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(formerly Stem Cell Therapeutics Corp.)

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2015

96 Skyway Avenue Toronto, Ontario M9W 4Y9
www.trilliumtherapeutics.com

Unless otherwise indicated, all information in the Annual
Information Form is presented as at and for the year ended December 31, 2015

March 9, 2016

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TABLE OF CONTENTS

|CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS  | 3 
|---------------------------------------------------------------- | --
|                                                                 |   
|CORPORATE
      INFORMATION                                      | 5 
|                                                                 |   
|BUSINESS                                                         | 5 
|                                                                 |   
|GENERAL
      DEVELOPMENT OF THE BUSINESS  3 YEAR SUMMARY       | 16
|                                                                 |   
|RISK
      FACTORS                                               | 18
|                                                                 |   
|DESCRIPTION
      OF SHARE CAPITAL                               | 32
|                                                                 |   
|MARKET
      FOR SECURITIES                                      | 36
|                                                                 |   
|BOARD
      OF DIRECTORS AND MANAGEMENT                          | 37
|                                                                 |   
|CEASE
      TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS   | 39
|                                                                 |   
|CONFLICTS
      OF INTEREST                                      | 39
|                                                                 |   
|LEGAL
      PROCEEDINGS                                          | 40
|                                                                 |   
|INTEREST
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 40
|                                                                 |   
|INTEREST
      OF EXPERTS                                        | 40
|                                                                 |   
|TRANSFER
      AGENT                                             | 40
|                                                                 |   
|MATERIAL
      CONTRACTS                                         | 40
|                                                                 |   
|AUDIT
      COMMITTEE INFORMATION                                | 41
|                                                                 |   
|ADDITIONAL
      INFORMATION                                     | 44
|                                                                 |   
|SCHEDULE A - CHARTER OF THE AUDIT COMMITTEE                      |   

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Information Form, or AIF, contains forward-looking
statements within the meaning of applicable securities laws. All statements
contained herein that are not clearly historical in nature are forward-looking,
and the words anticipate, believe, expect, estimate, may, will,
could, leading, intend, contemplate, shall and similar expressions are
generally intended to identify forward-looking statements. Forward-looking
statements in this AIF include, but are not limited to, statements with respect
to:

| |  | our expected future loss and accumulated deficit levels;                                                                                                                                                                                                                        
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our projected financial position and estimated cash burn
      rate;                                                                                                                                                                                                            
| |  | our expectations about the timing of achieving milestones
      and the cost of our development programs;                                                                                                                                                                       
| |  | our observations and expectations regarding the relative
      low binding of SIRPαFc to red blood cells compared to anti-CD47 monoclonal
      antibodies and proprietary CD47-blocking agents, and the potential
      benefits to patients;                                  
| |  | our requirements for, and the ability to obtain, future
      funding on favorable terms or at all;                                                                                                                                                                             
| |  | our projections for the SIRPαFc development plan and
      progress of each of our products and technologies, particularly with
      respect to the timely and successful completion of studies and trials and
      availability of results from such studies and trials;     
| |  | our expectations about the differentiated nature and
      potential for best-in-class product development programs and discovery
      research capabilities of Fluorinov Pharma Inc., or Fluorinov;                                                                           
| |  | our ability to generate future product development
      programs with improved pharmacological properties using Fluorinov
      technology;                                                                                                                                    
| |  | our expectations about whether various clinical and
      regulatory milestones with an existing Fluorinov compound will be
      achieved;                                                                                                                                     
| |  | our expectations of the final quantum and form of any
      future contingent milestone payments related to the Fluorinov acquisition;                                                                                                                                          
| |  | our expectations of the ability to secure the requisite
      approvals (including the Toronto Stock Exchange, or TSX, and NASDAQ Stock
      Market, or NASDAQ approvals) with respect to the issuance of any common
      shares in satisfaction of future milestone payments;
| |  | our expectations about our products safety and efficacy;                                                                                                                                                                                                                       
| |  | our expectations regarding our ability to arrange for the
      manufacturing of our products and technologies;                                                                                                                                                                 
| |  | our expectations regarding the progress, and the
      successful and timely completion, of the various stages of the regulatory
      approval process;                                                                                                                        
| |  | our ability to secure strategic partnerships with larger
      pharmaceutical and biotechnology companies;                                                                                                                                                                      
| |  | our strategy to acquire and develop new products and
      technologies and to enhance the safety and efficacy of existing products
      and technologies;                                                                                                                     
| |  | our plans to market, sell and distribute our products and
      technologies;                                                                                                                                                                                                   
| |  | our expectations regarding the acceptance of our products
      and technologies by the market;                                                                                                                                                                                 
| |  | our ability to retain and access appropriate staff,
      management, and expert advisers;                                                                                                                                                                                      
| |  | our expectations with respect to existing and future
      corporate alliances and licensing transactions with third parties, and the
      receipt and timing of any payments to be made by us or to us in respect of
      such arrangements; and                             
| |  | our strategy with respect to the protection of our
      intellectual property.                                                                                                                                                                                                 

All forward-looking statements reflect our beliefs and
assumptions based on information available at the time the assumption was made.
These forward-looking statements are not based on historical facts but rather on
managements expectations regarding future activities, results of operations,
performance, future capital and other expenditures (including the amount, nature
and sources of funding thereof), competitive advantages, business prospects and
opportunities. By its nature, forward-looking information involves numerous
assumptions, inherent risks and uncertainties, both general and specific, known
and unknown, that contribute to the possibility that the predictions, forecasts,
projections or other forward-looking statements will not occur. Factors which
could cause future outcomes to differ materially from those set forth in the
forward-looking statements include, but are not limited to:

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| |  | the effect of continuing operating losses on our ability
      to obtain, on satisfactory terms, or at all, the capital required to
      maintain us as a going concern;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the ability to obtain sufficient and suitable financing
      to support operations, preclinical development, clinical trials, and
      commercialization of products;  
| |  | the risks associated with the development of novel
      compounds at early stages of development in our intellectual property
      portfolio;                          
| |  | the risks of reliance on third-parties for the planning,
      conduct and monitoring of clinical trials and for the manufacture of drug
      product;                  
| |  | the risks associated with the development of our product
      candidates including the demonstration of efficacy and safety;                                            
| |  | the risks related to clinical trials including potential
      delays, cost overruns and the failure to demonstrate efficacy and safety;                                 
| |  | the risks of delays and inability to complete clinical
      trials due to difficulties enrolling patients;                                                              
| |  | risks associated with our inability to successfully
      develop companion diagnostics for our development candidates;                                                  
| |  | delays or negative outcomes from the regulatory approval
      process;                                                                                                  
| |  | our ability to successfully compete in our targeted
      markets;                                                                                                       
| |  | our ability to attract and retain key personnel,
      collaborators and advisors;                                                                                       
| |  | risks relating to the increase in operating costs from
      expanding existing programs, acquisition of additional development
      programs and increased staff;      
| |  | risk of negative results of clinical trials or adverse
      safety events by us or others related to our product candidates;                                            
| |  | the potential for product liability claims;                                                                                                                              
| |  | our ability to achieve our forecasted milestones and
      timelines on schedule;                                                                                        
| |  | financial risks related to the fluctuation of foreign
      currency rates and expenses denominated in foreign currencies;                                               
| |  | our ability to adequately protect proprietary information
      and technology from competitors;                                                                         
| |  | risks related to changes in patent laws and their
      interpretations;                                                                                                 
| |  | our ability to source and maintain licenses from
      third-party owners; and                                                                                           
| |  | the risk of patent-related litigation and the ability to
      protect trade secrets,                                                                                    

all as further and more fully described under the section of
this AIF entitled Risk Factors.

Although the forward-looking statements contained in this AIF
are based upon what our management believes to be reasonable assumptions, we
cannot assure readers that actual results will be consistent with these
forward-looking statements.

Any forward-looking statements represent our estimates only as
of the date of this AIF and should not be relied upon as representing our
estimates as of any subsequent date. We undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events, except as may be required by securities legislation.

All references in this AIF to the Company, Trillium, we,
us, or our refer to Trillium Therapeutics Inc. and the subsidiaries through
which it conducts its business, unless otherwise indicated.

All amounts are in Canadian dollars, unless otherwise
indicated.

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CORPORATE INFORMATION

We were incorporated under the Business Corporations Act
(Alberta) on March 31, 2004 as Neurogenesis Biotech Corp. On October 19, 2004,
we amended our articles of incorporation to change our name from Neurogenesis
Biotech Corp. to Stem Cell Therapeutics Corp., or SCT. On November 7, 2013 SCT
was continued under the Business Corporations Act (Ontario), or OBCA. On June 1,
2014 we filed articles of amalgamation to amalgamate SCT with our wholly-owned
subsidiary, Trillium Therapeutics Inc., or Trillium Privateco, and renamed the
combined company Trillium Therapeutics Inc. We are a company domiciled in
Ontario, Canada.

As of December 31, 2015 we had one wholly-owned subsidiary,
Trillium Therapeutics USA Inc. which was incorporated March 26, 2015 in the
State of Delaware. A wholly-owned and inactive subsidiary, Stem Cell
Therapeutics Inc. was dissolved on September 17, 2014.

On January 26, 2016, we acquired all the outstanding shares of
Fluorinov, a corporation existing under the OBCA. See Business - Small Molecule
Program, below.

Our head and registered offices are located at 96 Skyway
Avenue, Toronto, Ontario, Canada M9W 4Y9. Our website address is
www.trilliumtherapeutics.com.

BUSINESS

Overview

We are an immuno-oncology company developing innovative
therapies for the treatment of cancer. Our lead program, SIRPαFc, is a novel,
antibody-like protein that harnesses the innate immune system by blocking the
activity of CD47, a molecule whose expression is increased on cancer cells to
evade the host immune system. Expressed at high levels on the cell surface of a
variety of liquid and solid tumors, CD47 functions as a signal that inhibits the
destruction of tumor cells by macrophages via phagocytosis. By blocking the
activity of CD47, we believe SIRPαFc has the ability to promote the
macrophage-mediated killing of tumor cells in a broad variety of cancers both as
a monotherapy and in combination with other immune therapies.

The immune system is the bodys mechanism to identify and
eliminate pathogens, and can be divided into the innate immune system and the
adaptive immune system. The innate immune system is the bodys first line of
defense to identify and eliminate pathogens and consists of proteins and cells,
such as macrophages, that identify and provide an immediate response to
pathogens. The adaptive immune system is activated by, and adapts to, pathogens,
creating a targeted and durable response. Cancer cells often have the ability to
reduce the immune systems ability to recognize and destroy them. We believe
SIRPαFc could play an important role in enhancing the innate immune system and
importantly, because of its ability to target macrophages, also may have an
important downstream effect on the adaptive immune system.

Immuno-oncology is altering cancer treatment

While the concept of using the immune system to treat cancer
can trace its roots back to late nineteenth century, it was only recently that
the field of immuno-oncology received validation with the approval of antibodies
that block CTLA-4 (ipilimumab) and PD-1 (pembrolizumab and nivolumab). These
drugs have established the clinical principle that anti-tumor responses can be
induced by interfering with the negative signals that normally shut down immune
responses.

Our Strategy

Our goal is to become a leading innovator in the field of
immuno-oncology by targeting immune-regulatory pathways that tumor cells exploit
to evade the host immune system. We believe that SIRPαFc has the potential to
improve survival and quality of life for cancer patients.

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| |  | Rapidly advance the clinical development of
      SIRPαFc. We have initiated a
      first-in-human trial of SIRPαFc in patients with relapsed or refractory
      lymphoma in a dose escalation phase of up to 36 patients,  and expect to enroll up to 8 cohorts of 12-15 patients with
      advanced hematologic malignancies in an expansion phase of the trial after
      an optimal dose has been determined.                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Expand our SIRPαFc
      clinical program to include additional cancer indications. Because
      CD47 is highly expressed by multiple liquid and solid tumors, and high
      expression is correlated with worse clinical outcomes, we believe SIRPαFc
      has potential to be effective in a wide variety of cancers. We are
      carrying out preclinical work necessary to select additional, high
      potential cancer indications for clinical development.                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Maximize value of
      SIRPαFc through scientific
      collaborations. SIRPαFc has broad potential applicability in
      various cancer indications, and we believe it is well suited for use as
      both a monotherapy and in combination with other agents. We plan to
      continue to selectively and opportunistically pursue scientific
      collaborations with academic researchers as well as with other companies
      in order to realize the full value proposition of SIRPαFc.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Initiate IND-enabling studies in 2016 with a
      Fluorinov product. TTI-281 is an oral bromodomain inhibitor that
      we believe has strong potency and has shown efficacy in AML xenograft
      models. We plan to initiate scale up and manufacturing for TTI-281 in
      2016.                                                                                                                                                                                                            

SIRPαFc Key Attributes

| |  | Potential efficacy in a broad range of
      cancers. SIRPαFc blocks the tumors ability to transmit a do not
      eat signal allowing macrophages to destroy tumor cells; a mechanism that
      we believe could have broad applicability.                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                 
| |  | Potential for use as monotherapy and in combination
      with other therapies. We intend to develop SIRPαFc as a
      monotherapy as well as potentially for use in combination with other
      cancer immuno- therapies.                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                 
| |  | Differentiated pharmacokinetic and safety
      profile. We believe SIRPαFcs low level of binding to red blood
      cells lowers the risk of anemia and lowers the loss of drug from
      circulation. This pharmacokinetic profile potentially allows for lower
      dosing and an improved safety profile.
| |   |                                                                                                                                                                                                                                                                                                                 
| |  | May enhance both innate and adaptive immune
      response. SIRPαFc may enhance stimulation of tumor attacking T
      cells since macrophages, in addition to their role in phagocytosis, can
      also prime T cells through antigen presentation.                                                           

SIRPαFc Clinical development
plan

We commenced a phase I study in patients with advanced
hematologic malignancies. The two-part clinical trial is designed as a
multi-center, open-label Phase 1a/1b trial, evaluating TTI-621 as a single-agent
in patients with relapsed or refractory hematologic malignancies. During the
dose escalation phase set to enroll up to 36 subjects, the safety, tolerability,
pharmacokinetics and pharmacodynamics will be characterized to determine the
optimal dose for subsequent enrollment in the expansion phase. To characterize
potential changes in hematologic parameters that might occur with blockade of
CD47, the dose-escalation portion of the phase I trial will include lymphoma
patients with normal hematologic parameters and acceptable marrow function. Once
a reasonably well-tolerated dose and schedule of SIRPαFc has been established
for further study, safety and antitumor activity will be estimated in expansion
cohorts of up to 15 patients with advanced hematologic malignancies including
indolent B-cell lymphoma, aggressive B-cell lymphoma, T-cell lymphoma, Hodgkin
lymphoma, chronic lymphocytic leukemia, multiple myeloma, acute myeloid
leukemia, and myelodysplastic syndrome. We plan to engage five trial sites in
the United States for the dose escalation part of the trial.

