (biotechnology                            (.24%)
                                            company)
</Table>

Richard Bastiani was appointed Chairman of the Board in August 1998. As the
former President of Syva Company, an in-vitro diagnostics manufacturer, Dr.
Bastiani is a well known industry executive. He was most recently President of
Dendreon Corp., a Seattle, Washington biotechnology company focused on the
development of innovative cancer therapies. From 1972 to 1991, Dr. Bastiani held
a succession of Vice President positions at Syva. He was responsible at various
times for conducting clinical studies, obtaining regulatory approvals,
establishing a new division within the company, and conducting worldwide
marketing, sales and service activities. In 1991, Dr. Bastiani was appointed
President, a position he held until 1995 when Syva was acquired by Behringwerke
AG, a subsidiary of Hoechst AG.

OTHER BOARD AFFILIATIONS: ABAXIS, INC.; AND DISCOVERX CORPORATION

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Dr. Anthony F.        CEO and Director      Chief Executive Officer   March 4, 1991          331,267
Holler                                      of IDB
Vancouver, BC                                                                               (.77%)
</Table>

Anthony F. Holler was one of the original founders of ID Biomedical Corporation
and has been a member of the Company's Board of Directors since inception. Dr.
Holler has held a number of executive positions with the Company including
President. On March 27, 2001 Dr. Holler was appointed Chief Executive Officer.

Prior to founding ID Biomedical, Dr. Holler served as an emergency physician at
University Hospital at The University of British Columbia. He is a member of the
British Columbia College of Physicians and Surgeons.

OTHER BOARD AFFILIATIONS: CORRIENTE RESOURCES INC.

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Daniel A.             Director              President of Carriere     August 24, 1998        238,900
Carriere(1)                                 Financial Services Inc.
Vancouver, BC                               (venture capital
                                            company)                                        (.56%)
</Table>

Mr. Carriere is currently Senior Vice President of Corriente Resources Inc. Mr
Carriere is also the President of Carriere Financial Services Inc. a Canadian
firm specializing in growth and financial strategies for small to medium
capitalized companies. Mr. Carriere has been a significant shareholder in the
Company since the Company's initial public offering in 1991.

OTHER BOARD AFFILIATIONS: EXCAPE INC.; INFINITY FILM ENTERTAINMENT, BOG
PRODUCTIONS INC.; BOG PRODUCTIONS (1999) INC.; PRECIPICE PRODUCTIONS LTD; ZACHOR
PRODUCTION LIMITED; NUTSHELL PRODUCTIONS LTD.; DUTY PRODUCTIONS LTD.; GUINEA PIG
PRODUCTIONS LTD.; AND COMEDIC PRODUCTIONS LTD.



                                      -53-
<Page>

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Richard H.            Director              Retired; Vice Chairman    September 13, 1999     56,282
McCoy(1)(2)                                 Investment Banking, TD
Toronto, ON                                 Securities Inc.                                 (.13%)
                                            (investment dealer)
</Table>

Mr. McCoy has been in the investment business for over 35 years. Prior to
retiring in October, 2003, Mr. McCoy was Vice Chairman, Investment Banking at TD
Securities Inc., one of Canada's largest investment firms. Prior to joining TD
Securities Inc. in May 1997, Mr. McCoy was Deputy Chairman of CIBC Wood Gundy
Securities. Mr. McCoy holds an MBA from the Richard Ivey School of Business
Administration, University of Western Ontario.

OTHER BOARD AFFILIATIONS: ABERDEEN ASIA-PACIFIC INCOME INVESTMENT CO.; ABERDEEN
G7 TRUST; ROTHMANS INC.; AND PUBLIC STORAGE CANADIAN PROPERTIES.

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Michel Greco(1)(2)    Director              Retired,  Formerly        October 24, 2002       913
France                                      President, Aventis
                                            Pasteur                                         (.002%)
</Table>

Beginning in 1998 and until his retirement at the end of 2002, Mr. Greco was
President and COO and a Supervisory Board member of Aventis Pasteur, a
world-leading vaccine manufacturer. Prior to becoming President of Aventis
Pasteur, Mr. Greco was President and Chief Executive Officer of Pasteur Merieux
MSD from 1994 to 1998, a European joint venture between Aventis Pasteur and
Merck and Co. Mr. Greco has also held a number of industry-wide responsibilities
over the years, including President of the European Vaccine Manufacturers Group,
Chairman of the Biological Committee of the International Federation of
Pharmaceutical Manufacturers Associations, as well as a member of the World
Health Organization, Department of Vaccines and Biologicals, Strategic Advisory
Group of Experts. Mr. Greco holds an MBA from the Richard Ivey School of
Business Administration, University of Western Ontario.

OTHER BOARD AFFILIATIONS: VAXGEN INC.; FLAMEL; INTERCELL; DAS SAS; IAVI (THE
INTERNATIONAL AIDS VACCINE INITIATIVE);AERAS GLOBAL TUBERCULOSIS VACCINE
FOUNDATION; AND IVI(THE INTERNATIONAL VACCINE INSTITUTE).

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Jon S. Saxe(1)(2)     Director              Retired; Formerly         November 10, 1993      63,696
Los Altos, CA                               President, Protein
                                            Design Labs, Inc.                               (.15%)
                                            (biopharmaceutical
                                            company)
</Table>

Jon S. Saxe was a was President of Protein Design Labs, Inc from 1995 - 1999 and
is a Director of Protein Design Labs, Inc., a biotechnology company
headquartered in Fremont, California that is developing a portfolio of
therapeutic antibodies to prevent and treat serious medical problems such as
cancers, asthma, inflammatory bowel disease and other inflammatory conditions.
Until 1994, Mr. Saxe was Principal of Saxe Associates - consultants to venture
capital firms and biotechnology, diagnostic, and pharmaceutical companies. Mr.
Saxe is former Vice President, Licensing and Corporate Development of
Hoffmann-LaRoche Inc., where he worked for nearly 30 years (1960-1989). He held
the position of CEO and President at Synergen, Inc. from 1989 to 1993.

OTHER BOARD AFFILIATIONS: INSITE VISION, PROTEIN DESIGN LABS, INC.; QUESTCOR
PHARMACEUTICAL; FIRST HORIZON PHARMACEUTICALS, INC.; DURECT, INC.; SCICLONE,
INC.; AND SEVERAL PRIVATE COMPANIES.


                                      -54-
<Page>

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Brian J.              Director              Vice President, MDS       September 13, 1999     4,000
Underdown(1)(3)                             Capital Corporation and
Hamilton, ON                                President, University                           (.01%)
                                            Medical Discoveries Inc.
</Table>

Dr. Underdownan immunologist by training, is Senior Vice-President and Managing
Director, Technology Investing at MDS Capital Corporation and President,
University Medical Discoveries Inc. Prior to joining MDS Capital Corporation in
1997, Dr. Underdown was Assistant Vice President Research and Director of
Immunology at Pasteur Merieux Connaught, one of the world's leading vaccine
manufacturers. From 1970 to 1994, Dr. Underdown held a number of academic
positions including Professor and Associate Dean Research at the Faculty of
Medicine, University of Toronto and Professor, Department of Pathology and
Associate Dean Research at the Faculty of Health Sciences, McMaster University.

OTHER BOARD AFFILIATIONS: UNIVERSITY MEDICAL DISCOVERIES INC.; CYTOCHROMA INC.;
TRILLIUM THERAPEUTICS INC.; WELLICHEM BIOTECHNOLOGIES INC.; MERIX BIOSCIENCES
INC.; SALPEP INC.; AND CANVAC, THE CANADIAN CENTRE FOR VACCINES AND
IMMUNOTHERAPEUTICS.

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Ian A. Webb(3)        Director              Partner, Borden Ladner    July 11, 1997          6,994
Vancouver, BC                               Gervais LLP (law firm)
                                                                                            (.02%)
</Table>

Mr. Webb is a partner of the law firm of Borden Ladner Gervais LLP. His practice
focuses on corporate and securities law with an emphasis on the legal
requirements of public companies in a wide variety of industry sectors including
biotechnology, mining and forestry. Mr. Webb obtained a Bachelor of Laws Degree
from Osgoode Hall Law School in 1981 and a Masters Degree in Theoretical Physics
from the University of Saskatchewan in 1976.

OTHER BOARD AFFILIATIONS: NONE

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Todd R. Patrick       President and         President of IDB          May 18, 2000           110,030
Bellevue, WA          Director
                                                                                            (.26%)
</Table>

Todd R. Patrick is the President of the Company and a member of the Board of
Directors. Mr. Patrick has been employed by the Company since July 1, 1994 and
has been a Director since May, 2000. Mr. Patrick joined the Company from the
University of California, Los Angeles (UCLA), where, as the Director of the
Office of Intellectual Property Administration, he was responsible for the
patenting and licensing of the intellectual property arising out of UCLA.

OTHER BOARD AFFILIATIONS: CONTROL DYNAMICS, INC.; THE WASHINGTON BIOMEDICAL AND
BIOTECHNOLOGY ASSOCIATION.

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Mustapha L. Bakali    Chief Operating       Chief Operating Officer   N/A                    0
Laval, QC             Officer
</Table>

Mustapha (Staph) Bakali is the Chief Operating Officer for the Company. Prior to
joining the Company in January 2004, Mr. Bakali was Chief Operating Officer and
a member of the Board of Directors of PowderJect Pharmaceuticals since 2001.

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Deborah L.            Corporate Secretary   Corporate Secretary of    N/A                    2,050
Bowers                                      IDB
Vancouver, BC                                                                                (.005%)
</Table>



                                      -55-
<Page>

DEBORAH L. BOWERS has served as Corporate Secretary of the Company since January
1999. During her tenure at the Company, Ms. Bowers has held the positions of
Assistant Corporate Secretary (1998-1999) and Executive Assistant - Legal (1997
to 1998). Before joining ID Biomedical in 1997, she held various positions in
the corporate and securities industries.

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Richard Bear          VP, Finance and       VP, Finance and           N/A                    1,000
Bellevue, WA          Administration        Administration
                                                                                             (.002%)
</Table>

RICHARD BEAR is the Vice President of Finance and Administration for the
Company. Prior to joining the Company in June 2002, Mr. Bear held various
corporate finance positions with XO Communications. Before XO Communications,
Mr. Bear was Director of Finance for AT&T Wireless Communication. Mr. Bear
received his BA in Business Administration from the University of Washington and
is a CPA.