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Blocking the CD47 do not eat signal using a
SIRPαFc decoy receptor

Macrophages are a type of white blood cell that can ingest and
destroy (phagocytose) other cells. They are part of the innate immune system
that helps to protect the body from infection. More recently, a role for
macrophages in the control of tumors has been described.

Macrophage activity is controlled by both positive eat and
negative do not eat signals. Tumor cells may express eat signals (e.g.,
calreticulin) that make themselves visible to macrophages. To counterbalance
this increased visibility the tumor cells often express high levels of CD47,
which transmits a do not eat signal by binding signal regulatory protein
alpha, or SIRPα, on the surface of macrophages. We believe that the higher
expression of CD47 on the tumor cell helps it evade destruction by the
macrophage by overwhelming any activating eat signals.

SIRPαFc is an antibody-like protein that consists of the
CD47-binding domain of human SIRPα linked to the Fc region of a human
immunoglobulin. It is designed to act as a soluble decoy receptor, preventing
CD47 from delivering its inhibitory signal. Neutralization of the inhibitory
CD47 signal enables the activation of macrophage anti-tumor effects by the
pro-phagocytic eat signals. The Fc region of SIRPαFc may, depending on its
identity, also assist in the activation of macrophages by engaging Fc receptors.

Figure 1, below, illustrates how SIRPαFc blocks the CD47 do
not eat signal and engages activating Fc receptors on macrophages, leading to
tumor cell phagocytosis.



In addition to their direct anti-tumor activity, macrophages
can also function as antigen-presenting cells and stimulate antigen-specific T
cells. Thus it is possible that increasing tumor cell phagocytosis after SIRPαFc
exposure may result in enhanced adaptive immunity. In support of this, CD47
antibody blockade has been recently shown to augment antigen presentation and
prime an anti-tumor cytotoxic T cell response in immune-competent mice. CD47
blockade has also been reported to promote tumor-specific T cell responses
through a dendritic cell-based mechanism, although the effect of SIRPαFc on
dendritic cells is currently unknown.

SIRPαFc has broad clinical
potential

We believe that SIRPαFc has broad clinical potential in both
hematological and solid tumors. High expression of the CD47 do not eat signal
on tumor cells has been observed in acute lymphoblastic leukemia, or AML,
myelodysplastic syndrome, chronic myeloid leukemia, or CML, acute lymphoblastic
leukemia, or ALL, diffuse large B cell lymphoma, or DLBCL, chronic lymphocytic
leukemia, or CLL, follicular lymphoma, mantle cell lymphoma, marginal zone
lymphoma, multiple myeloma and in the following solid tumors: bladder, brain,
breast, colon, leiomyosarcoma, liver, melanoma, ovarian, pancreatic and
prostate. In a number of these cancers high CD47 expression was shown to have
negative clinical consequences, correlating with more aggressive disease and
poor survival. In normal karyotype AML patients, for example, high CD47
expression was correlated with worse event-free survival (6.8 vs. 17.1 months)
and worse overall survival (9.1 vs. 22.1 months) compared to low CD47
expression. These data are consistent with CD47 providing a survival advantage
to tumor cells. Furthermore, numerous studies have shown that antibody blockade
of CD47 has demonstrated activity in mice engrafted with human tumors. We
collaborate with academic investigators to explore the therapeutic potential of
SIRPαFc in a variety of solid tumor models.

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In vitro studies with primary tumor samples obtained
from AML, MDS, multiple myeloma, B cell-ALL and T-cell ALL demonstrated that
SIRPαFc frequently triggered significantly macrophage-mediated tumor cell
phagocytosis compared to control treatment. Similar results were observed with
tumor cell lines established from patients with B lymphoma and CML.

Figure 2, below, shows how SIRPαFc (TTI-621) triggers
macrophage-mediated phagocytosis of many different human blood cancer samples.



The p value is a probability value, with values <0.05
considered statistically significant versus control treatment. NS indicates
p>0.05, which is considered not statistically significant versus
control treatment.

SIRPα Minimal Red Blood
Cell Binding - Competition

SIRPαFc competes directly with CD47 blocking antibodies from
Forty Seven Inc. (recently licensed from Stanford University) and Celgene
Corporation, both of which have entered early clinical development. Novimmune SA
has a bispecific (anti-CD47/anti-CD19) antibody program in preclinical
development. Vasculox is also developing a CD47 antibody. Alexo Therapeutics is
developing mutated, high affinity SIRPα monomers as adjuvants for use with
anti-cancer antibodies. Both Vasculox and Alexo Therapeutics are in the
preclinical phase of development.

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We believe that our approach of using SIRPα, the natural
binding partner for CD47, may have important advantages over treatment with
CD47-specific antibodies. In April 2015, we presented data at the 106th American
Association for Cancer Research annual meeting demonstrating that our SIRPαFc
fusion proteins exhibit minimal binding to human red blood cells, or RBCs,
compared to anti-CD47 monoclonal antibodies. These data build upon preliminary
results announced at the 2014 American Association for Cancer Research annual
meeting.

Figure 3, below, shows how SIRPαFc binding to human RBCs (n=43
donors) compares to five CD47-specific antibodies.



The very low RBC binding profile of our SIRPαFc proteins may
provide three important advantages over other CD47 blocking agents. First, there
may be a lower risk of experiencing drug-induced anemia with SIRPαFc. This
potential advantage may translate into improved patient care, particularly in
diseases such as AML where almost all patients experience cytopenias including
anemia. Second, SIRPαFc may remain in circulation for longer intervals compared
to CD47 antibodies, which have been demonstrated to bind strongly to circulating
RBCs and may thus be more likely to be removed from circulation. The ability of
RBCs to absorb and remove circulating CD47-specific antibodies, an antigen-sink
effect, may necessitate high doses of antibody in order to effectively target
the tumor cells, which may lead to potentially higher off-target toxicity.
Therefore, SIRPαFc may be associated with both improved tolerability and drug
kinetics compared with CD47-specific antibodies based on these preclinical
analyses. Third, antibodies that bind RBCs have the potential to interfere with
laboratory blood typing tests. The minimal binding of TTI-621 to human RBCs may
minimize this interference compared to anti-CD47 antibodies.

9

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Combination Therapy

We believe that SIRPαFc enhancement of macrophage activity and
possibly T cell responses could be synergistic with other immune-mediated
therapies. Published studies conducted by third parties provide evidence that
SIRPαFc may be useful in combination with approved anti-cancer antibodies (e.g.
Rituxan®, Herceptin®, Campath®, and Erbitux®). Since many cancer antibodies work
at least in part by activating cells of the innate immune system, it may be
possible to enhance the potency of these agents by blocking the negative do not
eat CD47 signal that tumor cells deliver to macrophages. We hypothesize that
SIRPαFc may act synergistically with other immunological agents, including T
cell checkpoint inhibitors (e.g. pembrolizumab and nivolumab), cancer vaccines,
oncolytic viruses or chimeric antigen receptor, or CAR T cells.

Small Molecule Program

On January 26, 2016, we acquired all the outstanding shares of
Fluorinov, a privately-held oncology company that has developed a proprietary
medicinal chemistry platform using unique fluorine chemistry, which permits the
creation of new chemical entities from validated drugs and drug candidates with
improved pharmacological properties, potentially leading to increased safety and
efficacy. Fluorinovs most advanced preclinical oncology programs include
potent, orally-available, bromodomain and proteasome inhibitors, as well as
epidermal growth factor receptor antagonists with increased uptake in the brain,
all of which have been differentiated from competitors and have potential for
best-in-class status. In addition, a number of compounds directed at undisclosed
immuno-oncology targets are currently in the discovery phase.

Plan of Operations

Over the next 12 months, our primary focus is the advancement
of our Phase I clinical trial of SIRPαFc in patients with advanced hematologic
malignancies. We also plan to conduct preclinical research in solid tumors and
in combination studies to identify future potential clinical indications.

We also plan to advance one, or possibly two, of Fluorinovs preclinical programs through the IND-enabling
phase using our internal development group, while at the same time focusing our
new chemistry group on several immuno-oncology discovery programs.

Product for Development with Partners  CD200 Monoclonal
Antibodies

Our CD200 monoclonal antibody program also targets a key
pathway that tumor cells use to evade attack from the immune system. There is
evidence that CD200 is highly expressed by many different types of blood cell
and solid tumors, and in numerous cases this high expression correlates with
disease progression and poor clinical outcome. This is consistent with tumor
cells using CD200 as a means of evading immune-mediated destruction.
Tumor-expressed CD200 can modulate anti-tumor responses in vitro and in vivo,
and antibodies that block CD200 have been shown to promote anti-tumor immunity
in animal models of cancer.

Our CD200 monoclonal antibody is a fully human monoclonal
antibody that blocks the activity of CD200. We have conducted in vitro and in
vivo preclinical oncology-focused studies. Our antibodies bind strongly to human
CD200, potently neutralizing CD200 function in vitro, and have shown anti-tumor
activity in a transplanted human tumor cell model. We are seeking a development
partner to advance this program into formal preclinical IND-enabling
studies.

Intellectual Property

We own or control patent rights covering our key products and
their therapeutic end uses. The patents and patent applications are either
granted or pending in major pharmaceutical markets. In all, the patent estate
includes fourteen different inventions in three different areas that include
SIRPα, CD200, and modified new chemical entities. These are supported by 40
patents and applications. In connection specifically with patent coverage for
SIRPαFc, we control two patent families that comprise fifteen individual
filings. One family has claims that embrace species of SIRPαFc found to have
certain therapeutic benefits, and their use for the treatment of cancer. We own
these patent rights outright and national patent filings have been made in the
U.S., Europe, Japan, Canada, Australia, China and India. Patents emerging from
this family will expire in 2033. A second SIRPα patent family was in-licensed on
an exclusive basis from co-owners UHN and HSC. This family has
also been filed in major markets. The claims cover the use of various forms of
SIRPα to treat CD47-positive cancers. Patents in this family begin to expire in
the year 2030.

10

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Most recently, our patent estate expanded with the acquisition
of Fluorinov. This estate covers eleven different inventions in the small
molecule therapeutics field and in a diverse range of medical end-uses. Six of
these are provisional filings in the United States. Three others were filed
recently using the Patent Cooperation Treaty, with coverage for bromodomain
inhibitors, EGFR inhibitors and for a generic chemical process useful to produce
the novel classes of small molecule drugs. As well, there are two patent
families relating to proteasome inhibition that have been nationalized in the
US, Canada, Europe and Australia. Most patents in these families will have
patent terms that reach out to 2035 and beyond.

In connection specifically with CD200, Trillium and its partner
have made a patent filing that covers superior species of human antibodies to
human CD200. A patent family based on this filing would expire in 2037.

We intend to protect additional intellectual property developed
by us through the filing of patent applications within appropriate jurisdictions
throughout the world.

Regulatory Process

Government authorities in the United States, including federal,
state, and local authorities, and in other countries, extensively regulate,
among other things, the manufacturing, research and clinical development,
marketing, labeling and packaging, storage, distribution, post-approval
monitoring and reporting, advertising and promotion, and export and import of
biological products, such as those we are developing. The process of obtaining
regulatory approvals and the subsequent compliance with appropriate federal,
state, local, and foreign statutes and regulations require the expenditure of
substantial time and financial resources.

Securing final regulatory approval for the manufacture and sale
of biological products in the U.S., Europe, Canada and other commercial
territories, is a long and costly process that is controlled by that particular
territorys regulatory agency. The regulatory agency in the U.S. is the U.S.
Food and Drug Administration, or FDA, in Canada it is Health Canada, or HC, and
in Europe it is the European Medicines Agency. Other regulatory agencies have
similar regulatory approval processes, but each regulatory agency has its own
approval processes. Approval in the U.S., Canada or Europe does not assure
approval by other regulatory agencies, although often test results from one
country may be used in applications for regulatory approval in another country.

None of our products have been completely developed or tested
and, therefore, we are not yet in a position to seek final regulatory approval
to market any of our products. The time required to obtain approval by such
regulatory authorities is unpredictable but typically takes many years following
the commencement of preclinical studies and clinical trials and will require
significant additional capital.See Risk Factors - Risks Related to our
Business and our Industry below.

U.S. Government Regulation

In the U.S., the FDA regulates drugs under the Federal Food,
Drug, and Cosmetic Act, or FDCA, and its implementing regulations, and biologics
under the FDCA and the Public Health Service Act, or PHSA, and its implementing
regulations. FDA approval is required before any new unapproved drug or biologic
or dosage form, including a new use of a previously approved drug, can be
marketed in the United States. Drugs and biologics are also subject to other
federal, state, and local statutes and regulations. If we fail to comply with
applicable FDA or other requirements at any time during the product development
process, clinical testing, the approval process or after approval, we may become
subject to administrative or judicial sanctions. These sanctions could include
the FDAs refusal to approve pending applications, license suspension or
revocation, withdrawal of an approval, warning letters, product recalls, product
seizures, total or partial suspension of production or distribution, civil
monetary penalties or criminal prosecution. Any FDA enforcement action could
have a material adverse effect on us.

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The process required by the FDA before product candidates may
be marketed in the United States generally involves the following:

| |  | completion of extensive preclinical laboratory tests and
      preclinical animal studies, all performed in accordance with the Good
      Laboratory Practices regulations;                                         
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | submission to the FDA of an investigational new drug
      application, or IND, which must become effective before human clinical
      trials may begin and must be updated annually;                               
| |  | approval by an independent institutional review board, or
      IRB, or ethics committee representing each clinical site before each
      clinical trial may be initiated;                                          
| |  | performance of adequate and well-controlled human
      clinical trials to establish the safety and efficacy of the product
      candidate for each proposed indication;                                            
| |  | preparation of and submission to the FDA of a new drug
      application, or NDA, or biologics license application, or BLA, after
      completion of all pivotal clinical trials;                                   
| |  | potential review of the product application by an FDA
      advisory committee, where appropriate and if applicable;                                                                                                 
| |  | a determination by the FDA within 60 days of its receipt
      of an NDA or BLA to file the application for review;                                                                                                  
| |  | satisfactory completion of an FDA pre-approval inspection
      of the manufacturing facilities where the proposed product is produced to
      assess compliance with current Good Manufacturing Practices, or cGMP;
| |  | a potential FDA audit of the preclinical research and
      clinical trial sites that generated the data in support of the NDA or BLA;
      and                                                                     
| |  | FDA review and approval of an NDA or BLA prior to any
      commercial marketing or sale of the product in the U.S.                                                                                                  

The preclinical research and clinical testing and approval
process require substantial time, effort, and financial resources, and we cannot
be certain that any approvals for our product candidates will be granted on a
timely basis, if at all.

An IND is a request for authorization from the FDA to
administer an investigational new drug product to humans in clinical trials. The
central focus of an IND submission is on the general investigational plan and
the protocol(s) for human clinical trials. The IND also includes results of
animal studies assessing the toxicology, pharmacokinetics, pharmacology, and
pharmacodynamic characteristics of the product; chemistry, manufacturing, and
controls information; and any available human data or literature to support the
use of the investigational new drug. An IND must become effective before human
clinical trials may begin. An IND will automatically become effective 30 days
after receipt by the FDA, unless before that time the FDA raises concerns or
questions related to the proposed clinical trials. In such a case, the IND may
be placed on clinical hold and the IND sponsor and the FDA must resolve any
outstanding concerns or questions before clinical trials can begin. Accordingly,
submission of an IND may or may not result in the FDA allowing clinical trials
to commence.

Clinical Trials

Clinical trials involve the administration of the
investigational new drug to human subjects under the supervision of qualified
investigators in accordance with Good Clinical Practices, or GCPs, which include
the requirement that all research subjects provide their informed consent for
their participation in any clinical trial. Clinical trials are conducted under
protocols detailing, among other things, the objectives of the study, the
parameters to be used in monitoring safety, and the efficacy criteria to be
evaluated. A protocol for each clinical trial and any subsequent protocol
amendments must be submitted to the FDA as part of the IND. Additionally,
approval must also be obtained from each clinical trial sites IRB or ethics
committee, before the trials may be initiated, and the IRB or ethics committee
must monitor the trial until completed. There are also requirements governing
the reporting of ongoing clinical trials and clinical trial results to public
registries.

The clinical investigation of a drug is generally divided into
three or four phases. Although the phases are usually conducted sequentially,
they may overlap or be combined.

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| |  | Phase I. The drug is initially introduced into healthy
      human subjects or patients with the target disease or condition. These
      studies are designed to evaluate the safety, dosage tolerance, metabolism
      and pharmacologic actions of the investigational new drug in humans, the
      side effects associated with increasing doses, and if possible, to gain
      early evidence on effectiveness.               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Phase II. The drug is administered to a limited patient
      population to evaluate dosage tolerance and optimal dosage, identify
      possible adverse side effects and safety risks, and preliminarily evaluate
      efficacy.                                                                                                                                                                                                   
| |  | Phase III. The drug is administered to an expanded
      patient population, generally at geographically dispersed clinical trial
      sites to generate enough data to statistically evaluate dosage, clinical
      effectiveness and safety, to establish the overall benefit-risk
      relationship of the investigational new drug product, and to provide an
      adequate basis for physician labeling.                     
| |  | Phase IV. In some cases, the FDA may condition approval
      of an NDA or BLA for a product candidate on the sponsors agreement to
      conduct additional clinical trials after approval. In other cases, a
      sponsor may voluntarily conduct additional clinical trials after approval
      to gain more information about the drug. Such post-approval studies are
      typically referred to as phase IV clinical trials.

Clinical trial sponsors must also report to the FDA, within
certain timeframes, serious and unexpected adverse reactions, any clinically
important increase in the rate of a serious suspected adverse reaction over that
listed in the protocol or investigators brochure, or any findings from other
studies or animal testing that suggest a significant risk in humans exposed to
the product candidate. The FDA, the IRB or ethics committee, or the clinical
trial sponsor may suspend or terminate a clinical trial at any time on various
grounds, including a finding that the research subjects are being exposed to an
unacceptable health risk. Additionally, some clinical trials are overseen by an
independent group of qualified experts organized by the clinical trial sponsor,
known as a data safety monitoring board or committee. This group provides
authorization for whether or not a trial may move forward at designated check
points based on access to certain data from the trial.

The clinical trial process can take years to complete, and
there can be no assurance that the data collected will support FDA approval or
licensure of the product. Results from one trial are not necessarily predictive
of results from later trials. We may also suspend or terminate a clinical trial
based on evolving business objectives and/or competitive climate.

Submission of an NDA or BLA to the FDA

Assuming successful completion of all required preclinical
studies and clinical testing in accordance with all applicable regulatory
requirements, detailed investigational new drug product information is submitted
to the FDA in the form of an NDA or BLA requesting approval to market the
product for one or more indications. Under federal law, the submission of most
NDAs and BLAs is subject to an application user fee. For fiscal year 2016, the
application user fee exceeds $2.3 million, and the sponsor of an approved NDA or
BLA is also subject to annual product and establishment user fees, set at
$114,450 per product and $585,200 per establishment. These fees are typically
increased annually. Applications for orphan drug products are exempted from the
NDA and BLA application user fee, unless the application includes an indication
for other than a rare disease or condition, and may be exempted from product and
establishment user fees under certain conditions.

An NDA or BLA must include all relevant data available from
pertinent preclinical studies and clinical trials, including negative or
ambiguous results as well as positive findings, together with detailed
information relating to the products chemistry, manufacturing, controls, and
proposed labeling, among other things. Data comes from company-sponsored
clinical trials intended to test the safety and effectiveness of a use of a
product, and may also come from a number of alternative sources, including
trials initiated by investigators. To support marketing approval, the data
submitted must be sufficient in quality and quantity to establish the safety and
effectiveness of the investigational new drug product to the satisfaction of the
FDA.

Once an NDA or BLA has been submitted, the FDAs goal is to
review the application within ten months after it accepts the application for
filing, or, if the application relates to an unmet medical need in a serious or
life-threatening indication, six months after the FDA accepts the application
for filing. The review process is often significantly extended by the FDAs
requests for additional information or clarification.

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Before approving an NDA or BLA, the FDA typically will inspect
the facility or facilities where the product is manufactured. The FDA will not
approve an application unless it determines that the manufacturing processes and
facilities are in compliance with cGMP requirements and adequate to assure
consistent production of the product within required specifications.
Additionally, before approving an NDA or BLA, the FDA will typically inspect one
or more clinical sites to assure compliance with GCP.

The FDA is required to refer an NDA or BLA for a novel drug (in
which no active ingredient has been approved in any other application) to an
advisory committee or explain why such referral was not made. Typically, an
advisory committee is a panel of independent experts, including clinicians and
other scientific experts, that reviews, evaluates and provides a recommendation
as to whether the application should be approved and under what conditions. The
FDA is not bound by the recommendations of an advisory committee, but it
considers such recommendations carefully when making decisions.

The FDAs Decision on an NDA or BLA

After the FDA evaluates the NDA or BLA and conducts inspections
of manufacturing facilities where the product will be produced, the FDA will
issue either an approval letter or a Complete Response Letter. An approval
letter authorizes commercial marketing of the drug with specific prescribing
information for specific indications. A Complete Response Letter indicates that
the review cycle of the application is complete and the application is not ready
for approval. In order to satisfy deficiencies identified in a Complete Response
Letter, additional clinical data and/or an additional phase III clinical
trial(s), and/or other significant, expensive and time-consuming requirements
related to clinical trials, preclinical studies or manufacturing may be required
for the product candidate. Even if such additional information is submitted, the
FDA may ultimately decide that the NDA or BLA does not satisfy the criteria for
approval. The FDA could also approve the NDA or BLA with a risk evaluation and
mitigation strategy, plan to mitigate risks, which could include medication
guides, physician communication plans, or elements to assure safe use, such as
restricted distribution methods, patient registries and other risk minimization
tools. The FDA also may condition approval on, among other things, changes to
proposed labeling, development of adequate controls and specifications, or a
commitment to conduct one or more post-market studies or clinical trials. Such
post-market testing may include phase IV clinical trials and surveillance to
further assess and monitor the products safety and effectiveness after
commercialization. New government requirements, including those resulting from
new legislation, may be established, or the FDAs policies may change, which
could delay or prevent regulatory approval of our products under development.

Patent Term Restoration

Depending upon the timing, duration, and specifics of the FDA
approval of the use of our product candidates, some of our U.S. patents may be
eligible for limited patent term extension under the Drug Price Competition and
Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman
Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up
to five years as compensation for patent term lost during product development
and the FDA regulatory review process. However, patent term restoration cannot
extend the remaining term of a patent beyond a total of 14 years from the
products approval date. The patent term restoration period is generally
one-half the time between the effective date of an IND and the submission date
of an NDA or BLA, plus the time between the submission date and the approval of
that application. Only one patent applicable to an approved product is eligible
for the extension and the application for the extension must be submitted prior
to the expiration of the patent and within 60 days of the products approval.
The U.S. Patent and Trademark Office, in consultation with the FDA, reviews and
approves the application for any patent term extension or restoration. In the
future, we may apply for restoration of patent term for one of our currently
owned or licensed patents to add patent life beyond its current expiration date,
depending on the expected length of the clinical trials and other factors
involved in the filing of the relevant NDA or BLA.

Companion Diagnostics

In its August 6, 2014, guidance document entitled In Vitro
Companion Diagnostic Devices, the FDA defines an IVD companion diagnostic
device to be an in vitro diagnostic device that provides information that is
essential for the safe and effective use of a corresponding therapeutic product.
Use of an IVD companion diagnostic device is considered essential when its use
is required in the labeling of a therapeutic product, for example, to select
appropriate patients for a product or those who should not use
the product, or to monitor patients to achieve safety or effectiveness. In most
circumstances, the IVD companion diagnostic device should be approved or cleared
by FDA under the device authorities of the FDCA contemporaneously with the
therapeutic products approval under section 505 of the FDCA for a drug or
section 351 of the PHSA for a biological product. FDA expects the therapeutic
product sponsor to address the need for an approved or cleared IVD companion
diagnostic device in its therapeutic product development plan. The therapeutic
product sponsor may develop its own IVD companion diagnostic device, partner
with a diagnostic device sponsor to develop an IVD companion diagnostic device,
or explore modifying an existing IVD diagnostic device to develop a new intended
use. The FDA explains if a diagnostic device and a therapeutic device are
studied together to support their respective approvals, both products can be
studied in the same investigational study that meets both the requirements of
the Investigational Device Exemption, or IDE, regulations and the IND
regulations. Depending on the study plan and participants, a sponsor may seek to
submit an IND alone, or both an IND and IDE.

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Raw Materials, Manufacturing, and Supply

We have limited experience in manufacturing products for
clinical or commercial purposes. We produce small quantities of our products in
our laboratories for internal use. We believe that sources of raw materials
pertinent to our laboratory operations and for manufacturing of our products by
a CMO are generally available.

We have established a contract manufacturing relationship for
the supply of SIRPαFc that we believe will provide sufficient material for early
clinical trials. In addition, we are establishing the basis for long-term
commercial production capabilities. However, there can be no assurance that our
contract manufacturer will be successful at scaling up and producing our product
with the required quality and in the quantities and timelines that we will need
for clinical and/or commercial purposes.

We expect to similarly rely on contract manufacturing
relationships for any products that we may further develop, or in-license or
acquire in the future. However, there can be no assurance that we will be able
to successfully contract with such manufacturers on terms acceptable to us, or
at all.

Contract manufacturers are subject to ongoing periodic and
unannounced inspections by the FDA, the U.S. Drug Enforcement Administration and
corresponding state agencies to ensure strict compliance with cGMP and other
state and federal regulations. We do not have control over third-party
manufacturers compliance with these regulations and standards, other than
through contractual obligations and periodic auditing. If they are deemed out of
compliance with such regulations, approvals could be delayed, product recalls
could result, inventory could be destroyed, production could be stopped and
supplies could be delayed or otherwise disrupted.