<Table>
<Caption>
<S>                   <C>                   <C>                       <C>                    <C>
Paul Pinsonnault      VP, Legal             VP, Legal                 N/A                    0
Montreal, QC
</Table>

Paul Pinsonnault is the Vice President of Legal Affairs for the Company. Prior
to joining the Company in September 2004, Mr. Pinsonnault was Shire BioChem
Inc.'s Senior Legal Counsel. In this capacity Mr. Pinsonnault had the
opportunity to work in the United Kingdom for a year at the global headquarters
of Shire Pharmaceuticals. Before Shire BioChem, Mr. Pinsonnault acted as
corporate counsel for a variety of large Canadian based corporations. Mr.
Pinsonnault has degrees in Political Sciences, Communications and Law all
obtained at the University of Ottawa. He is a member of the Bar of the Province
of Quebec since 1987.

Note:    (1) Member of the Audit Committee of the board of directors
         (2) Member of the Compensation Committee
         (3) Member of the Corporate Governance Committee

The term of office for each director expires on the date of the next annual
general meeting of the Company or until their successors are duly elected or
appointed. The following directors have been determined to be independent under
the NASDAQ National Market rules by our current board of directors: Dr. Richard
Bastiani; Daniel Carriere; Richard H. McCoy; Michel Greco; Jon S. Saxe; and
Brian J. Underdown.


            CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS

To the knowledge of IDB, in the last 10 years, no director or executive officer
of IDB or a shareholder holding a significant number of securities of IDB to
affect materially the control of IDB, is or has been a director or executive
officer of any other issuer that, while that person was acting in that capacity:
(i) was the subject of a cease trade order or similar order, or an order that
denied the issuer access to any exemptions under Canadian securities legislation
for a period of more than 30 consecutive days; or (ii) became bankrupt, made a
proposal under any legislation relating to bankruptcy or insolvency, or was
subject to or instituted any proceedings, arrangement or compromise with
creditors, or had a receiver, receiver manager or trustee appointed to hold its
assets.

                      COMMITTEES OF THE BOARD OF DIRECTORS

The Company has an Audit Committee, a Compensation Committee and a Corporate
Governance Committee.


                                      -56-
<Page>

                                                AUDIT COMMITTEE

<Table>
<Caption>
          MEMBER                              UNRELATED/RELATED            MANAGEMENT/NON-MANAGEMENT
          ------------------------------------------------------------------------------------------
          <S>                                 <C>                          <C>
          Richard H. McCoy
          (Chairman/Financial Expert(1))      Unrelated                    Non Management
          Dr. Richard Bastiani                Unrelated                    Non Management
          Michel Greco                        Unrelated                    Non Management
          Jon S. Saxe                         Unrelated                    Non Management
          Dr. Brian J. Underdown              Unrelated                    Non Management
          Daniel A. Carriere                  Unrelated                    Non Management
</Table>


(1) FINANCIAL EXPERT AS DETERMINED BY THE BOARD OF DIRECTORS IN ACCORDANCE WITH
APPLICABLE REGULATORY REQUIREMENTS.

The Audit Committee provides assistance to the Board of Directors in
fulfilling its oversight responsibility to the shareholders, potential
shareholders, the investment community and others with respect to the
Corporation's: (a) financial statements; (b) financial reporting process; (c)
systems of internal accounting and financial controls; (d) external auditors'
reports; and (e) risk identification, assessment and management program. It
is the responsibility of the Committee to maintain an open avenue of
communication between itself, the external auditors and the management of the
Corporation. In performing its role, the Committee is empowered to
investigate any matter brought to its attention, with full access to all
books, records, facilities and personnel of the Corporation. It is also
empowered to instruct and retain outside counsel or other experts as
required. The Committee met four times in fiscal 2004. At two of the four
meetings all six members attended, at two of the meetings four members
attended, four of the six members attended and at two of the four meetings
all six members attended. The Company has one audit committee "financial
expert" as defined under Section 407 of the Sarbanes-Oxley Act of 2002 (SOX).

CHARTER OF THE AUDIT COMMITTEE

         A.        The audit committee shall consist of a minimum of three
                   outside members of the board of directors, of which all shall
                   be unrelated directors. One member must be an individual who,
                   in the opinion of the Board of Directors, is a financial
                   expert.

         B.       Subject to any duties and responsibilities imposed by the
                  board of directors, the audit committee shall have the
                  following duties and responsibilities:

                  1.       to assist the board of directors in fulfilling its
                           fiduciary responsibilities relating to the Company's
                           accounting and reporting practices and the integrity
                           of the Company's internal accounting controls and
                           information systems;

                  2.       to be directly responsible for the appointment,
                           termination, compensation and oversight of the
                           Company's independent auditors;

                  3.       to review with the auditors of the Company any
                           financial statement that is presented to an annual
                           general meeting or provided to shareholders or filed
                           with regulatory authorities, including any financial
                           statement contained in a prospectus, registration
                           statement or other similar document, and to report
                           thereon to the board of directors;



                                      -57-
<Page>

                  4.       to review the annual report and any interim reports
                           of the auditors and, through periodic meetings with
                           the auditors, to review the adequacy of internal
                           accounting and audit procedures;

                  5.       to ensure that no restrictions are placed by
                           management on the scope of the auditors' review and
                           examination of the Company's accounts;

                  6.       to review and approve all related party transactions;

                  7.       to recommend to the board of directors the firm of
                           independent auditors to be nominated for appointment
                           by the shareholders at the next annual general
                           meeting;

                  8.       to review and approve all press releases on all
                           annual financial results of the Company; and,

                  9.       to receive, investigate and take appropriate action
                           on accounting complaints and concerns.

         C.       The audit committee shall meet at least once (by person or by
                  teleconference) in each year to review and recommend approval
                  by the board of the annual financial statements for the
                  immediately preceding fiscal year.

         D.       The audit committee has the authority to engage independent
                  counsel and other advisors as they deem necessary to fulfill
                  their duties and responsibilities.

         E.       The audit committee shall be provided with all necessary
                  funding for:

                  1.       compensating any registered public accounting firm
                           engaged for the purpose of preparing or issuing an
                           audit report or performing other audit, review or
                           attest services;

                  2.       compensation to any advisors employed by the audit
                           committee; and

                  3.       ordinary administrative expenses of the audit
                           committee that are necessary or appropriate in
                           carrying out its duties.

         F.       The audit committee will be responsible for approving all
                  non-audit services to be performed by the external auditors as
                  follows:

                  1.       the audit committee will pre-approve non prohibited
                           (as defined by Sarbanes-Oxley) services to be
                           provided by the external auditor . (i.e. tax
                           compliance, tax planning, audit, review of proposed
                           accounting for new standards, issues etc.);

                  2.       the audit committee will pre-approve a range of fees
                           for non-audit services by type of service based upon
                           prior experience and current year expectations;

                  3.       any additional services not pre-approved will require
                           approval by the audit committee prior to engagement;
                           and

                  4.       any fees over the range approved or fees for services
                           not contemplated but on the list of approved services
                           will require approval of the audit committee Chairman
                           if the fees are less than $10,000 and by the audit
                           committee if the fees are more than $10,000.



                                      -58-
<Page>

         G.       The audit committee of the board of directors shall address
                  all reported concerns or complaints regarding corporate
                  accounting practices, internal controls or auditing. The
                  Chairman of the Corporate Governance Committee shall
                  immediately notify the audit committee of any such complaint
                  and work with the committee until the matter is resolved.

LIMITATION

The duties and responsibilities set out above do not extend, and are not to be
interpreted as extending, the obligations and liabilities of the directors
beyond those imposed by applicable law and in each case are subject to the
Memorandum and Articles of the Company and applicable law.

CORPORATE GOVERNANCE COMMITTEE

<Table>
<Caption>
          MEMBER                              UNRELATED/RELATED            MANAGEMENT/NON-MANAGEMENT
          ----------------------------------- ---------------------------- ----------------------------
          <S>                                 <C>                          <C>
          Ian A. Webb (Chairman )             Related                      Non Management
          Dr. Richard Bastiani                Unrelated                    Non Management
          Dr. Brian J. Underdown              Unrelated                    Non Management
</Table>

The Corporate Governance Committee's mandate is to undertake activities as
needed to assist the Board of Directors in providing efficient and effective
corporate governance for the benefit of shareholders. The Committee's
responsibilities include overseeing the effective functioning of the Board of
Directors, reviewing the relationship between management and the Board of
Directors, ensuring that the Board of Directors can function independently of
management and reviewing the size and composition of the Board on a periodic
basis. The Committee, together with management, monitors corporate governance
initiatives. The Committee met formally once in fiscal 2004. All members were in
attendance. One non-management board member was also in attendance.

COMPENSATION COMMITTEE

<Table>
<Caption>
          MEMBER                              UNRELATED/RELATED            MANAGEMENT/NON-MANAGEMENT
          ----------------------------------- ---------------------------- ----------------------------
          <S>                                 <C>                          <C>
          Jon S. Saxe (Chairman )             Unrelated                    Non Management
          Richard H. McCoy                    Unrelated                    Non Management
          Michel Greco                        Unrelated                    Non Management
</Table>

The Compensation Committee consults generally with, and makes recommendations
to, the Board of Directors on, matters concerning executive compensation,
including individual salary rates, and other supplemental compensation. The
Committee met six times in fiscal 2004. All three members of the Committee
attended all meetings. One meeting was attended by all non-management board
members. The Chairman of the Board attended all meetings. One non-management
member attended two additional meetings.

The Company does not have an executive committee of directors.

                                  RISK FACTORS

You should carefully consider the following risk factors and all of the other
information included in this Annual Information Form in evaluating the Company
and its common shares. Investing in our



                                      -59-
<Page>

common shares involves a high degree of risk. Additional risks and uncertainties
that are not yet identified or that we currently think are immaterial may also
materially adversely affect our business and financial condition in the future.
Any of the following risks could materially adversely affect our business,
operating results or financial condition.

                    RISKS RELATED TO OUR FINANCIAL CONDITION

We have generally incurred losses since our inception and we expect to continue
to incur substantial losses for the foreseeable future.

With the exception of 2000, we have incurred significant operating losses since
our inception in 1991, including a net loss of Cdn$39.7 million for the year
ended December 31, 2004. As of that date, we had an accumulated deficit of
Cdn$140.9 million based on Canadian generally accepted accounting principles. In
order to further develop our vaccine products and technologies, we will need to
incur significant and rising expenses in connection with our clinical
development programs, possibly including construction of a Proteosome protein
manufacturing plant. Importantly, to enter the US market with our Fluviral
vaccine, as well as to meet our requirements under the Canadian pandemic
contract, we will significantly expand our production capabilities to
manufacture flu vaccine. Still further, we will be required by the FDA to
complete large-scale clinical trials of the Fluviral product in the US and to
significantly expand and upgrade our quality assurance and quality control
capabilities to meet US FDA Good Manufacturing Practices. As a result, we expect
to incur operating losses for the foreseeable future. There can be no assurance
that we will ever become profitable or that we will sustain profitability if we
do become profitable. If we do not become profitable, the price of our shares
may decline.

WE WILL REQUIRE A SIGNIFICANT AMOUNT OF ADDITIONAL CAPITAL TO DEVELOP AND
COMMERCIALIZE OUR PRODUCTS

We will need to raise additional capital in order to finance our anticipated
losses. We will also need to finance capital expenditures for facilities,
equipment, intellectual property and other asset acquisitions as discussed in
the previous paragraph, as well as to repay outstanding debt. Our future capital
requirements will be substantial, and will depend on many factors including:

         o        the duration and cost of our clinical trials for Fluviral in
                  the United States, as well as for FluINsure, StreptAvax, and
                  PGCvax

         o        the progress and scope of our other collaborative and
                  independent research, development and clinical projects

         o        the size and complexity of these programs

         o        the time and costs involved in seeking regulatory approvals

         o        the time and costs involved in maintaining and expanding our
                  manufacturing and development facilities

         o        our business development and commercialization strategy

         o        the costs associated with filing, prosecution and enforcement
                  of patent claims

Completing the expansion of our influenza vaccine plant in Quebec City, Quebec
for Fluviral and the cost of quality, GMP production and overall regulatory
upgrades relating to the potential licensure of Fluviral in the U.S will require
significant expenditures. Although we anticipate that our available cash
resources, working capital, expected interest income, expected licensing



                                      -60-
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revenue and estimated funding from corporate partnerships will enable us to
maintain our currently planned operations for at least the next 12 months, there
can be no assurance that this will be the case. There can be no assurance that
additional capital will be available to us on favourable terms, or at all.

We may choose to raise additional capital from time to time, either through
public or private debt or equity financings, licensing or other arrangements.
Any additional equity financings could be dilutive to our shareholders and debt
financings, if available, may subject us to restrictive covenants. Any financing
done through licensing or other similar arrangements may require us to
relinquish our rights to certain of our technologies, products or marketing
territories. Our failure to raise capital when needed, particularly, for
example, within the term of the Second City loan agreement (See "Loan Facility
Agreements"), would harm our business, financial condition and results of
operations.

OUR FUTURE REVENUES COULD FLUCTUATE SIGNIFICANTLY

Our revenue was $10.9 million in 2002, $6.9 million in 2003 and $53.7 million in
2004. In 2004 substantially all of the Company's revenue was the result of
product sales, contract revenue recognized under the Shire Funding Facility and
contract revenue from the agreements with Dynport Vaccine Company, LLC. We
anticipate that substantially all of our revenue for 2005 will result from sales
of Fluviral and NeisVac-C in Canada, as well as from contract revenue recognized
under the Shire Funding Facility. We may also receive payments in the form of
licensing fees and milestone payments from existing and/or new partnership
agreements, contract development and collaboration arrangements, such as monies
received from Dynport Vaccine Company, LLC. These revenues will be subject to
significant fluctuation in both timing and amount, and will depend upon the
structure of our current and future agreements, market prices and demand for flu
vaccine in Canada, the ability of Baxter Corporation to deliver product as
required under our NeisVac-C agreement and the demand for such product by the
Canadian government.

Our revenue and results of operations for any period may also not be comparable
to the revenue or results of operations for any other period not only given the
seasonality of the influenza vaccine business, but due to variations in demand
caused by factors outside of the Company's control, such as the perceived need
for flu vaccine (due to potential shortages) or severity of the flu season. For
influenza, almost all of our revenues occur in the third and fourth quarters of
the year. Also, the Company incurs significant inventory risk because we are
required to manufacture product in advance of the flu season and there is no
guarantee that all produced product will be purchased by our customers,
including the Canadian government. Our failure to achieve anticipated revenue
levels could have a negative effect on the price of our shares.

OUR ABILITY TO SERVICE OUR DEBT WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH

We have a significant amount of outstanding debt obligations, including
obligations under the loan agreement with Second City Capital Partners. The
principal plus any unpaid and accrued interest under the Second City loan
becomes due and fully payable in July 2006. Accordingly, to service our debt, we
require a significant amount of cash and/or access to alternative sources of
capital to repay such debt. Our ability to generate cash, make scheduled
payments or to refinance our obligations depends on our successful financial and
operating performance. In the event we are required to seek additional sources
of capital to repay these obligations, we could be required to issue additional
debt or equity securities, which would dilute the interests of our current
shareholders. There can be no assurance that such funding sources will be
available to us on commercially reasonable terms, if at all.



                                      -61-
<Page>

                       RISKS RELATED TO MARKETED PRODUCTS

A breakdown within the product supply chain may result in the Company being
unable to continue marketing or developing a product or may result in the
Company being unable to do this on a commercially viable basis.

The Company has its own manufacturing capability for most of its development
programs and for the marketed product, Fluviral. The Company has also entered
into supply agreements with third party manufacturers, such as the NeisVac-C
vaccine with Baxter Corporation. In the event of failure of any manufacturer or
supplier to deliver products as agreed, the Company may be unable to market or
develop products. There is no assurance that the suppliers will continue to
exist on commercially viable terms or be able to supply components that meet
regulatory requirements. The Company is also subject to the risk that suppliers
will not be able to meet the quantities needed to meet market requirements.

The Company also has its own warehousing and distribution capability for certain
products, such as Fluviral in Canada, and has entered into distribution
agreements with third party distributors for certain services. The failure of
either the Company's or a third party service could result in IDB being unable
to continue marketing its products. The development and approval of IDB's
products depends on the ability to procure active ingredients and special
packaging materials from sources approved by regulatory authorities. As the
marketing approval process requires manufacturers to specify their own proposed
suppliers of active ingredients and special packaging materials in their
applications, regulatory approval of a new supplier would be required if active
ingredients or such packaging materials were no longer available from the
specified supplier. The need to qualify a new supplier could delay the Company's
development and marketing efforts.

OUR BUSINESS MAY BE HARMED IF WE CANNOT OBTAIN SUFFICIENT QUANTITIES OF RAW
MATERIALS

For certain of our vaccine candidates, we depend on outside vendors for the
supply of raw materials. For example, we purchase, among other items, eggs for
our Fluviral vaccine, alum as an adjuvant for our StreptAvax and PGCvax
vaccines, nasal spray dispensers for our FluINsure vaccine and allergens for our
allergy vaccine program. If the third party suppliers were to cease production
or otherwise fail to supply us with quality raw materials and we were unable to
contract on acceptable terms for these services with alternative suppliers, our
ability to produce Fluviral and our ability to conduct preclinical testing and
clinical trials of product candidates would be adversely affected. Specifically,
if we are unable to purchase sufficient quantities of eggs in a timely manner
from third party suppliers to produce our injectable influenza vaccine,
Fluviral, in advance of the flu season then our sales would be materially
impacted, we may default on certain contracts, such as to the Canadian
government, and our business would be adversely affected.

WE ARE SUBJECT TO INTENSE COMPETITION FOR SKILLED PERSONNEL AND THE LOSS OF KEY
PERSONNEL OR THE INABILITY TO ATTRACT AND RETAIN ADDITIONAL PERSONNEL COULD
IMPAIR OUR ABILITY TO CONDUCT OUR OPERATIONS

We are highly dependent on the principal members of our management,
manufacturing and scientific staff (including clinical and regulatory), the loss
of whose services might adversely impact the achievement of our objectives and
the continuation of existing collaborations. In addition, recruiting and
retaining qualified personnel to perform future manufacturing, quality, research
and development work will be critical to our success. There is currently a
shortage of employees with expertise in our areas of flu vaccine manufacturing,
research and clinical and regulatory affairs, and this shortage is likely to
continue, particularly in Canada. Competition for skilled personnel is intense.
Our ability to attract and retain qualified personnel may be limited,
particularly since our principal influenza manufacturing plant is located in
Quebec City, which is isolated from a large population base and to which it may
be difficult to recruit experienced personnel, particularly with expertise in US
or international regulatory and manufacturing quality



                                      -62-
<Page>

programs.

A SIGNIFICANT PERCENTAGE OF OUR INFLUENZA MANUFACTURING WORKFORCE IS MADE UP OF
SEASONAL EMPLOYEES.

We are dependent upon a seasonal workforce to manufacture our flu vaccine. Given
the seasonal characteristic of our production, each year we need to hire about
one third of our total production employees as temporary seasonal workers and
train them to our production and quality standards. We rely on the competency of
our production employees to deliver to our quality standards. Seasonal employees
are hired for the duration of production and employment time varies dependent
upon job function. Every year, we recall past years production employees but
usually only about thirty three percent of them are available as others have
found regular full-time employment elsewhere. Consequently we have to train
about one third of our production employees each year.

OUR INFLUENZA PRODUCTION EMPLOYEES ARE UNIONIZED

Our production employees are unionized. Working conditions are negotiated
through the union representing our production employees. By local labour law, as
part of the collective agreement negotiation process, the employees may acquire
legal right to strike. In case of a legal strike, labour law forbids the hiring
of replacement employees, creating the possibility of an interruption of
production.

OUR OPERATIONS INVOLVE HAZARDOUS MATERIALS WHICH REQUIRE US TO COMPLY WITH
REGULATORY REQUIREMENTS AND WHICH COULD SUBJECT US TO DAMAGES RESULTING FROM
ACCIDENTAL CONTAMINATION OR INJURY

Our manufacturing as well as research and development processes involve the
controlled use of hazardous and radioactive materials. In Canada and the US we
are subject to federal, provincial, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of hazardous
materials and certain waste products. In the event of an accident, we could be
held liable for damages resulting from accidental contamination or injury. These
damages could exceed our resources and any applicable insurance coverage. In
addition, we may be required to incur significant costs to comply with
regulatory requirements in the future and if we were to lose any of the licenses
required to handle, store and dispose of any hazardous materials relating to flu
vaccine manufacturing, then our ability to generate revenues from this activity
may be impacted, which would severely impact our ability to operate as a
business.

     RISKS RELATED TO THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCTS

OUR SUCCESS DEPENDS ON THE SUCCESSFUL COMMERCIALIZATION OF THE FLUVIRAL VACCINE;
FLUINSURE VACCINE; STREPTAVAX VACCINE; AND PGCVAX

Clinical development of biological products, such as vaccines, is risky. It is
not possible to accurately predict whether any of our vaccines in development
will be successfully licensed prior to the completion and analysis of data from
final, pivotal efficacy and safety studies. This is even true for the licensure
of Fluviral in the US, although the product is already licensed in Canada and
other countries. For example, while Fluviral produces immune responses that are
generally thought to correlate with protection from influenza-like illness,
there is no universal agreement on what exact immune responses are required so
the FDA is requiring the Company (and other manufacturers seeking to enter the
US market) to conduct efficacy trials prior to licensing the product in the US.
These trials may not be successful.