If we need to change manufacturers after commercialization, the
FDA and corresponding foreign regulatory agencies must approve these new
manufacturers in advance, which will involve testing and additional inspections
to ensure compliance with FDA regulations and standards and may require
significant lead times and delay, and disruption of supply. Furthermore,
switching manufacturers may be difficult because the number of potential
manufacturers is limited. It may be difficult or impossible for us to find a
replacement manufacturer quickly or on terms acceptable to us, or at all.

Property, Plant and Equipment

We currently operate from approximately 10,000 square feet of
leased laboratory and office space at 96 Skyway Avenue, Toronto, Ontario,
Canada, M9W 4Y9. Due to the growth of our staff and programs, we have secured a
lease of approximately 22,000 square feet of laboratory and office space at 2488
Dunwin Avenue, Mississauga, Ontario, L5L 1J9, and plan to relocate there in the
second quarter of 2016. We perform research and development in our facility and
use qualified vendors and collaborators to conduct research and development and
manufacturing on our behalf. We incur capital expenditures mainly for laboratory
equipment, office equipment, computer equipment and leaseholds in the operation
of our business. As at December 31, 2015 the net carrying value of our property
and equipment was $874,390.

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Employees

As at December 31, 2015, we had twenty-eight full-time
employees including five senior management, twenty research and development
staff and three finance and administrative staff. Twenty-six employees are
located at our head office and lab facilities in Toronto, Ontario, Canada and
two employees are located at in the United States.

We also use consultants and outside contractors to carry on
many of our activities, including preclinical testing and validation,
formulation, assay development, manufacturing, clinical and regulatory affairs,
toxicology and clinical trials.

Legal Proceedings

To our knowledge, there have not been any legal or arbitration
proceedings, including those relating to bankruptcy, receivership or similar
proceedings, those involving any third party, and governmental proceedings
pending or known to be contemplated, which may have, or have had in the recent
past, significant effect our financial position or profitability.

Also, to our knowledge, there have been no material proceedings
in which any director, any member of senior management, or any of our affiliates
is either a party adverse to us or any of our subsidiaries or has a material
interest adverse to us or any of our subsidiaries.

GENERAL DEVELOPMENT OF THE BUSINESS  3 YEAR SUMMARY

Acquisition of Fluorinov Pharma Inc.

On January 26, 2016, we acquired all the outstanding shares of
Fluorinov, a privately-held oncology company that has developed a proprietary
medicinal chemistry platform using unique fluorine chemistry. The terms of the
acquisition were an upfront payment of $10 million plus up to $35 million of
additional future payments that are contingent on us achieving certain clinical
and regulatory milestones with an existing Fluorinov compound. We will also have
an obligation to pay royalty payments on future sales of such compounds. The
upfront payment was subject to adjustment based on the net working capital of
Fluorinov and other adjustments at the time of closing. At our discretion, up to
50% of the future contingent payments can be satisfied through the issuance of
common shares of Trillium provided that the aggregate number of common shares
issuable under such payments will not exceed 1,558,447 common shares unless
shareholder approval has first been obtained. In addition, any such future share
issuance remains subject to final approval from our board of directors and
receipt of any requisite approvals under the applicable rules of the Toronto
Stock Exchange and the NASDAQ Stock Market. We have also committed to use
commercially reasonable efforts to monetize Fluorinovs central nervous system,
or CNS, assets and share 50% of the net proceeds with Fluorinov
shareholders.

Acquisition of Trillium Privateco

During 2013, we refocused our product pipeline through the
strategic acquisition of Trillium Privateco, a private biopharmaceutical company
specializing in immune regulation and the development of cancer therapeutics,
which included the SIRPαFc and CD200 preclinical cancer programs. On April 9,
2013, we completed a merger with Trillium Privateco, to access its SIRPαFc
immuno-oncology program. Prior to this merger, we were focused on regenerative
stem cell technologies. Following the merger, in July 2013, we ceased all
activities associated with our regenerative neurology programs and abandoned all
related intellectual property filings.

As consideration for the merger, we paid $1,200,000 in cash and
issued 92,639 common shares and 110,000 units. Each unit consisted of one common
share and 30 common share purchase warrants, with each 30 common share purchase
warrants allowing their holder to acquire one additional common share at an
exercise price of $12.00 until March 15, 2018. Cash used in the investment of
$647,996 was determined by subtracting cash acquired of $552,004 from cash consideration of $1,200,000. Post-closing, Trillium
Privateco shareholders held approximately 16% of the issued and outstanding
common shares, and Trillium Privateco became our wholly-owned subsidiary.

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Trillium Privatecos SIRPαFc program originated from leading
researchers in the field, including Drs. John Dick and Jean Wang of the UHN and
Dr. Jayne Danska of HSC. Exclusive rights to SIRPαFc have been licensed from UHN
and HSC pursuant to a license agreement amended and restated as of June 1, 2012.
The licensed intellectual property relates to methods and compounds used in the
modulation of SIRPα-CD47 interaction for therapeutic cancer applications. The
license agreement requires us to use commercially reasonable efforts to
commercialize the licensed technology. The license agreement will terminate on a
country-by-country basis, in countries where a valid claim exists, when the last
valid claim expires in such country, or if no valid claim exists, when the last
valid claim expires in the U.S.

Under the license agreement for SIRPαFc, we have future
contingent milestones payable of $35,000 related to successful patent grants,
$100,000, $200,000 and $300,000 on the first patient dosed in phase I, II and
III trials respectively, and regulatory milestones on their first achievement
totalling $5,000,000. The Company is required to pay 20% of any sublicensing
revenues to the licensors on the first $50 million of sublicensing revenues, and
pay 15% of any sublicensing revenues to the licensors after the first $50
million of sublicensing revenue received.

Tigecycline License

On April 16, 2013, we signed an agreement with UHN to gain
rights to intellectual property related to the use of tigecycline for the
treatment of leukemia which included a UHN sponsored, open label phase I
multicenter dose-escalation tigecycline trial in patients with relapsed or
refractory AML. The initial consideration for the UHN license of $1,085,714 was
satisfied by the issuance of 167,619 common shares and 1,600,000 common share
purchase warrants, with each 30 warrants allowing their holder to acquire one
additional common share at an exercise price of $12.00 until March 15, 2018.
Additional consideration under the UHN license included an annual license
maintenance fee and future development milestones. The fair value of the common
shares issued was based on the closing price of our common shares of $6.00 on
April 16, 2013 and $7.50 per unit based on the fair value of the common share
and common share purchase warrant components as of the date of acquisition.

In August 2014, we completed an evaluation of this program with
respect to its scientific merit, commercial potential, strength of intellectual
property, as well as its overall fit with our current focus and expertise. We
concluded that we should focus our business plan on expanding the SIRPαFc
program, rather than continue development of tigecycline, and returned the
licensed rights to UHN and recorded an impairment loss of $429,763 in the second
quarter of 2014.

Agreements with Catalent Pharma Solutions

In connection with our development of SIRPαFc, we entered into
two agreements on August 12, 2014 with Catalent pursuant to which we acquired
the right to use two of Catalents proprietary GPEx® expression cell lines for
the manufacture of SIRPαFc. One agreement relates to the manufacture of TTI-621
and the other agreement relates to the manufacture of TTI-622. In consideration
for the purchase of the expression cell lines, each agreement provides that we
will pay Catalent up to US$875,000 upon reaching certain pre-marketing approval
milestones and up to an additional US$28.8 million for reaching certain sales
milestones. We will also pay Catalent an annual product maintenance fee until
the first product derived from the expression cell lines receives a regulatory
approval other than a pricing approval.

Under the agreements, we may use the two expression cell lines
to secure such regulatory approvals and to develop, test, market and otherwise
commercially exploit products originating from the cell lines. We may transfer
the expression cell lines to a third party contract manufacturer who may utilize
the cell lines in a similar fashion. We, or a third-party, cannot use or modify
the cell lines, or any portions of the cell lines, to create a new cell line.

We plan to further develop the expression cell lines for use in
our pre-IND toxicology and pharmacology studies, as well as to supply our phase
I clinical trial. We will be required to indemnify Catalent for any costs
Catalent incurs related to regulatory filings and related claims or proceedings,
for the conduct of any clinical trials and for any manufacture, packaging, sale, promotion, distribution, use of
or exposure to the expression cell lines or products. As a result of this risk,
we are obligated to maintain several designated insurance policies throughout
the term of the agreements.

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We may terminate the agreements upon 90 days written notice to
Catalent, upon their bankruptcy or upon their material breach and failure to
cure within 30 days. Similarly, Catalent may terminate the agreements upon our
bankruptcy or upon our material breach and failure to cure within 30 days. If
our material breach is for nonpayment, however, we will only have 10 days to
cure before Catalent may terminate the agreement.

Financings

See details of our financings completed over the past three
years under Description of Share Capital below.

Capital Markets

We were listed on the TSX Venture Exchange, or TSXV, until
April 22, 2014 when we migrated to the Toronto Stock Exchange, or TSX. We traded
under the symbol SSS until June 6, 2014 when the symbol was changed to TR.
We were listed on the OTCQX International under the symbol SCTPF from May 20,
2013 until we began trading on the NASDAQ Capital Market under the symbol TRIL
on December 19, 2014.

Capital Expenditures

Capital expenditures for 2015 were mainly for laboratory
equipment, leasehold improvements for our new office and laboratory location,
office equipment, and information technology equipment. Capital expenditures for
2014 were mainly for laboratory equipment. Capital expenditures in the years
ended December 31, 2015 and 2014 are set out in the following table.

Year ended December 31,2015
    
    
    2014Capital expenditures
    $
    750,382
    
    $
    173,603


Trend Information

Historical patterns of expenditures cannot be taken as an
indication of future expenditures. The amount and timing of expenditures and
therefore liquidity and capital resources vary substantially from period to
period depending on the number of research and development programs being
undertaken at any one time, the stage of the development programs, the timing of
significant expenditures for manufacturing, toxicology and pharmacology studies
and clinical trials, and the availability of funding from investors and
prospective commercial partners.

RISK FACTORS

An investment in our common shares involves a high degree of
risk and should be considered speculative. An investment in our common shares
should only be undertaken by those persons who can afford the total loss of
their investment. You should carefully consider the risks and uncertainties
described below, as well as other information contained in this AIF. The risks
and uncertainties below are not the only ones we face. Additional risks and
uncertainties not presently known to us or that we believe to be immaterial may
also adversely affect our business. If any of the following risks occur, our
business, financial condition and results of operations could be seriously
harmed and you could lose all or part of your investment. Further, if we fail to
meet the expectations of the publicmarket in any given period, the market price of our common
shares could decline. We operate in a highly competitive environment that
involves significant risks and uncertainties, some of which are outside of our
control.

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Risks Related to our Business and our Industry

We expect to incur future losses and we may never become
profitable.

We have incurred losses of $14.7 million, $12.9 million and
$4.3 million for the years ended December 31, 2015, 2014, and 2013,
respectively, and expect to incur an operating loss for the year ending December
31, 2016. We have an accumulated deficit since inception through December 31,
2015 of $65.3 million. We believe that operating losses will continue as we are
planning to incur significant costs associated with the clinical development of SIRPαFc. Our net losses have had and will continue to have an adverse effect on,
among other things, our shareholders equity, total assets and working capital.
We expect that losses will fluctuate from quarter to quarter and year to year,
and that such fluctuations may be substantial. We cannot predict when we will
become profitable, if at all.

We currently have no product revenue and will not be able
to maintain our operations and research and development without additional
funding.

To date, we have generated no product revenue and cannot
predict when and if we will generate product revenue. Our ability to generate
product revenue and ultimately become profitable depends upon our ability, alone
or with partners, to successfully develop our product candidates, obtain
regulatory approval, and commercialize products, including any of our current
product candidates, or other product candidates that we may develop, in-license
or acquire in the future. We do not anticipate generating revenue from the sale
of products for the foreseeable future. We expect our research and development
expenses to increase in connection with our ongoing activities, particularly as
we advance our product candidates through clinical trials.

Our prospects depend on the success of our product
candidates which are at early stages of development, and we may not generate
revenue for several years, if at all, from these products.

Given the early stage of our product development, we can make
no assurance that our research and development programs will result in
regulatory approval or commercially viable products. To achieve profitable
operations, we, alone or with others, must successfully develop, gain regulatory
approval, and market our future products. We currently have no products that
have been approved by the FDA, HC, or any similar regulatory authority. To
obtain regulatory approvals for our product candidates being developed and to
achieve commercial success, clinical trials must demonstrate that the product
candidates are safe for human use and that they demonstrate efficacy. While we
have commenced a phase I trial for SIRPαFc, we have not yet completed a phase I
clinical trial or subsequent required clinical trials.

Many product candidates never reach the stage of clinical
testing and even those that do have only a small chance of successfully
completing clinical development and gaining regulatory approval. Product
candidates may fail for a number of reasons, including, but not limited to,
being unsafe for human use or due to the failure to provide therapeutic benefits
equal to or better than the standard of treatment at the time of testing.
Unsatisfactory results obtained from a particular study relating to a research
and development program may cause us or our collaborators to abandon commitments
to that program. Positive results of early preclinical research may not be
indicative of the results that will be obtained in later stages of preclinical
or clinical research. Similarly, positive results from early-stage clinical
trials may not be indicative of favorable outcomes in later-stage clinical
trials. We can make no assurance that any future studies, if undertaken, will
yield favorable results.