The successful regulatory approval and commercialization of our Fluviral vaccine
in the US



                                      -63-
<Page>

market is crucial for our success. Also, we believe the successful
commercialization of the FluINsure vaccine, StreptAvax vaccine, and PGCvax is
important to our future success. These vaccines are currently in a relatively
early stage of their clinical and manufacturing/process development. The
Fluviral vaccine, while more advanced, also has clinical and regulatory risks
associated with doing large-scale safety and efficacy studies for US approval,
particularly those that must be completed during a particular time of the year
(i.e. during the flu season). Each product faces a variety of risks and
uncertainties. Principally, these risks include the following:

         o        future clinical trials of the Fluviral vaccine may not show
                  safety or efficacy of the vaccine to prevent illnesses caused
                  by influenza. This could occur as a result of inherent
                  deficiencies in the product, the production of the product, or
                  could be totally unrelated to the product itself, such as due
                  to a mild flu season where efficacy is difficult to prove or
                  abnormally low safety issues in the population taking placebo.
                  We may also have difficulty completing the expanded production
                  of our flu plant or in obtaining FDA regulatory approval of
                  any of our facilities used in the production of Fluviral.

         o        future clinical trial results may show that the FluINsure
                  vaccine, StreptAvax vaccine, or PGCvax is unsafe, not well
                  tolerated by the recipients or not efficacious as compared to
                  placebo.

         o        future clinical trial results may be inconsistent with
                  previous results. For example, the laboratory confirmed data
                  from a US field efficacy trial may be inconsistent with data
                  previously obtained in Canada or elsewhere.

         o        in large Phase 3 safety studies, there may be rare adverse
                  events that delay or prevent licensure.

         o        even if our Fluviral vaccine, FluINsure vaccine, PGCvax and/or
                  StreptAvax vaccine are each shown to be safe and effective for
                  intended purposes, we may face significant or unforeseen
                  difficulties in manufacturing these vaccines or their
                  components. These difficulties may become apparent when we
                  manufacture vaccines on a small scale for clinical trials and
                  regulatory approval or may only become apparent when we try to
                  scale-up the manufacturing to commercial scale or with respect
                  to Fluviral, may become apparent when we begin production from
                  the expanded manufacturing facility in Quebec.

         o        our ability to complete the development and commercialization
                  of our vaccine products is significantly dependent upon our
                  ability to obtain and maintain experienced and committed
                  employees or partners to assist us with obtaining clinical and
                  regulatory approvals for, and the manufacturing, marketing and
                  distribution of, our vaccines on a worldwide basis.

          o       even if our products are successfully developed, commercially
                  produced and receive all necessary regulatory approvals, there
                  is no guarantee that there will be market acceptance. Although
                  we have distribution and purchase agreements for the US market
                  for the Fluviral product, these agreements may be terminated
                  under certain circumstances, and the price for flu vaccines
                  may go down in future years, which would impact our revenues.
                  The US government is encouraging additional suppliers of flu
                  vaccine to the US market. If this happens and supply of
                  product is significantly higher than demand, there is no
                  guarantee that prices for flu vaccine will continue to allow
                  profitability for all manufacturers, including the Company.

         o        our competitors may develop vaccines or other treatments which
                  are superior or



                                      -64-
<Page>

                  less costly than our own with the result that our products,
                  even if they are successfully developed, manufactured and
                  approved, may not generate significant revenues.

If we are unsuccessful in dealing with any of these risks, or if we are unable
to successfully commercialize our vaccine products, particularly for the US
market, which is the largest market in the world, it would likely seriously harm
our business.

IF A PANDEMIC WERE TO OCCUR, OUR BUSINESS WILL BE IMPACTED

In accordance with our contract with the Canadian government, in the event the
government determines that an influenza pandemic has or will soon occur, then
the Company must immediately stop all activities related to its annual influenza
vaccine production, and concentrate on producing a pandemic vaccine in
accordance with the then product specifications. Such a situation could have an
impact on our annual revenues or expected revenues as we may not be able to sell
as many pandemic vaccine doses as annual vaccine doses, and the price per dose
will very likely be lower than market prices for annual influenza vaccines or
the pandemic vaccine may be difficult or impossible to produce, which could
result in our having no revenues in the event of a pandemic. The Company has
provided the Canadian government with an approximate $20 million Letter of
Credit to compensate for potential damages in the event of a breach of the
pandemic contract due to, among other things, our inability to produce a
vaccine.

GOVERNMENTAL AND PAYER PRICE CONTROLS COULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS

Vaccine products are subject to price controls or pressures and other
restrictions in many markets. For instance, some governments intervene directly
in setting prices. In addition, in some markets major purchasers of vaccines
(whether governmental agencies or private health care providers) have the
economic power to exert substantial pressure on prices or the terms of access to
formularies. The commercial success of our products and product candidates
depends in part on the extent to which the costs of our products are reimbursed.
We cannot predict whether existing controls will increase or new controls will
be introduced that will reduce our margins or affect adversely our ability to
introduce new products profitably.

OUR PRODUCTS AND DEVELOPMENT PROGRAMS SUBJECT US TO THE RISK OF PRODUCT
LIABILITY CLAIMS FOR WHICH WE MAY NOT BE ABLE TO OBTAIN ADEQUATE INSURANCE
COVERAGE

Human vaccine products and medical devices involve the risk of product liability
claims and associated adverse publicity. Currently, our principal risks relate
to the production and sale of our Fluviral vaccine and the distribution of the
NeisVac-C vaccine in Canada, as well as to participants in our clinical trials
who may become ill or suffer unintended consequences from our vaccines. Claims
might be made directly by consumers, healthcare providers, including
governments, or by distribution or pharmaceutical companies or others selling
our products. Claims for pain and suffering and punitive damages are frequently
asserted in product liability actions and, if allowed, can represent potentially
open-ended exposure. There can be no assurance that we will be able to obtain or
maintain sufficient and affordable insurance coverage for any of these claims
and, without sufficient coverage, any claim brought against us could have a
materially adverse effect on our business, financial condition or results of
operations.

OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN COLLABORATIVE PARTNERS
OVER WHOM WE HAVE LIMITED CONTROL

Our business depends on our ability to enter into arrangements with corporate
and academic collaborators relating to the research, development, clinical
testing, manufacturing, marketing and commercialization of our products. We
usually acquire rights to intellectual property which we further develop with
the expectation of increasing its value. If successful, we license or



                                      -65-
<Page>

sublicense that intellectual property to others. We generally try to have our
partners assume the obligation to manufacture, market and distribute the
resulting products, although we expect to continue to manufacture Fluviral for
the US and Canadian markets and to manufacture at least our Proteosome proteins.
Consequently, our success depends upon not only on our own ability, but also on
our partners' ability to perform these tasks. We enter into these arrangements
to reduce development risk, defray capital needs, and to earn licensing
revenues. However, there can be no assurance that we will be able to establish
necessary arrangements on favourable terms, or at all, or that current or future
collaborative agreements will be successful.

Our dependence on collaborative agreements with third parties subjects us to a
number of risks. Our business could be adversely affected if any collaborative
partner breaches its agreement with us or fails to develop or commercialize any
product to which it has rights, or any of its products over which we have
rights. In addition, these collaborations may not be continued or result in
successfully marketable products. If a collaborative partner fails to continue
funding any particular program, that could delay or halt development or
commercialization of any products which arise out of that program. If we are not
able to establish further collaborative arrangements or any or all of our
existing collaborative arrangements are terminated, we may have to seek new
collaborative arrangements or undertake product development and
commercialization at our own expense. This may:

         o        limit the number of products that we are able to develop and
                  commercialize

         o        reduce the likelihood of successful product introduction

         o        significantly increase our capital requirements

         o        place additional strain on our management resources

Disputes may arise with respect to the ownership of rights to any technology or
products developed with any current or future collaborative partner. Lengthy
negotiations with potential new collaborative partners or disagreements between
us and our collaborative partners may lead to delays or termination in the
research, development or commercialization of our products or result in time
consuming and expensive litigation or arbitration.

OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY RIGHTS AND OPERATE
WITHOUT INFRINGING UPON THE PROPRIETARY RIGHTS OF OTHERS

We try to protect the technology that we consider important to the development
of our business by filing Canadian, US and selected foreign patent applications.
We currently hold, or have licensed (or are in the process of licensing),
several patents and pending patent applications in Canada, the United States and
corresponding patents and patent applications filed in a number of countries
throughout the world. These patents or patent applications are directed
primarily to:

         o        our FluINsure, StreptAvax, and PGCvax vaccines

         o        our Proteosome technology

         o        our pipeline programs

         o        our gene-cloning and protein expression system


Most if not all of our intellectual property relative to our injectable
influenza vaccine, Fluviral, is trade secret and know-how that is not patented
or patentable.

The patent position of biopharmaceutical and biotechnology firms, including us,
is generally



                                      -66-
<Page>

uncertain and involves complex legal and factual questions. We do not know
whether any of our current or future patent applications will result in the
issuance of any patents. Even issued patents may be challenged, invalidated or
circumvented. Patents may not provide a competitive advantage or afford
protection against competitors with similar technology. Competitors or potential
competitors may have filed applications for, or may have received patents and
may obtain additional and proprietary rights to compounds or processes used by
or competitive with ours.

Patent litigation is widespread in the biotechnology industry and we cannot
predict how this will affect our efforts to form strategic alliances, conduct
clinical testing or manufacture and market any products. If challenged, our
patents may not be held valid. We could also become involved in interference
proceedings in connection with one or more of our patents or patent applications
to determine priority of invention. In some jurisdictions, such as Europe and
Japan, our patents may be opposed and revocation sought. If we become involved
in any litigation, opposition, interference or other administrative proceedings,
we will likely incur substantial expenses and the efforts of our technical and
management personnel will be significantly diverted. In addition, an adverse
determination could subject us to significant liabilities or require us to seek
licenses that may not be available on favourable terms, if at all. We may be
restricted or prevented from manufacturing and selling our products or
collecting royalties in the event of an adverse determination in a judicial or
administrative proceeding or if we fail to obtain necessary licenses.