We recently acquired several preclinical and discovery research
programs in our acquisition of Fluorinov, including certain assets relating to
the treatment of central nervous system disorders. While we conducted extensive
due diligence before making this acquisition, our assessment of the Fluorinov
technologies may not be accurate. Therefore, our expectations about whether
various clinical and regulatory milestones with an existing Fluorinov compound
or development of a future program on the Fluorinov development platform will be
achieved may not be borne out fully or at all. We have made a commitment to
attempt to monetize the Fluorinov central nervous system assets and, if
successful, to share the net proceeds
with the Fluorinov vendors. As this is not a core competency of the Company, our
efforts to monetize these assets or any other Fluorinov assets may not be
successful. We can make no assurances that toxicology, or other preclinical,
studies will yield results that will allow us to proceed with clinical trials in
humans.
The early stage of our product development makes it
particularly uncertain whether any of our product development efforts will prove
to be successful and meet applicable regulatory requirements, and whether any of
our product candidates will receive the requisite regulatory approvals, be
capable of being manufactured at a reasonable cost or be successfully marketed. If we are successful in developing
our current and future product candidates into approved products, we will still
experience many potential obstacles such as the need to develop or obtain
manufacturing, marketing and distribution capabilities. If we are unable to
successfully commercialize any of our products, our financial condition and
results of operations may be materially and adversely affected.

19

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We rely and will continue to rely on third parties to
plan, conduct and monitor our preclinical studies and clinical trials, and their
failure to perform as required could cause substantial harm to our
business.

We rely and will continue to rely on third parties to conduct a
significant portion of our preclinical and clinical development activities.
Preclinical activities include in vivo studies providing access to specific
disease models, pharmacology and toxicology studies, and assay development.
Clinical development activities include trial design, regulatory submissions,
clinical patient recruitment, clinical trial monitoring, clinical data
management and analysis, safety monitoring and project management. If there is
any dispute or disruption in our relationship with third parties, or if they are
unable to provide quality services in a timely manner and at a feasible cost,
our active development programs will face delays. Further, if any of these third
parties fails to perform as we expect or if their work fails to meet regulatory
requirements, our testing could be delayed, cancelled or rendered
ineffective.

We rely on contract manufacturers over whom we have
limited control. If we are subject to quality, cost or delivery issues with the
preclinical and clinical grade materials supplied by contract manufacturers, our
business operations could suffer significant harm.

We have limited manufacturing experience and rely on contract
manufacturing organizations, or CMOs, to manufacture our product candidates for
larger preclinical studies and clinical trials. We produce small quantities of
our product candidates at bench scale in our laboratory facilities for use in
smaller preclinical studies. We rely on CMOs for manufacturing, filling,
packaging, storing and shipping of drug product in compliance with cGMP
regulations applicable to our products. The FDA ensures the quality of drug
products by carefully monitoring drug manufacturers compliance with cGMP
regulations. The cGMP regulations for drugs contain minimum requirements for the
methods, facilities and controls used in manufacturing, processing and packing
of a drug product.

We contracted with Catalent for the manufacture of the SIRPαFc
protein to supply drug product for our phase I clinical trial. The manufacture
of recombinant proteins uses well established processes including a protein
expression system. Catalent is producing SIRPαFc using their proprietary GPEx®
expression system. We believe that Catalent has the capacity, the systems, and
the experience to supply SIRPαFc for our phase I clinical trial and we may
consider using Catalent for manufacturing for later clinical trials. However,
since the Catalent manufacturing facility where SIRPαFc is being produced was
only recently established, it has not been inspected by the FDA. Any
manufacturing failures or delays or compliance issues could cause delays in the
conduct of SIRPαFc preclinical studies and clinical trials.

There can be no assurances that CMOs will be able to meet our
timetable and requirements. We have not contracted with alternate suppliers in
the event Catalent is unable to scale up production, or if Catalent otherwise
experiences any other significant problems. If we are unable to arrange for
alternative third-party manufacturing sources on commercially reasonable terms
or in a timely manner, we may be delayed in the development of our product
candidates. Further, contract manufacturers must operate in compliance with cGMP
and failure to do so could result in, among other things, the disruption of
product supplies. Our dependence upon third parties for the manufacture of our
products may adversely affect our profit margins and our ability to develop and
deliver products on a timely and competitive basis.

If clinical trials of our product candidates fail to
demonstrate safety and efficacy to the satisfaction of regulatory authorities or
do not otherwise produce positive results, we would incur additional costs or
experience delays in completing, or ultimately be unable to complete, the
development and commercialization of our product candidates.

Before obtaining marketing approval from regulatory authorities
for the sale of our product candidates, we must conduct preclinical studies in
animals and extensive clinical trials in humans to demonstrate the safety and
efficacy of the product candidates. Clinical testing is expensive and difficult
to design and implement, can take many years to complete and has uncertain
outcomes. The outcome of preclinical studies and early clinical trials may not
predict the success of later clinical trials, and interim results of a clinical
trial do not necessarily predict final results. A number of companies in the pharmaceutical and biotechnology industries
have suffered significant setbacks in advanced clinical trials due to lack of
efficacy or unacceptable safety profiles, notwithstanding promising results in
earlier trials. We do not know whether the clinical trials we may conduct will
demonstrate adequate efficacy and safety to result in regulatory approval to
market any of our product candidates in any jurisdiction. A product candidate
may fail for safety or efficacy reasons at any stage of the testing process. A
major risk we face is the possibility that none of our product candidates under
development will successfully gain market approval from the FDA or other
regulatory authorities, resulting in us being unable to derive any commercial
revenue from them after investing significant amounts of capital in multiple
stages of preclinical and clinical testing.

20

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If we experience delays in clinical testing, we will be
delayed in commercializing our product candidates, and our business may be
substantially harmed.

We cannot predict whether any clinical trials will begin as
planned, will need to be restructured, or will be completed on schedule, or at
all. Our product development costs will increase if we experience delays in
clinical testing. Significant clinical trial delays could shorten any periods
during which we may have the exclusive right to commercialize our product
candidates or allow our competitors to bring products to market before us, which
would impair our ability to successfully commercialize our product candidates
and may harm our financial condition, results of operations and prospects. The
commencement and completion of clinical trials for our products may be delayed
for a number of reasons, including delays related, but not limited, to:

| |  | failure by regulatory authorities to grant permission to
      proceed or placing the clinical trial on hold;                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | patients failing to enroll or remain in our trials at the
      rate we expect;                                                                                                                                                                                                                                                                        
| |  | suspension or termination of clinical trials by
      regulators for many reasons, including concerns about patient safety or
      failure of our contract manufacturers to comply with cGMP requirements;                                                                                                                                            
| |  | any changes to our manufacturing process that may be
      necessary or desired;                                                                                                                                                                                                                                                                       
| |  | delays or failure to obtain clinical supply from contract
      manufacturers of our products necessary to conduct clinical trials;                                                                                                                                                                                                                    
| |  | product candidates demonstrating a lack of safety or
      efficacy during clinical trials;                                                                                                                                                                                                                                                            
| |  | patients choosing an alternative treatment for the
      indications for which we are developing any of our product candidates or
      participating in competing clinical trials;                                                                                                                                                                    
| |  | patients failing to complete clinical trials due to
      dissatisfaction with the treatment, side effects or other reasons;                                                                                                                                                                                                                           
| |  | reports of clinical testing on similar technologies and
      products raising safety and/or efficacy concerns;                                                                                                                                                                                                                                        
| |  | competing clinical trials and scheduling conflicts with
      participating clinicians;                                                                                                                                                                                                                                                                
| |  | clinical investigators not performing our clinical trials
      on their anticipated schedule, dropping out of a trial, or employing
      methods not consistent with the clinical trial protocol, regulatory
      requirements or other third parties not performing data collection and
      analysis in a timely or accurate manner;             
| |  | failure of our contract research organizations, or CROs,
      to satisfy their contractual duties or meet expected deadlines;                                                                                                                                                                                                                         
| |  | inspections of clinical trial sites by regulatory
      authorities or Institutional Review Boards, or IRBs, or ethics committees
      finding regulatory violations that require us to undertake corrective
      action, resulting in suspension or termination of one or more sites or the
      imposition of a clinical hold on the entire study;
| |  | one or more IRBs or ethics committees rejecting,
      suspending or terminating the study at an investigational site, precluding
      enrollment of additional subjects, or withdrawing its approval of the
      trial; or                                                                                                                          
| |  | failure to reach agreement on acceptable terms with
      prospective clinical trial sites                                                                                                                                                                                                                                                             

Our product development costs will increase if we experience
delays in testing or approval or if we need to perform more or larger clinical
trials than planned. Additionally, changes in regulatory requirements and
policies may occur, and we may need to amend study protocols to reflect these
changes. Amendments may require us to resubmit our study protocols to regulatory
authorities or IRBs or ethics committees for re-examination, which may impact
the cost, timing or successful completion of that trial. Delays or increased
product development costs may have a material adverse effect on our business,
financial condition and prospects.

If we have difficulty enrolling patients in clinical
trials, the completion of the trials may be delayed or cancelled.

21

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As our product candidates advance from preclinical testing to
clinical testing, and then through progressively larger and more complex
clinical trials, we will need to enroll an increasing number of patients that
meet our eligibility criteria. There is significant competition for recruiting
cancer patients in clinical trials, and we may be unable to enroll the patients
we need to complete clinical trials on a timely basis or at all. The factors
that affect our ability to enroll patients are largely uncontrollable and
include, but are not limited to, the following:

| |  | size and nature of the patient population;                                        
| | - | ----------------------------------------------------------------------------------
| |  | eligibility and exclusion criteria for the
      trial;                           
| |  | design of the study protocol;                                                     
| |  | competition with other companies for clinical
      sites or patients;            
| |  | the perceived risks and benefits of the product
      candidate under study;      
| |  | the patient referral practices of physicians;
      and                           
| |  | the number, availability, location and
      accessibility of clinical trial sites

If we are unable to successfully develop companion
diagnostics for our therapeutic product candidates, or experience significant
delays in doing so, we may not achieve marketing approval or realize the full
commercial potential of our therapeutic product candidates.

We may develop companion diagnostics for our therapeutic
product candidates. We expect that, at least in some cases, regulatory
authorities may require the development and regulatory approval of a companion
diagnostic as a condition to approving our therapeutic product candidates. We
have limited experience and capabilities in developing or commercializing
diagnostics and plan to rely in large part on third parties to perform these
functions. We have not begun to develop companion diagnostics for any of our
therapeutic product candidates.

Companion diagnostics are subject to regulation by the FDA, HC,
and comparable foreign regulatory authorities as medical devices and may require
separate regulatory approval or clearance prior to commercialization. If we, or
any third parties that we engage to assist us, are unable to successfully
develop companion diagnostics for our therapeutic product candidates, or
experience delays in doing so, our business may be substantially harmed.

Regulatory approval processes are lengthy, expensive and
inherently unpredictable. Our inability to obtain regulatory approval for our
product candidates would substantially harm our business.

Our development and commercialization activities and product
candidates are significantly regulated by a number of governmental entities,
including the FDA, HC, and comparable authorities in other countries. Regulatory
approvals are required prior to each clinical trial and we may fail to obtain
the necessary approvals to commence or continue clinical testing. We must comply
with regulations concerning the manufacture, testing, safety, effectiveness,
labeling, documentation, advertising, and sale of products and product
candidates and ultimately must obtain regulatory approval before we can
commercialize a product candidate. The time required to obtain approval by such
regulatory authorities is unpredictable but typically takes many years following
the commencement of preclinical studies and clinical trials. Any analysis of
data from clinical activities we perform is subject to confirmation and
interpretation by regulatory authorities, which could delay, limit or prevent
regulatory approval. Even if we believe results from our clinical trials are
favorable to support the marketing of our product candidates, the FDA or other
regulatory authorities may disagree. In addition, approval policies,
regulations, or the type and amount of clinical data necessary to gain approval
may change during the course of a product candidates clinical development and
may vary among jurisdictions. We have not obtained regulatory approval for any
product candidate and it is possible that none of our existing product
candidates or any future product candidates will ever obtain regulatory
approval.

We could fail to receive regulatory approval for our product
candidates for many reasons, including, but not limited to:

| |  | disagreement with the design or implementation of our
      clinical trials;                                  
| | - | --------------------------------------------------------------------------------------------------------------
| |  | failure to demonstrate that a product candidate is safe
      and effective for its proposed indication;      
| |  | failure of clinical trials to meet the level of
      statistical significance required for approval;         
| |  | failure to demonstrate that a product candidates
      clinical and other benefits outweigh its safety risks;
| |  | disagreement with our interpretation of data from
      preclinical studies or clinical trials;               

22

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| |  | the insufficiency of data collected from clinical trials
      of our product candidates to support the submission and filing of a BLA or
      other submission to obtain regulatory approval;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | deficiencies in the manufacturing processes or the
      failure of facilities of CMOs with whom we contract for clinical and
      commercial supplies to pass a pre-approval inspection; or  
| |  | changes in the approval policies or regulations that
      render our preclinical and clinical data insufficient for approval.                                                                 

A regulatory authority may require more information, including
additional preclinical or clinical data to support approval, which may delay or
prevent approval and our commercialization plans, or we may decide to abandon
the development program. If we were to obtain approval, regulatory authorities
may approve any of our product candidates for fewer or more limited indications
than we request, may grant approval contingent on the performance of costly
post-marketing clinical trials, or may approve a product candidate with a label
that does not include the labeling claims necessary or desirable for the
successful commercialization of that product candidate. Moreover, depending on
any safety issues associated with our product candidates that garner approval,
the FDA may impose a risk evaluation and mitigation strategy, thereby imposing
certain restrictions on the sale and marketability of such products.

We will require additional capital to finance our
operations, which may not be available to us on acceptable terms, or at all. As
a result, we may not complete the development and commercialization of our
product candidates or develop new product candidates.