In some of the countries in which we operate, patent protection may be
significantly weaker than in Canada, the United States or the European Union. In
addition, in an effort to control public health crises, some developing
countries, such as South Africa and Brazil, have considered plans for
substantial reductions in the scope of patent protection for pharmaceutical
products. In particular, these countries could facilitate competition within
their markets from generic manufacturers who would otherwise be unable to
introduce competing products for a number of years. Any loss of patent
protection, including abrogation of patent rights or compulsory licensing, is
likely to affect adversely our operating results in those national markets but
is not expected to be material overall. Absence of adequate patent protection
could limit the opportunity to look to such markets for future sales growth.

Our commercial success also depends significantly on our ability to operate
without infringing the patents and other proprietary rights of third parties.
Patent applications are, in many cases, maintained in secrecy until patents are
issued. The publication of discoveries in the scientific or patent literature
frequently occurs substantially later than the date on which the underlying
discoveries were made and patent applications are filed. In the event of
infringement or violation of another party's patent, we may be prevented from
pursuing product development or commercialization. Also, in the United States it
has become increasingly common that following an adverse outcome in prosecution
of patent infringement actions or other intellectual property actions, the
defendants and direct and indirect purchasers and other payers initiate
anti-trust actions as well. Claims by direct and indirect purchasers and other
payers are typically filed as class actions and the relief sought may include
treble damages and restitution claims. Damages in adverse anti-trust verdicts
are subject to automatic trebling in the United States.

In addition to patents, we rely on trade secrets and proprietary know-how to
protect our intellectual property. As mentioned above, this is particularly true
for our injectable influenza vaccine business. We generally require our
employees, consultants, outside scientific collaborators and sponsored
researchers and other advisors to enter into confidentiality agreements. These
agreements provide that all confidential information developed or made known to
the individual during the course of the individual's relationship with us is to
be kept confidential and not disclosed to third parties except in specific
circumstances. In the case of our employees, the agreements provide that all of
the technology which is conceived by the individual during the course of
employment is our exclusive property. These agreements may not provide
meaningful protection or adequate remedies in the event of unauthorized use or
disclosure of our proprietary information. In addition, it is possible that
third parties could independently develop



                                      -67-
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proprietary information and techniques substantially similar to ours or
otherwise gain access to our trade secrets.

WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN REGULATORY APPROVALS THAT WILL BE
NECESSARY TO COMMERCIALIZE OUR PRODUCTS

The manufacture and sale of human vaccine and therapeutic products in the United
States and Canada is governed by a variety of statutes and regulations in both
countries. These laws govern the development, testing, manufacture, safety,
efficacy, record keeping, labelling, storage, approval, advertising, promotion,
sale and distribution of biopharmaceutical products. If our products are
ultimately marketed abroad they will be subject to extensive regulation by
foreign governments. There can be no assurance that we will be able to obtain
or, if obtained, maintain the required regulatory approvals or comply with the
applicable regulatory requirements for any of our products in development. If we
are unable to obtain or retain necessary regulatory approvals, we may not be
able to commercialize our products. Because of the relatively low prices for flu
vaccine outside of the US, and due to our distribution and product purchase
agreements for the US market, our ability to obtain regulatory approval for our
Fluviral influenza vaccine in the US, by the time required under said
agreements, is critical to the Company's success.

The products we have currently under development will require significant
development, preclinical testing (except our Fluviral, FluINsure, StreptAvax and
PGCvax vaccines which have completed preclinical testing), clinical testing and
investment of significant funds prior to their commercialization. Securing
regulatory approval requires us to submit extensive preclinical and clinical
data and supporting information for each indication to establish the product's
safety and efficacy. The process of completing development, preclinical and
clinical testing and obtaining subsequent approvals is likely to take a number
of years. Any delay in obtaining approvals may:

         o        adversely affect the successful commercialization of products
                  that we or our collaborative partners develop

         o        diminish any competitive advantages that we or our
                  collaborative partners may obtain

         o        adversely affect our receipt of revenues or royalties


Certain material changes to an approved product such as manufacturing changes or
changes in the supplier of raw materials are subject to further regulatory
review and approval. For example, we changed bulk flu antigen in the attempt to
commercialize the FluINsure vaccine as a result of the acquisition of the Shire
vaccine assets and the ability to use the flu antigen produced at Quebec City,
Quebec. Such a change requires a relatively small clinical "bridging" study,
which has been undertaken in Canada, but could involve more extensive clinical
studies. Any required approvals, once obtained, may be withdrawn. Compliance
with other regulatory requirements may not be maintained. Additionally, if we
fail to comply with applicable regulatory requirements at any stage during the
regulatory process, our contract manufacturers or we may be subject to
sanctions, including:

         o        fines

         o        product recalls or seizures

         o        injunctions

         o        refusal of regulatory agencies to review pending market
                  approval applications or supplements to approval applications



                                      -68-
<Page>

         o        total or partial suspension of production

         o        civil penalties

         o        withdrawals of previously approved marketing applications

         o        criminal prosecution

 We and our contract manufacturers will be required to comply with applicable
good manufacturing practices regulations, which include requirements relating to
quality control and quality assurance as well as the corresponding maintenance
records and documentation. Manufacturing facilities must be approved before we
can use them in commercial manufacturing of our products and are subject to
inspection by regulatory agencies. We and our contract manufacturers may not be
able to comply with the applicable good manufacturing practice requirements and
other regulatory requirements, which could have a material adverse affect on our
business, financial condition and results of operations.

EVEN IF WE ARE ABLE TO COMMERCIALIZE OUR PRODUCTS, OUR PRODUCTS MAY NOT GAIN
MARKET ACCEPTANCE

Whether or not any our products gain market acceptance among physicians,
patients, healthcare payers and the medical community, as well as the degree of
market acceptance of any of our products, will depend on a number of factors,
including:

         o        establishment and demonstration of clinical usefulness and
                  safety and documented in label claims

         o        cost-effectiveness of the products

         o        their potential advantage over alternative products

         o        reimbursement policies of governments and third-party payers

         o        marketing and distribution support for the products

For example, we will not be the first company to have an intranasal flu vaccine
on the market. The success of other products in this market segment in
establishing the market, their pricing, their clinical usefulness or other
potential advantages or disadvantages, will very likely have a major impact on
the success of our product. Thus far, the only other intranasal flu vaccine on
the market, FluMist, has generated smaller than expected revenues and has not
met most expectations for market share of the influenza vaccine market in the
United States. If our products do not achieve significant market acceptance, our
business, financial condition and results of operations will be harmed.

In addition, third-party payers such as government health administration
authorities, managed care providers and private health insurers are increasingly
challenging the price and examining the cost effectiveness of medical products
and services. If these third-party payers fail to provide adequate coverage for
our products, the market acceptance of the products may be adversely affected.

Finally, although we do have distribution and purchase contracts for the US
market related to our Fluviral product, there can be no assurance that pricing
of flu vaccines will continue to stay the same or rise in the future. If the
market does not accept our product or flu vaccine products in general are not
valued by the market, then our distribution agreements may not lead to
profitable operations, or there may be pressure by our partners to re-negotiate
these contracts, particularly



                                      -69-
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if they are incurring losses.

WE DEPEND ON LICENSES AND SIMILAR CONTRACTUAL ARRANGEMENTS WITH THIRD PARTIES IN
ORDER TO DEVELOP OUR PRODUCTS AND TO CARRY OUT OUR RESEARCH AND DEVELOPMENT
PROGRAMS

We currently hold a number of important intellectual property licenses
including:

         o        an exclusive license from the University of Tennessee Research
                  Corporation covering know-how, technology and several issued
                  patents and patent applications relating to the development of
                  a vaccine against Group A Streptococcus;

         o        an exclusive license from the Walter Reed Army Institute of
                  Research relating to our Proteosome technology; and

         o        an exclusive license for Canada from the National Research
                  Council of Canada in connection with the intellectual property
                  relating to the NeisVac-C vaccine

These licenses, and others, are important because we rely on them to develop our
products. There can be no assurance that these licenses will not be terminated
by our licensors or that they will be renewed when necessary. We may also
acquire additional licenses to technologies developed by other companies or
academic institutions. Pursuant to the terms of these agreements, we may be
required to exercise diligence in bringing products to market and to make
milestone payments that, in some instances, could be substantial. We may also be
obligated to make royalty payments on the net sales, if any, of products
resulting from our licensed technology and, in some instances, could be
responsible for the costs of filing and prosecuting patent applications. For
example, we are obligated to pay Walter Reed Army Institute royalties on the
sale of our FluINsure vaccine, and to make two milestone payments to the
University of Tennessee Research Corporation in connection with the development
of our StreptAvax vaccine. We cannot assure you that the licenses we currently
have will be maintained in good standing or that the underlying technology or
patent rights which are the subject of the licenses will continue to be of any
value to us.

COMPETITION IN OUR TARGETED MARKETS IS INTENSE AND DEVELOPMENTS BY OTHER
COMPANIES COULD RENDER OUR PRODUCTS OR TECHNOLOGIES NON-COMPETITIVE

The biotechnology industry is highly competitive and subject to significant and
rapid technological change. Developments by other companies within the industry
could render our products or technologies non-competitive. Competitors have
developed technologies that could form the basis for competitive products. Some
of these products may be more effective or have an entirely different approach
or means of accomplishing the desired effect than our products. We expect
technological competition from biotechnology companies and academic research
institutions to increase over time.

Many of our competitors and potential competitors have substantially greater
product development capabilities and financial, scientific, marketing and human
resources than we do. Our competitors may succeed in developing products earlier
and obtaining regulatory approvals and patent protection for such products more
rapidly than we can.

There are several companies that have marketed injectable flu vaccines on the
market. There are also several products on the market and in development that
compete with NeisVac-C vaccine. For a list of the primary competitors known to
us, please see "Vaccines - Competition".

OTHER THAN IN THE CASE OF PRODUCING INFLUENZA VACCINE, OUR LACK OF COMMERCIAL
MANUFACTURING EXPERIENCE MEANS THAT WE WILL HAVE TO INCUR SUBSTANTIAL COSTS TO
DEVELOP



                                      -70-
<Page>

MANUFACTURING FACILITIES OR CONTRACT WITH THIRD PARTIES OVER WHOM WE HAVE
LIMITED CONTROL TO DEVELOP OUR PRODUCTS

In order to be successful, our products must be manufactured in commercial
quantities in compliance with regulatory requirements and at acceptable costs.
Other than our influenza plant in Quebec City and a leased facility in Laval,
both of which are related to Fluviral production in Canada, we do not have
facilities to commercially manufacture our products or the Proteosome proteins
under development and we must initially obtain the small amounts of products we
require for clinical studies from contract manufacturing companies or our own
pilot-scale facilities. In order to manufacture our products under development
in commercial quantities, we will need to develop manufacturing facilities or
contract with third parties to manufacture our products. We may not be able to
develop or otherwise secure access to appropriate facilities and manufacturing
contracts with third parties may not be available to us on favourable terms, if
at all.