As a research and development company, our operations have
consumed substantial amounts of cash since inception. We expect to spend
substantial funds to continue the research, development and testing of our
product candidates and to prepare to commercialize products subject to FDA
approval in the U.S. and similar approvals in other jurisdictions. We will also
require significant additional funds if we expand the scope of our current
clinical plans for the SIRPαFc program or if we were to acquire any new assets
and advance their development. Therefore, for the foreseeable future, we will
have to fund all of our operations and development expenditures from cash on
hand, equity or debt financings, through collaborations with other biotechnology
or pharmaceutical companies or through financings from other sources. We expect
that our existing cash at December 31, 2015 of $86,770,542 will enable us to
fund our current operating plan requirements for at least the next twelve
months. Additional financing will be required to meet our long term liquidity
needs. If we do not succeed in raising additional funds on acceptable terms, we
might not be able to complete planned preclinical studies and clinical trials or
pursue and obtain approval of any product candidates from the FDA and other
regulatory authorities. It is possible that future financing will not be
available or, if available, may not be on favorable terms. The availability of
financing will be affected by the achievement of our corporate goals, the
results of scientific and clinical research, the ability to obtain regulatory
approvals, the state of the capital markets generally and with particular
reference to drug development companies, the status of strategic alliance
agreements and other relevant commercial considerations. If adequate funding is
not available, we may be required to delay, reduce or eliminate one or more of
our product development programs, or obtain funds through corporate partners or
others who may require us to relinquish significant rights to product candidates
or obtain funds on less favorable terms than we would otherwise accept. To the
extent that external sources of capital become limited or unavailable or
available on onerous terms, our intangible assets and our ability to continue
our clinical development plans may become impaired, and our assets, liabilities,
business, financial condition and results of operations may be materially or
adversely affected.

We face competition from other biotechnology and
pharmaceutical companies and our financial condition and operations will suffer
if we fail to effectively compete.

The biotechnology and pharmaceutical industries are intensely
competitive and subject to rapid and significant technological change. Our
competitors include large, well-established pharmaceutical companies,
biotechnology companies, and academic and research institutions developing
cancer therapeutics for the same indications we are targeting and competitors
with existing marketed therapies. Many other companies are developing or
commercializing therapies to treat the same diseases or indications for which
our product candidates may be useful. Although there are no approved therapies
that specifically target the CD47 pathway, some competitors use therapeutic
approaches that may compete directly with our product candidates. For example,
SIRPαFc is in direct competition with CD47 blocking antibodies from Stanford
University, Celgene Corporation, and Novimmune SA.

23

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Many of our competitors have substantially greater financial,
technical and human resources than we do and have significantly greater
experience than us in conducting preclinical testing and human clinical trials
of product candidates, scaling up manufacturing operations and obtaining
regulatory approvals of products. Accordingly, our competitors may succeed in
obtaining regulatory approval for products more rapidly than we do. Our ability
to compete successfully will largely depend on:

| |  | the efficacy and safety profile of our product candidates
      relative to marketed products and other product candidates in development;       
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to develop and maintain a competitive
      position in the product categories and technologies on which we focus;                   
| |  | the time it takes for our product candidates to complete
      clinical development and receive marketing approval;                              
| |  | our ability to obtain required regulatory approvals;                                                                                             
| |  | our ability to commercialize any of our product
      candidates that receive regulatory approval;                                               
| |  | our ability to establish, maintain and protect
      intellectual property rights related to our product candidates; and                         
| |  | acceptance of any of our product candidates that receive
      regulatory approval by physicians and other healthcare providers and
      payers.

Competitors have developed and may develop technologies that
could be the basis for products that challenge the differentiated nature and
potential for best-in-class product development programs and discovery research
capabilities of Fluorinov. Some of those products may have an entirely different
approach or means of accomplishing the desired therapeutic effect than our
products and may be more effective or less costly than our products. The success
of our competitors and their products and technologies relative to our
technological capabilities and competitiveness could have a material adverse
effect on the future pre-clinical and clinical trials of our products, including
our ability to obtain the necessary regulatory approvals for the conduct of such
trials. This may further negatively impact our ability to generate future
product development programs with improved pharmacological properties using
Fluorinov technology.

If we are not able to compete effectively against our current
and future competitors, our business will not grow and our financial condition
and operations will substantially suffer.

We heavily rely on the capabilities and experience of our
key executives and scientists and the loss of any of them could affect our
ability to develop our products.

The loss of Dr. Niclas Stiernholm, our President and Chief
Executive Officer, or other key members of our staff, including Dr. Robert Uger,
our Chief Scientific Officer, Dr. Eric Sievers, our Chief Medical Officer, James
Parsons, our Chief Financial Officer, Dr. Penka Petrova, our Chief Development
Officer, or Dr. Malik Slassi, our Senior Vice President, Discovery Research
could harm us. We have employment agreements with Drs. Stiernholm, Uger,
Sievers, Petrova and Slassi and Mr. Parsons, although such employment agreements
do not guarantee their retention. We also depend on our scientific and clinical
collaborators and advisors, all of whom have outside commitments that may limit
their availability to us. In addition, we believe that our future success will
depend in large part upon our ability to attract and retain highly skilled
scientific, managerial, medical, clinical and regulatory personnel, particularly
as we expand our activities and seek regulatory approvals for clinical trials.
We enter into agreements with our scientific and clinical collaborators and
advisors, key opinion leaders and academic partners in the ordinary course of
our business. We also enter into agreements with physicians and institutions who
will recruit patients into our clinical trials on our behalf in the ordinary
course of our business. Notwithstanding these arrangements, we face significant
competition for these types of personnel from other companies, research and
academic institutions, government entities and other organizations. We cannot
predict our success in hiring or retaining the personnel we require for
continued growth. The loss of the services of any of our executive officers or
other key personnel could potentially harm our business, operating results or
financial condition.

24

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Our employees may engage in misconduct or other improper
activities, including noncompliance with regulatory standards and requirements,
which could have a material adverse effect on our business.

We are exposed to the risk of employee fraud or other
misconduct. Misconduct by employees could include failures to comply with FDA
regulations, provide accurate information to the FDA, comply with manufacturing
standards we have established, comply with federal and state health-care fraud
and abuse laws and regulations, report financial information or data accurately
or disclose unauthorized activities to us. In particular, sales, marketing and
business arrangements in the healthcare industry are subject to extensive laws
and regulations intended to prevent fraud, kickbacks, self-dealing, and other
abusive practices. These laws and regulations may restrict or prohibit a wide
range of pricing, discounting, marketing and promotion, sales commission,
customer incentive programs and other business arrangements. Employee misconduct
could also involve the improper use of information obtained in the course of
clinical trials, which could result in regulatory sanctions and serious harm to
our reputation. If any such actions are instituted against us, and we are not
successful in defending ourselves or asserting our rights, those actions could
have a substantial impact on our business and results of operations, including
the imposition of substantial fines or other sanctions.

We may expand our business through the acquisition of
companies or businesses or by entering into collaborations or by in-licensing
product candidates, each of which could disrupt our business and harm our
financial condition.

We have in the past and may in the future seek to expand our
pipeline and capabilities by acquiring one or more companies or businesses,
entering into collaborations, or in-licensing one or more product candidates.
For example, in January 2016, we acquired Fluorinov, a small molecule medicinal
chemistry company with preclinical oncology assets and a potential discovery
platform. In April 2013, we in-licensed tigecycline which was subsequently
returned to the UHN in 2014. Acquisitions, collaborations and in-licenses
involve numerous risks, including, but not limited to:

| |  | substantial cash expenditures;                                                                                                                 
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | technology development risks;                                                                                                                  
| |  | potentially dilutive issuances of equity securities;                                                                                           
| |  | incurrence of debt and contingent liabilities, some of
      which may be difficult or impossible to identify at the time of
      acquisition;
| |  | difficulties in assimilating the operations of the
      acquired companies;                                                                   
| |  | potential disputes regarding contingent consideration;                                                                                         
| |  | diverting our managements attention away from other
      business concerns;                                                                  
| |  | entering markets in which we have limited or no direct
      experience; and                                                                   
| |  | potential loss of our key employees or key employees of
      the acquired companies or businesses.                                            

We have experience in making acquisitions, entering
collaborations, and in-licensing product candidates, however, we cannot provide
assurance that any acquisition, collaboration or in-license will result in
short-term or long-term benefits to us. We may incorrectly judge the value or
worth of an acquired company or business or in-licensed product candidate. In
addition, our future success would depend in part on our ability to manage the
rapid growth associated with some of these acquisitions, collaborations and
in-licenses. We cannot provide assurance that we would be able to successfully
combine our business with that of acquired businesses, manage a collaboration or
integrate in-licensed product candidates. Furthermore, the development or
expansion of our business may require a substantial capital investment by
us.

Negative results from clinical trials or studies of
others and adverse safety events involving the targets of our products may have
an adverse impact on our future commercialization efforts.

From time to time, studies or clinical trials on various
aspects of biopharmaceutical products are conducted by academic researchers,
competitors or others. The results of these studies or trials, when published,
may have a significant effect on the market for the biopharmaceutical product
that is the subject of the study. The publication of negative results of studies
or clinical trials or adverse safety events related to our product candidates,
or the therapeutic areas in which our product candidates compete, could
adversely affect our share price and our ability to finance future development
of our product candidates, and our business and financial results could be
materially and adversely affected.

25

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We face the risk of product liability claims, which could
exceed our insurance coverage and produce recalls, each of which could deplete
our cash resources.

We are exposed to the risk of product liability claims alleging
that use of our product candidates caused an injury or harm. These claims can
arise at any point in the development, testing, manufacture, marketing or sale
of our product candidates and may be made directly by patients involved in
clinical trials of our product candidates, by consumers or healthcare providers
or by individuals, organizations or companies selling our products. Product
liability claims can be expensive to defend, even if the product or product
candidate did not actually cause the alleged injury or harm.

Insurance covering product liability claims becomes
increasingly expensive as a product candidate moves through the development
pipeline to commercialization. We currently maintain clinical trial liability
insurance coverage of $10 million. However, there can be no assurance that such
insurance coverage is or will continue to be adequate or available to us at a
cost acceptable to us or at all. We may choose or find it necessary under our
collaborative agreements to increase our insurance coverage in the future. We
may not be able to secure greater or broader product liability insurance
coverage on acceptable terms or at reasonable costs when needed. Any liability
for damages resulting from a product liability claim could exceed the amount of
our coverage, require us to pay a substantial monetary award from our own cash
resources and have a material adverse effect on our business, financial
condition and results of operations. Moreover, a product recall, if required,
could generate substantial negative publicity about our products and business,
inhibit or prevent commercialization of other products and product candidates or
negatively impact existing or future collaborations.

In addition, some of our licensing and other agreements with
third parties require or might require us to maintain product liability
insurance. If we cannot maintain acceptable amounts of coverage on commercially
reasonable terms in accordance with the terms set forth in these agreements, the
corresponding agreements would be subject to termination, which could have a
material adverse impact on our operations.

We may not achieve our publicly announced milestones
according to schedule, or at all.

From time to time, we may announce the timing of certain events
we expect to occur, such as the anticipated timing of results from our clinical
trials. These statements are forward-looking and are based on the best estimates
of management at the time relating to the occurrence of such events. However,
the actual timing of such events may differ from what has been publicly
disclosed. The timing of events such as initiation or completion of a clinical
trial, filing of an application to obtain regulatory approval, or announcement
of additional clinical trials for a product candidate may ultimately vary from
what is publicly disclosed. These variations in timing may occur as a result of
different events, including the nature of the results obtained during a clinical
trial or during a research phase, problems with a CMO or a CRO or any other
event having the effect of delaying the publicly announced timeline. We
undertake no obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise, except as
otherwise required by law. Any variation in the timing of previously announced
milestones could have a material adverse effect on our business plan, financial
condition or operating results and the trading price of common shares.

We are exposed to the financial risk related to the
fluctuation of foreign exchange rates and the degrees of volatility of those
rates.

We may be adversely affected by foreign currency fluctuations.
To date, we have been primarily funded through issuances of equity, proceeds
from the exercise of warrants and stock options and from interest income on
funds available for investment, which are all denominated both in Canadian and
U.S. dollars. Also, a growing portion of our expenditures are in U.S. dollars,
and we are therefore subject to foreign currency fluctuations which may, from
time to time, impact our financial position and results of operations.

Risks Related to Intellectual Property

If we are unable to adequately protect and enforce our
intellectual property, our competitors may take advantage of our development
efforts or acquired technology and compromise our prospects of marketing and
selling our key products.

26

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We control two patent families relating to SIRPα. One family
relates to the use of SIRPα to treat cancer. The other family relates our drug
as a composition of matter, SIRPαFc.

More recently, we acquired the patent portfolio of Fluorinov,
which embraces patent filings that cover eleven different inventions. With the
exception of one process scheme, these patent filings each claim a family of
small molecule drugs as compositions of matter, together with claims for their
production and their medical uses. These drugs target cancer for the most part,
and some related medical end-uses.

Our success will depend in part upon our ability to protect our
intellectual property and proprietary technologies and upon the nature and scope
of the intellectual property protection we receive. For example, some of our
patent portfolio covers primarily methods of medical use but not compositions of
matter. The ability to compete effectively and to achieve partnerships will
depend on our ability to develop and maintain proprietary aspects of our
technology and to operate without infringing on the proprietary rights of
others. The presence of such proprietary rights of others could severely limit
our ability to develop and commercialize our products, to conduct our existing
research and could require financial resources to defend litigation, which may
be in excess of our ability to raise such funds. There is no assurance that our
pending patent applications or those that we intend to acquire will be approved
in a form that will be sufficient to protect our proprietary technology and gain
or keep any competitive advantage that we may have.