OUR PRODUCTS AND PRODUCT CANDIDATES ARE COMPLEX AND DIFFICULT TO MANUFACTURE ON
A LARGE-SCALE BASIS, WHICH COULD CAUSE US TO DELAY PRODUCT LAUNCHES, EXPERIENCE
SHORTAGES OF PRODUCTS OR PREVENT US FROM OFFERING PRODUCTS ON A VOLUME BASIS.

Most of our products are biologics, which are complex and difficult to
manufacture. Unlike chemical pharmaceuticals, a biologic product generally
cannot be sufficiently characterized (in terms of its physical and chemical
properties) to rely on assaying of the finished product alone to ensure that the
product will perform in the intended manner. Accordingly, it is essential to be
able to both validate and control the manufacturing process in order to show
that the process works and is made strictly and consistently in compliance with
that process. Slight deviations anywhere in the manufacturing process, including
quality control, labeling and packaging, may result in unacceptable changes in
the products that may result in lot failures or product recalls. Manufacturing
processes that are used to produce the smaller quantities of material needed for
research and development purposes may not be successfully scaled up to allow
production of commercial quantities at reasonable cost, or at all. All of these
difficulties are compounded when dealing with novel biologic products that
require novel manufacturing processes. Additionally, manufacturing is subject to
extensive government regulation. Even a minor change in a manufacturing process
requires regulatory approval, which, in turn, may require further clinical
studies.

EXCEPT FOR OUR FLUVIRAL INFLUENZA VACCINE, OUR LACK OF MARKETING AND SALES
EXPERIENCE MEANS THAT WE MUST RELY ON THE EFFORTS OF OTHERS TO COMMERCIALIZE OUR
PRODUCTS

Other than for our Fluviral vaccine and the NeisVac-C vaccine in Canada, we do
not have a marketing, sales or distribution capability. For Fluviral sales in
the US, should we obtain regulatory approval, we have entered into arrangements
with third parties to market and sell most of what we can or expect to produce.
These arrangements may be terminated in certain circumstances. For all other
products, we may not be able to enter into marketing and sales arrangements with
others on favourable terms, if at all. For the Fluviral product in the US, and
to the extent that we enter into marketing and sales arrangements with other
companies for other products, our revenues will depend on the efforts of others
and which efforts may not be successful. If we are unable to enter into or
maintain satisfactory third-party arrangements, such as our US Fluviral
distribution arrangement, then we must develop a marketing and sales force,
which may need to be substantial in size, in order to achieve commercial success
for any product. We may not successfully develop or obtain the necessary
marketing and sales experience or have sufficient resources to do so. If we fail
to establish successful marketing and sales capabilities or to enter into or
maintain successful marketing arrangements with third parties, such as for our
Fluviral product, our business, financial condition and results of operations
will be materially adversely affected.

IF WE ARE UNABLE TO ENROLL SUFFICIENT PATIENTS AND CLINICAL INVESTIGATORS TO
COMPLETE OUR CLINICAL TRIALS, OUR DEVELOPMENT PROGRAMS COULD BE DELAYED OR
TERMINATED



                                      -71-
<Page>

The rate of completion of our clinical trials, and those of our collaborators,
is significantly dependent upon the rate of enrollment of patients and clinical
investigators. Patient enrollment is a function of many factors, including:

     o    efforts of the sponsor and clinical sites involved to facilitate
          timely enrollment;

     o    patient referral practices of physicians;

     o    design of the protocol;

     o    eligibility criteria for the study in question;

     o    perceived risks and benefits of the drug under study;

     o    the size of the patient population;

     o    availability of competing therapies;

     o    availability of clinical trial sites; and

     o    proximity of and access by patients to clinical sites.


We may have difficulty obtaining sufficient patient enrollment or clinician
participation to conduct our clinical trials as planned, and we may need to
expend substantial additional funds to obtain access to resources or delay or
modify our plans significantly. These considerations may lead us to consider the
termination of ongoing clinical trials or development of a product for a
particular indication. This is especially problematic when considering that we
have limited time windows each year to conduct clinical trials relating to our
Fluviral or FluINsure vaccines since many of the clinical tests (such as for
efficacy) must begin prior to and be conducted during the influenza season.

OUR COLLABORATIONS WITH SCIENTIFIC ADVISORS AND ACADEMIC INSTITUTIONS MAY BE
SUBJECT TO RESTRICTION AND CHANGE

We work with scientific advisors and academic collaborators who assist us in our
research and development efforts. Almost all of our preclinical and research
programs are heavily reliant upon such collaborators. These scientists are not
our employees and may have other commitments that limit their availability to
us. Our scientific advisors and academic collaborators generally agree not to
compete with us. If a conflict of interest arises between their work for us and
their work for another entity, we may lose their services. In addition, although
our scientific advisors and academic collaborators sign agreements not to
disclose our confidential information, it is possible that valuable proprietary
knowledge may become publicly known which would compromise our competitive
advantage.

DIFFICULTIES WE MAY ENCOUNTER MANAGING GROWTH COULD ADVERSELY AFFECT OUR RESULTS
OF OPERATIONS

We have experienced a period of rapid and substantial growth that has placed
and, if such growth continues, will continue to place a strain on our
administrative and operational infrastructure. If we are unable to manage this
growth effectively, particularly, for example as a result of our acquisition of
the Shire vaccine assets, our business, results of operations or financial
condition may be materially adversely affected. Our ability to manage our
operations and growth effectively requires us to continue to improve our
operational, financial and management controls, reporting systems and procedures
and hiring programs. We may not be able to successfully implement improvements
to our management information and control systems in an efficient or timely


                                      -72-
<Page>

manner and may discover deficiencies in existing systems and controls. If we are
unable to improve our controls and systems to meet the needs of an expanding
enterprise, we could experience production delays and problems with our
reporting systems, and these problems could harm our business.

ACQUISITIONS OF COMPANIES OR TECHNOLOGIES MAY RESULT IN DISRUPTIONS TO OUR
BUSINESS

As part of our business strategy, we may acquire additional assets or businesses
principally related to, or complementary to, our current operations. Any such
acquisitions will be accompanied by certain risk including:

     o    exposure to unknown liabilities of acquired companies;

     o    higher than anticipated acquisition costs and expenses;

     o    the difficulty and expense of integrating operations and personnel of
          acquired companies;

     o    disruption of our ongoing business;

     o    diversion on management's time and attention; and

     o    possible dilution to shareholders.


We may not be able to successfully overcome these risks and other problems
associated with acquisitions and this may adversely affect our business.

THE ACQUISITION OF THE VACCINE BUSINESS OF SHIRE MAY RESULT IN DISRUPTIONS TO
OUR BUSINESS

As described earlier in this Annual Information Form, we purchased the vaccine
business previously conducted by Shire. This transaction has exposed our Company
to a number of risks including:

     o    changing the nature of the Company from an R&D focus to a company with
          commercial operations, including manufacturing, marketing,
          distribution and sales;

     o    the difficulty and expense of integrating the operations of the
          acquired business with our own business. In particular, the geographic
          distances between the location of the business being acquired and the
          location of many of our management personnel might make full
          integration of the acquired business more difficult;

     o    the possibility that the anticipated benefits of the acquisition will
          not materialize;

     o    diversion of management's time and attention;

     o    the need to finance increased costs of operations and debt resulting
          from the acquisition; and

     o    the loss of key employees of the acquired business as a result of
          change in management.

With the acquisition of the vaccine business of Shire, we have become a company
that is involved in the manufacture, sales and distribution of vaccine products
currently in Canada but



                                      -73-
<Page>

with plans to expand at least into the US market in the foreseeable future. Our
management will have to adapt to this new line of business.

If we are unable to overcome or manage these risks or other problems associated
with this acquisition, our business could be negatively affected.

GOVERNMENTAL INVESTIGATIONS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS

We operate globally in complex legal and regulatory environments that often vary
among jurisdictions. The failure to comply with applicable laws, rules and
regulations in these jurisdictions may result in civil and criminal legal
proceedings. In the United States, for example, there may be federal and state
governmental investigations into pricing, marketing and reimbursement of
prescription drug products. These investigations could result in related
restitution or civil false claims act litigation on behalf of the federal or
state governments, as well as related proceedings initiated against us by or on
behalf of consumers and private payers. Such proceedings may result in trebling
of damages awarded or fines in respect of each violation of law. Criminal
proceedings may also be initiated against us or individuals.

                       RISKS RELATED TO OWNING OUR SHARES

OUR SHARE PRICE HAS BEEN AND IS LIKELY TO CONTINUE TO BE HIGHLY VOLATILE

The market price of our common shares has been highly volatile and is likely to
continue to be volatile. Factors such as announcements of technological
innovations, new commercial products, patents, the development of technologies
(by us or others), acquisitions, financings, results of clinical studies,
regulatory actions, publications, events affecting our competitors, financial
results or public concern over the safety or effectiveness of biotechnology
products and other factors could have a significant effect on the market price
of our common shares.

OUR SHAREHOLDER RIGHTS PLAN CONTAINS PROVISIONS THAT MAY DELAY OR PREVENT A
CHANGE OF CONTROL

In the event that any shareholder becomes a beneficial holder of 20% or more of
our common shares, other than pursuant to a permitted bid, our shareholder
rights plan contains provisions which would allow all shareholders, other than
the beneficial holder in question, to acquire additional common shares at
significant discounts to the then current market price of the shares. These
provisions could have the effect of delaying or preventing a change of control
of our company.

            INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

None of the directors or executive officers of the Company, no person or company
that is the direct or indirect beneficial owner of, or who exercises control or
direction over, more than 10% of the outstanding common shares and no associate
or affiliate of any of the foregoing has any material interest, direct or
indirect, in any transaction within the three most recently completed financial
years or during the current financial year that has materially affected, or will
materially affect, the Company.

                                 DIVIDEND POLICY

For the foreseeable future, the Company intends to retain all earnings, if any,
for general and corporate purposes. The payment of dividends in the future will
depend on the earnings and



                                      -74-
<Page>

financial condition of the Company and on such other factors as the Board of
Directors of the Company may consider appropriate.

           OFF-BALANCE SHEET TRANSACTIONS AND CONTRACTUAL COMMITMENTS

We have no relationships with any "special purpose" entities and have no
commercial commitments with related parties. The only contractual obligations
are in the form of operating leases, capital leases, notes payable and future
research and development expenditures.