The patent positions of pharmaceutical companies can be highly
uncertain and involve complex legal, scientific and factual questions for which
important legal principles remain unresolved. Patents issued to us or our
respective licensors may be challenged, invalidated or circumvented. To the
extent our intellectual property, including licensed intellectual property,
offers inadequate protection, or is found to be invalid or unenforceable, we are
exposed to a greater risk of direct competition. If our intellectual property
does not provide adequate protection against our competitors products, our
competitive position could be adversely affected, as could our business,
financial condition and results of operations. Both the patent application
process and the process of managing patent disputes can be time consuming and
expensive, and the laws of some foreign countries may not protect our
intellectual property rights to the same extent as do the laws of Canada and the
United States.

We will be able to protect our intellectual property from
unauthorized use by third parties only to the extent that our proprietary
technologies, key products, and any future products are covered by valid and
enforceable intellectual property rights including patents or are effectively
maintained as trade secrets, and provided we have the funds to enforce our
rights, if necessary.

If we lose our licenses from third-party owners we may be
unable to continue a substantial part of our business.

We are party to licenses that give us rights to intellectual
property that is necessary or useful for a substantial part of our business.
Pursuant to our exclusive license agreement with UHN and the HSC, under which we
license certain patent rights for our key products and their uses, we are
required to use commercially reasonable efforts to commercialize products based
on the licensed rights and pay certain royalties and sublicensing revenue to UHN
and HSC. These licenses require that we pay development milestone payments,
regulatory milestone payments, royalties on net sales, and sublicensing
revenues, as well as annual maintenance fees.

We have also entered into agreements allowing us to manufacture
SIRPαFc using Catalents proprietary GPEx® expression system. The consideration
includes payments at the time we successfully reach a series of development and
sales milestones. We may also enter into licenses in the future to access
additional third-party intellectual property.

If we fail to pay annual maintenance fees, development and
sales milestones, or it is determined that we did not use commercially
reasonable efforts to commercialize licensed products, we could lose our
licenses which could have a material adverse effect on our business and
financial condition.

We may require additional third-party licenses to
effectively develop and manufacture our key products and are currently unable to
predict the availability or cost of such licenses.

A substantial number of patents have already been issued to
other biotechnology and pharmaceutical companies. To the extent that valid
third-party patent rights cover our products or services, we or our strategic
collaborators would be required to seek licenses from the holders of these patents
in order to manufacture, use or sell these products and services, and payments
under them would reduce our profits from these products and services. We are
currently unable to predict the extent to which we may wish or be required to
acquire rights under such patents, the availability and cost of acquiring such
rights, and whether a license to such patents will be available on acceptable
terms or at all. There may be patents in the U.S. or in foreign countries or
patents issued in the future that are unavailable to license on acceptable
terms. Our inability to obtain such licenses may hinder or eliminate our ability
to manufacture and market our products.

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Changes in patent law and its interpretation could
diminish the value of patents in general, thereby impairing our ability to
protect our product candidates.

As is the case with other biotechnology and pharmaceutical
companies, our success is heavily dependent on intellectual property rights,
particularly patents. Obtaining and enforcing patents in the biopharmaceutical
industry involves technological and legal complexity, and obtaining and
enforcing biopharmaceutical patents is costly, time-consuming and inherently
uncertain. The U.S. Supreme Court has ruled on several patent cases in recent
years, either narrowing the scope of patent protection available in certain
circumstances or weakening the rights of patent owners in certain situations. In
addition to increasing uncertainty with regard to our and our licensors or
collaborators ability to obtain patents in the future, this combination of
events has created uncertainty with respect to the value of patents, once
obtained. Depending on decisions by the U.S. Congress, the federal courts, and
the U.S. Patent and Trademark Office, or USPTO, the laws and regulations
governing patents could change in unpredictable ways that would weaken our and
our licensors or collaborators ability to obtain new patents or to enforce
existing patents and patents we and our licensors or collaborators may obtain in
the future.

Recent patent reform legislation could increase the
uncertainties and costs surrounding the prosecution of our and our licensors or
collaborators patent applications and the enforcement or defense of our or our
licensors or collaborators issued patents. On September 16, 2011, the
Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law.
The Leahy-Smith Act includes a number of significant changes to U.S. patent law.
These include provisions that affect the way patent applications are prosecuted
and may also affect patent litigation. The USPTO recently developed new
regulations and procedures to govern administration of the Leahy-Smith Act, and
many of the substantive changes to patent law associated with the Leahy-Smith
Act, and in particular, the first to file provisions, only became effective on
March 16, 2013. Accordingly, it is not clear what, if any, impact the
Leahy-Smith Act will have on the operation of our business. However, the
Leahy-Smith Act and its implementation could increase the uncertainties and
costs surrounding the prosecution of our or our licensors or collaborators
patent applications and the enforcement or defense of our or our licensors or
collaborators issued patents, all of which could have a material adverse effect
on our business and financial condition.

Litigation regarding patents, patent applications, and
other proprietary rights may be expensive, time consuming and cause delays in
the development and manufacturing of our key products.

Our success will depend in part on our ability to operate
without infringing the proprietary rights of third parties. The pharmaceutical
industry is characterized by extensive patent litigation. Other parties may
have, or obtain in the future, patents and allege that the use of our
technologies infringes these patent claims or that we are employing their
proprietary technology without authorization.

In addition, third parties may challenge or infringe upon our
existing or future patents. Proceedings involving our patents or patent
applications or those of others could result in adverse decisions regarding:

| |  | the patentability of our inventions relating to our key
      products; and/or                                 
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | the enforceability, validity, or scope of protection
      offered by our patents relating to our key products.

If we are unable to avoid infringing the patent rights of
others, we may be required to seek a license, defend an infringement action, or
challenge the validity of the patents in court. Regardless of the outcome,
patent litigation is costly and time consuming. In some cases, we may not have
sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a
license, develop or obtain non-infringing technology, fail to defend an
infringement action successfully or have infringed patents declared invalid, we
may:

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| |  | incur substantial monetary damages;                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------
| |  | encounter significant delays in bringing our key products
      to market; and/or                                                    
| |  | be precluded from participating in the manufacture, use
      or sale of our key products or methods of treatment requiring licenses.

Even if we are successful in these proceedings, we may incur
substantial costs and divert management time and attention in pursuing these
proceedings, which could have a material adverse effect on us.

Our reliance on third parties requires us to share our
trade secrets, which increases the possibility that a competitor will discover
them.

Because we rely on third parties to develop our products, we
must share trade secrets with them. We seek to protect our proprietary
technology in part by entering into confidentiality agreements and, if
applicable, material transfer agreements, collaborative research agreements,
consulting agreements or other similar agreements with our collaborators,
advisors, employees and consultants prior to beginning research or disclosing
proprietary information. These agreements typically restrict the ability of our
collaborators, advisors, employees and consultants to publish data potentially
relating to our trade secrets. Our academic collaborators typically have rights
to publish data, provided that we are notified in advance and may delay
publication for a specified time in order to secure our intellectual property
rights arising from the collaboration. In other cases, publication rights are
controlled exclusively by us, although in some cases we may share these rights
with other parties. We also conduct joint research and development programs
which may require us to share trade secrets under the terms of research and
development collaboration or similar agreements. Despite our efforts to protect
our trade secrets, our competitors may discover our trade secrets, either
through breach of these agreements, independent development or publication of
information including our trade secrets in cases where we do not have
proprietary or otherwise protected rights at the time of publication. A
competitors discovery of our trade secrets may impair our competitive position
and could have a material adverse effect on our business and financial
condition.

Risks Related to Our Common Shares

Our common share price has been volatile in recent years,
and may continue to be volatile.

The market prices for securities of biopharmaceutical
companies, including ours, have historically been volatile. In the year ended
December 31, 2015, our common shares traded on the TSX, at a high of $37.27 and
a low of $10.50 per share. In the year ended December 31, 2014, on the TSXV/TSX
our common shares traded at a high of $22.20 and a low of $6.30 per share. A
number of factors could influence the volatility in the trading price of our
common shares, including changes in the economy or in the financial markets,
industry related developments, the results of product development and
commercialization, changes in government regulations, and developments
concerning proprietary rights, litigation and cash flow. Our quarterly losses
may vary because of the timing of costs for manufacturing, preclinical studies
and clinical trials. Also, the reporting of adverse safety events involving our
products and public rumors about such events could cause our share price to
decline or experience periods of volatility. Each of these factors could lead to
increased volatility in the market price of our common shares. In addition,
changes in the market prices of the securities of our competitors may also lead
to fluctuations in the trading price of our common shares.

We have never paid dividends and do not expect to do so
in the foreseeable future.

We have not declared or paid any cash dividends on our common
or preferred shares to date. The payment of dividends in the future will be
dependent on our earnings and financial condition in addition to such other
factors as our board of directors considers appropriate. Unless and until we pay
dividends, shareholders may not receive a return on their shares. There is no
present intention by our board of directors to pay dividends on our shares.

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Future sales or issuances of equity securities and the
conversion of outstanding securities to common shares could decrease the value
of the common shares, dilute investors voting power, and reduce our earnings
per share.

We may sell additional equity securities in future offerings,
including through the sale of securities convertible into equity securities, to
finance operations, acquisitions or projects, and issue additional common shares
if outstanding warrants or stock options are exercised, or preferred shares are
converted to common shares, which may result in dilution. See Description of
Share Capital, below, for details of our outstanding securities convertible
into common shares. We filed a base shelf prospectus with securities commissions
in Canada and a Form F-10 registration statement with the U.S. Securities and
Exchange Commission (SEC) on June 4, 2015, that provides that we may sell
under the prospectus from time to time over the following 25 months up to U.S.
$100 million, in one or more offerings, of common shares, First Preferred
shares, warrants to purchase common shares, or units comprising a combination of
common shares, First Preferred shares and/or warrants. Subject to receipt of any
required regulatory approvals, subscribers of the December 2013 private
placement who purchased a minimum of 10% of the securities sold under the
offering received rights to purchase our securities in future financings to
enable each such shareholder to maintain their percentage holding in our common
shares for so long as the subscriber holds at least 10% of the outstanding
common shares on a fully-diluted basis. Shareholders who do not have this future
financing participation right may be disadvantaged in participating in such
financings.

Our board of directors has the authority to authorize certain
offers and sales of additional securities without the vote of, or prior notice
to, shareholders. Based on the need for additional capital to fund expected
expenditures and growth, it is likely that we will issue additional securities
to provide such capital. Such additional issuances may involve the issuance of a
significant number of common shares at prices less than the current market price
for our common shares.

Sales of substantial amounts of our securities, or the
availability of such securities for sale, as well as the issuance of substantial
amounts of our common shares upon conversion of outstanding convertible equity
securities, could adversely affect the prevailing market prices for our
securities and dilute investors earnings per share. A decline in the market
prices of our securities could impair our ability to raise additional capital
through the sale of securities should we desire to do so.

We are likely a passive foreign investment company,
which may have adverse U.S. federal income tax consequences for U.S.
shareholders.

U.S. investors should be aware that we believe we were
classified as a passive foreign investment company, or PFIC, during the tax
years ended December 31, 2015 and 2014, and based on current business plans and
financial expectations, we expect that we will be a PFIC for the current tax
year and may be a PFIC in future tax years. If we are a PFIC for any year during
a U.S. shareholders holding period of our common shares, then such U.S.
shareholder generally will be required to treat any gain realized upon a
disposition of our common shares, or any so-called excess distribution
received on our common shares, as ordinary income, and to pay an interest charge
on a portion of such gain or distributions, unless the shareholder makes a
timely and effective qualified electing fund election, or QEF Election, or a
mark-to-market election with respect to our shares. A U.S. shareholder who
makes a QEF Election generally must report on a current basis its share of our
net capital gain and ordinary earnings for any year in which we are a PFIC,
whether or not we distribute any amounts to our shareholders. A U.S. shareholder
who makes the mark-to-market election generally must include as ordinary income
each year the excess of the fair market value of the common shares over the
shareholders adjusted tax basis therein. Each U.S. shareholder should consult
its own tax advisors regarding the PFIC rules and the U.S. federal income tax
consequences of the acquisition, ownership and disposition of our common shares.

It may be difficult for non-Canadian investors to obtain
and enforce judgments against us because of our Canadian incorporation and
presence.

We are a corporation existing under the laws of the Province of
Ontario, Canada. Several of our directors and officers, and several of the
experts are residents of Canada, and all or a substantial portion of their
assets, and a substantial portion of our assets, are located outside the United
States. Consequently, although we have appointed an agent for service of process
in the United States, it may be difficult for holders of our securities who
reside in the United States to effect service within the United States upon
those directors and officers, and the experts who are not residents of the
United States. It may also be difficult for holders of our securities who reside
in the United States to realize in the United States upon judgments of courts of
the United States predicated upon our civil liability and the civil liability of
our directors, officers and experts under the United States federal securities
laws. Investors should not assume that Canadian courts (i) would enforce
judgments of United States courts obtained in actions against us or such
directors, officers or experts predicated upon the civil liability provisions of
the United States federal securities laws or the securities or blue sky laws
of any state or jurisdiction of the United States or (ii) would enforce, in
original actions, liabilities against us or such directors, officers or experts
predicated upon the United States federal securities laws or any securities or
blue sky laws of any state or jurisdiction of the United States. In addition,
the protections afforded by Canadian securities laws may not be available to
investors in the United States.

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If there are substantial sales of our common shares, the
market price of our common shares could decline.