                     PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table provides information about the fees billed to us for
professional services rendered by KPMG LLP, our principal accountant, during
fiscal 2004 and 2003, respectively:

<Table>
<Caption>
                                                                   AGGREGATE FEES BILLED BY OUR
                                                                       PRINCIPAL ACCOUNTANT
                                                             ---------------------------------------
                                                                       2004                     2003
                                                             --------------            -------------
<S>                                                          <C>                       <C>
     Audit fees                                              $      363,788            $     328,113
     Audit-related fees                                             200,589                   24,786
     Non-audit services                                             268,790                   74,100
     Total fees                                              $      833,167            $     426,999
</Table>

For the year ended December 31, 2004, the total amount of fees paid by the
Company to KPMG LLP for professional services rendered was $833,167. These fees
were paid as follows:

AUDIT FEES - Audit fees were paid for services rendered by the auditors for the
audit of the Company's annual consolidated financial statements for the year
ended December 31, 2004 and the review of the Company's quarterly consolidated
financial statements for 2004 and services provided in connection with statutory
and regulatory filings or engagements, including accounting consultations on
specific issues related to the year-end audit.

AUDIT RELATED FEES - Audit related fees were paid for assurance and related
services that are reasonably related to the performance of services that are
traditionally performed by an independent auditor, and which are not reported
under the audit fees item above. These services consisted of general advice and
consultations on accounting standards, assistance related to due diligence and
the acquisition of the Shire businesses during the year.

NON-AUDIT SERVICES - Non-audit services include tax fees paid for tax compliance
services, including the review of original and amended tax returns, assistance
with questions regarding tax audits and assistance in completing routine tax
schedules and calculations.

                   INTERNAL CONTROLS - REPORT FROM MANAGEMENT

The Company maintains a set of disclosure controls and procedures designed to
ensure that information required to be disclosed is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms. The



                                      -75-
<Page>

Company's principal executive and financial officers have evaluated the
Company's controls and procedures as of the end of the period covered by this
report.


There were no significant changes to the Company's internal controls over
financial reporting that occurred during the period covered by this report or in
other factors that materially affected, or would be reasonably likely to
materially affect, the Company's internal control over financial reporting that
could significantly affect those controls subsequent to the date of their last
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

                                 CODE OF ETHICS

The Company adopted a code of ethics for their principal executive officers,
principal financial officer, principal accounting officer or controller, and/or
persons performing similar functions. The portion of our Code of Business
Conduct which applies to our senior officers is filed as Exhibit 1 to this
annual report.

                          CRITICAL ACCOUNTING ESTIMATES

The preparation of Company's financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Significant areas requiring
the use of management estimates relate to the determination of the valuation of
investments, medical technology and other assets, the useful lives of assets for
depreciation and amortization, stock-based compensation, the amounts recorded as
revenue and deferred licensing revenue and accrued liabilities, and the
allocation of the purchase price on an acquisition.

                             ADDITIONAL INFORMATION

The Company will provide to any person, upon request to the Secretary of the
Company:

(a)      when securities of the Company are in the course of a distribution
         pursuant to a short form prospectus or a preliminary short form
         prospectus has been filed in respect of a distribution of securities of
         the Company,

               (i)         one copy of this Annual Information Form together
                           with one copy of any document, or the pertinent pages
                           from any document, incorporated by referenced in this
                           Annual Information Form;

              (ii)         one copy of the audited consolidated financial
                           statements of the Company for the years ended
                           December 31, 2004 and 2003 together with the
                           accompanying report of the auditors thereon and one
                           copy of any interim financial statements of the
                           Company subsequent to such financial statements;

             (iii)         one copy of the most recent Information Circular of
                           the Company; and

              (iv)         one copy of any other document that is incorporated
                           by reference into the preliminary short form
                           prospectus or the short form prospectus other than
                           those referred to above; or



                                      -76-
<Page>

(b)      at any other time, one copy of any of the documents referred to in
         (a)(i), (ii) and (iii) above, provided that the Company may require the
         payment of a reasonable charge if the request is made by a person who
         is not a security holder in the Company.

Additional information including directors' and officers' remuneration and
indebtedness, principal holders of the Company's securities, options to purchase
securities and interest of insiders in material transactions, where applicable,
is contained in the most recent Information Circular of the Company and
additional financial information is provided in the audited consolidated
financial statements of the Company for the year ended December 31, 2004 and
Management Discussion and Analysis thereof.

Documents filed by the Company with Canadian securities regulators are available
at www.sedar.com.

                  CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This Annual Information Form contains forward-looking statements that involve
risks and uncertainties. The forward-looking statements are contained
principally in the sections entitled "Business of ID Biomedical - General,"
"Vaccines, "Gene-Based Testing", and "Risk Factors". These statements involve
known and unknown risks, uncertainties and other factors, including the risks
outlined under the section entitled "Risk Factors," which may cause our actual
results, performance or achievements to be materially different from any future
results, performances or achievements expressed or implied by the
forward-looking statements. Forward-looking statements include, but are not
limited to, statements about:

     o    marketing and/or commercialization of our products and technologies
          under development;

     o    decisions and the timing of those decisions made by the various health
          regulatory agencies relative to the Company's technology and products,
          particularly Fluviral in the US;

     o    the Company's ability to successfully complete pre-clinical and
          clinical development of its products;

     o    our estimates for future revenues and profitability;

     o    our estimates regarding our capital requirements and our needs for
          additional financing;

     o    market acceptance of the Company's technology and products;

     o    plans for future products, technologies and services and for
          enhancements of existing products, technologies and services;

     o    the Company's ability to obtain and enforce timely patent and other
          intellectual property protection and to avoid or license third party
          intellectual property covering its technology and products;

     o    our ability to attract customers and establish and maintain corporate
          alliances relating to the development and commercialization of our
          technology and products;



                                      -77-
<Page>

     o    sources of revenues and anticipated revenues, including licenses of
          our intellectual property, collaborative agreements and the continued
          viability and duration of those agreements; and

     o    the ability to obtain sufficient financial resources.

In some cases, you can identify forward-looking statements by terms such as
"anticipate," "believe," "could," "continue," "estimate," "expect," "intent,"
"may," "might," "ongoing," "plan," "potential," "predict," "project," "should,"
"will," "would," or the negative of these terms, and similar expressions
intended to identify forward-looking statements. These statements reflect our
current views with respect to future events and are based on assumptions and
subject to risks and uncertainties. We discuss many of these risks in this
Annual Information Form in greater detail under the heading "Risk Factors."
Also, these forward-looking statements represent our estimates and assumptions
only as of the date of this Annual Information Form, and we are no obligation to
update any of these forward-looking statements after the date of this Annual
Information Form to conform such statements to actual results, unless required
by law. You should read this Annual Information Form completely and with the
understanding that our actual future results may be materially different from
what we expect. We qualify all of our forward-looking statements by these
cautionary statements. Given these uncertainties, you should not place undue
reliance on these forward-looking statements.



                                      -78-
<Page>



                           GLOSSARY OF TECHNICAL TERMS

Adjuvant                                      A substance or drug added to a
                                              vaccine to increase the immune
                                              response and the therapeutic or
                                              prophylactic benefit of the
                                              vaccine.

AE                                            Adverse Event

Antibody                                      A type of protein produced by the
                                              immune system and released into
                                              serum and tissue fluids in
                                              response to exposure to a foreign
                                              substance (antigen). Antibodies
                                              bind tightly to such foreign
                                              substances and help eliminate them
                                              from the body.

Antigen                                       Any foreign or non-self substance
                                              that, when introduced into the
                                              body, causes the immune system to
                                              create an antibody.

Assay                                         A test for a particular substance.

Bacteria                                      A large group of typically single
                                              celled microorganisms, some of
                                              which are disease causing.

Biological                                    Biological pathogens released
Warfare Agents                                intentionally or accidentally, or
                                              naturally occurring, that result
                                              in disease or death. Human
                                              exposure to these agents may occur
                                              through inhalation, skin
                                              (cutaneous) exposure, or ingestion
                                              of contaminated food or water.

Biotechnology                                 The application of organisms,
                                              biological systems or biological
                                              processes to manufacturing and
                                              service industries including any
                                              process in which organisms,
                                              tissues, cells, organelles or
                                              isolated enzymes are used to
                                              convert biological or other raw
                                              materials to products of greater
                                              value - also includes the design
                                              and use of reactors, fermentors
                                              and downstream processing,
                                              analytical and control equipment
                                              associated with biological
                                              manufacturing processes.

Clinical trials                               Studies in which human
                                              subjects are used to assess the
                                              immunogenicity, safety and
                                              effectiveness of a new drug or
                                              vaccine.

CPT                                           Cycling Probe Technology - a
                                              proprietary technology for
                                              detecting target DNA that uses the
                                              target to catalyze the conversion
                                              of chimeric probes to shorter,
                                              detectable fragments.

Delivery System                               A modification to the physical
                                              form, enclosure, or attachment to
                                              a carrier substance of a drug or
                                              vaccine that is intended to
                                              improve the delivery or function
                                              of the drug or vaccine in the
                                              body.

DNA                                           Deoxyribonucleic Acid - a complex
                                              biological polymer found in the
                                              cell nucleus of all living
                                              organisms which contains all the
                                              genetic information necessary to
                                              direct all aspects of cellular
                                              function - it also carries and
                                              transmits the genetic information
                                              in most organisms (an exception
                                              being the RNA viruses).



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ELISA                                         Enzyme-Linked Immunosorbent
                                              Assay used for measuring the
                                              level of immunoglobulins
                                              produced in sera following
                                              immunization

FDA                                           United States Food and Drug
                                              Administration - the government
                                              agency which regulates the use and
                                              sale of medical products in the
                                              United States.

GMP                                           Good Manufacturing Practices

GMT                                           Geometric  Mean  Titer,  a measure
                                              of the level of  specific
                                              antibodies in body fluids
                                              following immunization

GrAS                                          Group A, beta-hemolytic
                                              streptococci - bacteria that can
                                              cause rheumatic fever, as well as,
                                              deep or superficial infections of
                                              the skin, but most commonly cause
                                              "strep throat."

Hemagglutinin Protein (HA)                    Protein on the surface of
                                              influenza virus that mediates
                                              infection and agglutinates red
                                              blood cells

IgA                                           Immunoglobulin of class A found
                                              mainly in blood

IgG                                           Immunoglobulin of class G found
                                              mainly in blood

Immune Response                               An adaptive response in which the
                                              immune system recognizes a
                                              foreign substance or organism
                                              and produces antibodies and/or
                                              cells that interact specifically
                                              with the foreign material and
                                              contain, neutralize, or
                                              eliminate it.

Immunity                                      The condition of being able to
                                              resist a particular disease.

IND                                           Abbreviation for "Investigational
                                              New Drug Application"  - a
                                              comprehensive document submitted
                                              to the FDA or TPP or other similar
                                              authorities in seeking approval to
                                              conduct clinical trials in humans.

Infectious Diseases                           Diseases caused by bacteria,
                                              viruses, parasites, etc., which
                                              can be spread from one organism to
                                              another.

Mucosa                                        The layer of tissue lining the
                                              hollow internal organs in
                                              vertebrates (respiratory,
                                              intestinal and urigenital tracts)
                                              and separating the internal milieu
                                              from the environment. Mucosal
                                              surfaces are usually covered by
                                              secretions that lubricate them and
                                              help eliminate foreign substances.

Mucosal Immune Response                       An immune response that stops
                                              invading organisms at the
                                              mucosal surface, before they can
                                              reach the internal organs.

Nasal                                         Via the nose.

Pathogen                                      A specific causative agent (such
                                              as a bacterium or virus) of
                                              disease.



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Pneumococcal                                  A nonmotile, gram-positive
                                              bacterium (STREPTOCOCCUS
                                              PNEUMONIAE) that is the most
                                              common cause of bacterial
                                              pneumonia, associated with
                                              meningitis and other infectious
                                              diseases.

Preclinical studies                           Experiments that evaluate
                                              the efficacy and safety of new
                                              drugs or vaccines in animals prior
                                              to, and in parallel with, studies
                                              in humans.

Prophylactic                                  Vaccines designed to produce an
                                              immune response that prevents a
                                              disease or condition.

Protein                                       A macromolecule comprising a
                                              specific sequence of amino acids
                                              which, when folded in its natural
                                              shape, has a unique biological
                                              activity.

Proteosome                                    Microparticles of specific
                                              purified bacterial membrane
                                              proteins that serve as both a
                                              delivery system and adjuvant for
                                              vaccines.

Safety Trials                                 Clinical trials designed
                                              principally to evaluate the
                                              incidence of adverse reactions and
                                              significant side effects of a drug
                                              or a vaccine.

Salivary secretory IgA                        Immunoglobulin of class A found
                                              in mucosal secretions including
                                              saliva

Secreted cytokine patterns                    The variety of small proteins
                                              that control immune responses
                                              that are secreted by cells of
                                              the immune system

Serum hemagglutination-inhibiting (HAI)       A test that measures the level of
                                              serum antibodies against influenza
                                              HA protein based on the ability to
                                              prevent influenza virus from
                                              agglutinating red blood cells

Shigellosis                                   Intestinal disease caused by
                                              bacteria of the genus Shigella,
                                              and characterized by diarrhea,
                                              abdominal discomfort and fever.

Split-viron                                   A virus preparation containing
                                              membrane proteins separated from
                                              the virus particle using
                                              detergents or organic solvents

STREPTOCOCCUS PNEUMONIAE                      Gram-positive bacterium
                                              that causes diseases of the
                                              sinuses and lungs, and can also
                                              invade the blood and central
                                              nervous system.

Therapeutic                                   Vaccines designed to produce an
                                              immune response that treats, cures
                                              or improves an existing disease or
                                              condition.



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Thimerosal                                    A mercury containing organic
                                              compound used as a preservative in
                                              a number of biological products,
                                              including influenza vaccines.

Toxin                                         A product of the metabolic
                                              activities of a living organism
                                              that causes disease or dysfunction
                                              in another organism.

TPP                                           Abbreviation for "Therapeutic
                                              Products Programme" - the unity
                                              within the Health Protection
                                              Branch of Health Canada
                                              responsible for supervising the
                                              drug development and approval
                                              process in Canada.

Type 1 immune response                        The type of immune response
                                              characterized predominantly by
                                              the production of cytokines that
                                              stimulate cellular immunity,
                                              antibodies and non-allergic
                                              responses

Type 2 immune response                        The type of immune response
                                              characterized predominantly by
                                              the production of cytokines that
                                              stimulate the production of
                                              antibodies and allergic
                                              responses

Vaccine                                       A preparation of non-living
                                              microorganisms, living attenuated
                                              organisms, or living fully
                                              virulent organisms that are
                                              administered to produce or
                                              artificially increase immunity to
                                              a particular disease.

Virus                                         A type of "germ." Viruses
                                              contain a protein coat
                                              surrounding a core of genetic
                                              material, and may or may not be
                                              surrounded by a membrane
                                              envelope. They have no metabolic
                                              machinery of their own, and must
                                              invade living cells to multiply.
                                              They are probably the most
                                              common agents of infectious
                                              disease in humans and animals.

WHO                                           World Health Organization - an
                                              international agency which assists
                                              countries to research, co-ordinate
                                              and target health care related
                                              resources and provides regional
                                              and national structures in the
                                              prevention and control of diverse
                                              health concerns.



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                                    EXHIBIT 1

                   CODE OF ETHICS FOR OUR PRINCIPAL EXECUTIVE

                      OFFICERS AND SENIOR FINANCIAL OFFICER

SET FORTH BELOW IS A CODE OF ETHICS THAT COMPLIES WITH THE REQUIREMENTS OF
SECTION 406 OF THE SARBANES-OXLEY ACT OF 2002 AND ANY CANADIAN SECURITIES
REGULATIONS.

INTRODUCTION

This Code of Ethics is applicable to the Company's principal executive officers,
principal financial officer or any person performing similar functions (which
are referred to in this Code of Ethics as "Financial Managers"). References in
this Code of Ethics to the Company mean the Company or any of its subsidiaries.

While the Company and its shareholders expect honest and ethical conduct in all
aspects of our business from all employees, the Company and its shareholders
expect the highest possible standards of honest and ethical conduct from our
Financial Managers. You are setting an example for other employees and are
expected to foster a culture of transparency, integrity and honesty. Compliance
with this Code (and the code of Business Conduct and Ethics) is a condition to
your employment and any violations will be dealt with appropriately and, if
warranted, severely.

In accordance with the rules of the US Securities and Exchange Commission (the
"SEC") and Canadian Securities regulations, any change or waiver of this code
will be disclosed in our annual report on Form 40-F.

CONFLICTS OF INTEREST

A conflict of interest occurs when your personal interests interfere, or appear
to interfere, in any way, with the interest of the Company. A conflict of
interest can arise either when you have an interest that may make it difficult
for you to perform your professional obligations fully or when you otherwise
take action for your direct or indirect benefit or the direct or indirect
benefit of a third party that is not consistent with the interests of the
Company. Conflicts of interests also arise when you, or a member of your family,
receive improper personal benefits as a result of your position in the Company.
Loans to, or guarantees of obligations of, any employees, officers, directors or
any of their family members are likely to pose conflicts of interest, as are
transactions of any kind between the Company and any other entity in which you
or any member of your family have a material interest.

As a Financial Manager, it is imperative that you avoid any investments,
interest, association or other relationship that interferes, might interfere, or
might be thought to interfere, with your independent exercise of judgment in the
Company's best interest and other wise with your professional obligations to the
Company.

Any material transaction or relationship that reasonably could be expected to
give rise to a conflict of interest must be disclosed as soon as possible to the
chairman of the Audit Committee and/or Chairman of the Corporate Governance
Committee.

ACCURATE PERIODIC REPORTS

As you are aware, full, fair, accurate, timely and understandable disclosure in
the reports and



                                      -83-
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other documents that we file with, or submit to, the SEC and in our other public
communications is critical for us to maintain our good reputation, to comply
with our obligations under the securities laws and to meet the expectations of
our shareholders and other members of the investment community. You are to
exercise the highest standard of care in preparing such reports, documents and
other public communications, or in ensuring that such reports, documents and
other public communications are prepared, in accordance with the guidelines set
forth below.

     o    Compliance with generally accepted accounting principles is required
          at all times. However, technical compliance with GAAP may not be
          sufficient and, to the extent that technical compliance with GAAP
          would render financial information that the Company reports
          misleading, additional disclosure will be required.

     o    Compliance with the Company's system of internal accounting controls
          is required at all times, and no action designed to circumvent such
          controls and procedures will be tolerated.

     o    Compliance with the Company's disclosure controls and procedures is
          required at all times, and no action designed to circumvent such
          controls and procedures will be tolerated.

FINANCIAL RECORDS

Financial Managers are responsible for establishing and managing our
financial reporting systems to ensure that:

     o    All financial transactions are properly authorized.

     o    All records fairly and accurately reflect the transactions or
          occurrences to which they relate.

     o    All records fairly and accurately reflect in reasonable detail the
          Company's assets, liabilities, revenues and expenses.

     o    The Company's accounting records do not contain any false or
          intentionally misleading entries.

     o    No transactions are intentionally misclassified as to accounts,
          departments or accounting periods.

     o    All transactions are supported by accurate documentation in reasonable
          detail and recorded in the proper account and in the proper accounting
          period.

     o    No information is concealed from the internal auditors, the
          independent auditors, the Audit Committee or the full board of
          directors.

COMPLIANCE WITH LAWS

Financial Managers are expected to comply with both the letter and spirit of all
applicable laws and government rules and regulations. You will be responsible
for establishing and maintaining procedures to:

     o    Educate members of the finance department about applicable laws and
          governmental rules and regulations.



                                      -84-
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     o    Monitor compliance of the finance department with applicable laws and
          governmental rules and regulations.

     o    Identify any possible violations of applicable laws and governmental
          rules and regulations and report to the Audit Committee and correct in
          a timely and effective manner any violations of applicable laws or
          governmental rules and regulations.

ETHICAL CONDUCT

Financial Managers will promote the highest standards of ethical and honest
conduct in the finance department. You will be responsible for establishing and
maintaining procedures that:

     o    Encourage and reward professional integrity.

     o    Eliminate any pressure or incentive to achieve specific financial
          results by altering any records or the entries, or wilfully
          misapplying accounting polices or GAAP, or by entering into
          transactions that are designed to circumvent accounting controls or
          otherwise disguise the true nature of the transaction.

     o    Encourage members of the finance department to report deviations from
          accounting policies and practices.

COMPLIANCE WITH THIS CODE

If you fail to comply with this Code of Ethics or applicable laws, rules or
regulations (including without limitation all rules and regulations of the SEC)
you will be subject to disciplinary measures, up to and including discharge from
the Company.

You are expected to report violations of this Code of Ethics promptly to the
Chairman of the Audit Committee and/or the Chairman of the Corporate Governance
Committee.


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