Sales of substantial numbers of our common shares could cause a
decline in the market price of our common shares. Any sales by existing
shareholders or holders who exercise their warrants or stock options may have an
adverse effect on our ability to raise capital and may adversely affect the
market price of our common shares.

We are an emerging growth company, and we cannot be
certain if the reduced reporting requirements applicable to emerging growth
companies will make our common shares less attractive to investors.

We are an emerging growth company, as defined in the JOBS
Act. For as long as we continue to be an emerging growth company, we may take
advantage of exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies, including not
being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and exemptions from the
requirements of holding a nonbinding advisory vote on executive compensation and
shareholder approval of any golden parachute payments not previously approved.
We could be an emerging growth company for up to five years, although
circumstances could cause us to lose that status earlier. We cannot predict if
investors will find our common shares less attractive because we may rely on
these exemptions. If some investors find our common shares less attractive as a
result, there may be a less active trading market for our common shares and our
share price may be more volatile.

Any failure to maintain an effective system of internal
controls may result in material misstatements of our consolidated financial
statements or cause us to fail to meet our reporting obligations or fail to
prevent fraud; and in that case, our shareholders could lose confidence in our
financial reporting, which would harm our business and could negatively impact
the price of our common shares.

Effective internal controls are necessary for us to provide
reliable financial reports and prevent fraud. If we fail to maintain an
effective system of internal controls, we might not be able to report our
financial results accurately or prevent fraud; and in that case, our
shareholders could lose confidence in our financial reporting, which would harm
our business and could negatively impact the price of our common shares. While
we believe that we have sufficient personnel and review procedures to allow us
maintain an effective system of internal controls, we cannot provide assurance
that we will not experience potential material weaknesses in our internal
control. Even if we conclude that our internal control over financial reporting
provides reasonable assurance regarding the reliability of financial reporting
and the preparation of consolidated financial statements for external purposes
in accordance with International Financial Reporting Standards, as issued by the
International Accounting Standards Board, because of its inherent limitations,
internal control over financial reporting may not prevent or detect fraud or
misstatements. Failure to implement required new or improved controls, or
difficulties encountered in their implementation, could harm our results of
operations or cause us to fail to meet our future reporting obligations.

If we fail to timely achieve and maintain the adequacy of our
internal control over financial reporting, we may not be able to produce
reliable financial reports or help prevent fraud. Our failure to achieve and
maintain effective internal control over financial reporting could prevent us
from complying with our reporting obligations on a timely basis, which could
result in the loss of investor confidence in the reliability of our consolidated
financial statements, harm our business and negatively impact the trading price
of our common shares.

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As a foreign private issuer, we are not subject to
certain United States securities law disclosure requirements that apply to a
domestic United States issuer, which may limit the information which would be
publicly available to our shareholders.

As a foreign private issuer, we are not required to comply with
all the periodic disclosure requirements of the Exchange Act, and therefore,
there may be less publicly available information about us than if we were a
United States domestic issuer. For example, we are not subject to the proxy
rules in the United States and disclosure with respect to our annual meetings
will be governed by Canadian requirements.

Our charter documents and certain Canadian legislation
could delay or deter a change of control, limit attempts by our shareholders to
replace or remove our current management and limit the market price of our
common shares.

Our authorized preferred shares are available for issuance from
time to time at the discretion of our board of directors, without shareholder
approval. Our articles grant our board of directors the authority to determine
the special rights and restrictions granted to or imposed on any unissued series
of preferred shares, and those rights may be superior to those of our common
shares. Further, the Investment Canada Act subjects any acquisition of control
of a company by a non-Canadian to government review if the value of the assets
as calculated pursuant to the legislation exceeds a threshold amount or in other
circumstances determined at the discretion of the Canadian government. A
reviewable acquisition may not proceed unless the relevant minister is satisfied
that the investment is likely to be of net benefit to Canada and the Canadian
government is satisfied that no other important concerns arise from the
acquisition of control. Any of the foregoing could prevent or delay a change of
control and may deprive or limit strategic opportunities to our shareholders to
sell their shares.

DESCRIPTION OF SHARE CAPITAL

Overview

Our authorized share capital consists of an unlimited number of
common shares, Class B Shares, First Preferred Shares, Series I Non-Voting
Convertible First Preferred Shares, or Series I First Preferred Shares, and
Series II Non-Voting Convertible First Preferred Shares, or Series II First
Preferred Shares, in each case without nominal or par value.

The holders of common shares are entitled to receive notice of
and to attend all annual and special meetings of our shareholders and to one
vote per share held at each such meeting, and they are entitled to receive
dividends as determined and declared by our board of directors.

Subject to the rights of the holders of any other class of our
shares entitled to receive dividends in priority to or concurrently with the
holders of the common shares, our board of directors may in its sole discretion
declare dividends on the common shares to the exclusion of any other class of
shares of the Company.

In the event of our liquidation, dissolution or winding up or
other distribution of our assets among our shareholders for the purpose of
winding up our affairs, the holders of the common shares shall, subject to the
rights of the holders of any other class of shares entitled to receive our
assets upon such a distribution in priority to or concurrently with the holders
of the common shares, be entitled to participate in the distribution. Such
distribution shall be made in equal amounts per share on all the common shares
at the time outstanding without preference or distinction.

The holders of the Class B Shares are entitled to receive
notice of and to attend any meeting of our shareholders but shall not be
entitled to vote any of their Class B Shares at any such meeting. Each issued
and fully paid Class B Share may at any time be converted, at the option of the
holder, into one common share. In the event of our liquidation, dissolution or
winding up or other distribution of our assets among our shareholders for the
purpose of winding up our affairs, the holders of the Class B Shares shall be
entitled to participate rateably with the common shares in any distribution of
the assets of the Company.

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The First Preferred Shares may at any time and from time to
time be issued in one or more series and our board of directors may before the
issue thereof fix the number of shares in, and determine the designation,
rights, privileges, restrictions and conditions attaching to the shares of, each
series of First Preferred Shares.

The First Preferred Shares shall be entitled to priority over
the common shares and Class B Shares and all other shares ranking junior to the
First Preferred Shares with respect to the payment of dividends and the
distribution of our assets in the event of our liquidation, dissolution or
winding up or other distribution of our assets among our shareholders for the
purpose of winding up our affairs.

The First Preferred Shares of each series rank on a parity with
the First Preferred Shares of every other series with respect to priority in the
payment of dividends and in the distribution of our assets in the event of our
liquidation, dissolution or winding up or other distribution of our assets among
our shareholders for the purpose of winding up our affairs.

During 2013, we created a new series of shares, our Series I
First Preferred Shares. The holders of Series I First Preferred Shares are not
entitled to vote at any meeting of our shareholders (except in limited
circumstances provided for in the OBCA), and they are entitled to receive
dividends as determined and declared at the discretion of our board of directors
equally on a one-for-one basis with the holders of shares of the other series of
First Preferred Shares. Each issued and fully paid Series I First Preferred
Share may at any time be converted, at the option of the holder, into
one-thirtieth (1/30th) of a common share, subject to adjustment. In
the event of a take-over bid, that is a formal bid, the Offeror of such bid
shall make an offer to acquire the same percentage of outstanding Series I First
Preferred Shares as the percentage of common shares for which the bid is made,
on the same terms and for the same amount and kind of consideration.

During 2015, we created a new series of shares, our Series II
First Preferred Shares. The holders of Series II First Preferred Shares are not
entitled to vote at any meeting of our shareholders (except in limited
circumstances provided for in the OBCA), and they are entitled to receive
dividends as determined and declared at the discretion of our board of directors
equally on a one-for-one basis with the holders of shares of the other series of
First Preferred Shares. Each issued and fully paid Series II First Preferred
Share may at any time be converted, at the option of the holder, into one common
share, subject to adjustment. In the event of a take-over bid, that is a formal
bid, the Offeror of such bid shall make an offer to acquire the same percentage
of outstanding Series II First Preferred Shares as the percentage of common
shares for which the bid is made, on the same terms and for the same amount and
kind of consideration.

As at December 31, 2015, 7,796,137 common shares were
outstanding, 53,788,579 Series I Preferred Shares were outstanding and
convertible into 1,792,953 common shares, and no Class B Shares were
outstanding. As at December 31, 2015, 106,096,356 common share purchase warrants
were outstanding and convertible into 3,536,545 common shares at a weighted
average exercise price of $8.72 per common share.

As at December 31, 2015, there were 927,834 stock options
outstanding to purchase common shares. The terms and conditions of such stock
options are contained in the 2014 Stock Option Plan.

As at December 31, 2015, we have issued 51,788 deferred share
units. The terms and conditions of such deferred share units are contained in
the 2014 DSU Plan.

Share capital issued  for the year ended December 31, 2015

On April 7, 2015, the Company completed an underwritten public
offering of common shares and non-voting convertible preferred shares in the
United States. In the offering, Trillium sold 1,750,754 common shares and
1,077,605 Series II First Preferred Shares at a price of U.S. $19.50 per share,
including 228,359 common shares sold pursuant to the full exercise of the
underwriters option to purchase additional common shares. The gross proceeds to
Trillium from this offering were $68,875,067 (U.S. $55,153,000) before deducting
offering expenses of $4,913,443.

During the year ended December 31, 2015, 1,087,603 common
shares were issued on the exercise of 32,628,425 warrants for proceeds of
$9,515,154 and 6,666 stock options were exercised for proceeds of $49,995.

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During the year ended December 31, 2015, 15,716,110 Series I
First Preferred Shares were converted into 523,870 common shares.

Share capital issued  for the year ended December 31, 2014

On November 14, 2014, we consolidated our outstanding common
shares issuing one post-consolidated share for each 30 pre-consolidated shares.
All references in this AIF to the number of common shares, stock options and
deferred share units, or DSUs, refer to the post-consolidated amounts.

In the year ended December 31, 2014, 2,596,251 warrants were
exercised for 86,540 common shares and for proceeds of $946,813 and 2,614 stock
options were exercised for proceeds of $19,600. Also, 909,091 warrants issued in
March 2011 expired unexercised.

During the year ended December 31, 2014, 8,390,476 Series I
First Preferred Shares were converted into 279,682 common shares.

Share capital issued  for the year ended December 31, 2013

On February 6, 2013, we consolidated our outstanding common
shares issuing one post-consolidated share for each 10 pre-consolidated
shares.

In March 2013, we completed an offering pursuant to a base
shelf prospectus and prospectus supplement and in the U.S. pursuant to a private
placement memorandum for a total of 424,500 units at a price of $7.50 per unit,
for aggregate gross proceeds to us of $3,185,080 ($2,615,240 net of issuance
costs). Each unit consisted of one common share and 30 common share purchase
warrants. Each 30 warrants entitle the holder to purchase one common share at a
price of $12.00 per share at any time prior to expiry on March 15, 2018
(12,315,000 warrants) and March 27, 2018 (420,000 warrants). In connection with
the financing, we issued 814,051 compensation warrants having an aggregate fair
value of $48,843 estimated using the Black-Scholes option pricing model. Each 30
compensation warrants entitle the holder to acquire one common share at an
exercise price of $7.50 per share prior to expiry on March 16, 2015.

On April 9, 2013, we issued 202,639 common shares and 3,300,000
common share purchase warrants for partial consideration for the acquisition of
Trillium Privateco.

On April 16, 2013, we issued 167,619 common shares and
1,600,000 common share purchase warrants as consideration for the acquisition of
certain rights related to tigecycline from UHN.

On December 13, 2013, we completed a private placement of
2,641,590 common share units (each common share unit consisting of one common
share and 22.5 common share purchase warrants) at a price of $6.30 per unit and
77,895,165 preferred share units (each preferred share unit consisting of one
Series I First Preferred Share and three-quarters of a common share purchase
warrant) at a price of $0.21 per unit for gross proceeds of $32,866,025
($30,713,841 net of issuance costs). Each 30 warrants entitle the holder to
purchase one common share at a price of $8.40 at any time prior to expiry on
December 13, 2018. In connection with the financing, we issued 5,014,839
compensation warrants having an aggregate fair value of $651,929 estimated using
the Black-Scholes option pricing model. Each 30 compensation warrants entitle
the holder to acquire one common share at an exercise price of $6.30 per share
prior to expiry on December 13, 2015.

In the December 2013 private placement, subscribers who
purchased preferred share units and certain subscribers who purchased common
share units were subject to restrictions on the conversion and exercise of
securities of ours convertible into common shares. Such subscribers cannot
convert or exercise securities of ours convertible or exercisable into common
shares if, after giving effect to the exercise of conversion, the subscriber and
its joint actors would have beneficial ownership or direction or control over
common shares in excess of 4.99% of the then outstanding common shares. This
limit may be increased at the option of the subscriber on 61 days prior written
notice: (i) up to 9.99%, (ii) up to 19.99%, subject to stock exchange clearance
of a personal information form submitted by the subscriber, and (iii) above
19.99%, subject to stock exchange approval and shareholder approval.

Subject to
  receipt of any required regulatory approvals, subscribers who purchased a
  minimum of 10% of the securities sold under the offering have been given rights
  to purchase securities of ours in future financings to enable each such subscriber to maintain its percentage holding in us
  for so long as the subscriber holds at least 10% of the outstanding common
  shares on a fully-diluted basis.

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Fully Diluted Share Capital

The number of issued and outstanding common shares, Series I
First Preferred Shares, Series II First Preferred Shares warrants, stock options
and DSUs on a fully converted basis as at December 31, 2015 was as follows:

|                                                    | Number of common 
|--------------------------------------------------- | -----------------
|                                                    | share equivalents
|                                                    |                  
|Common shares                                       | 7,796,137        
|Series I First Preferred Shares                     | 1,792,953        
|Series II First Preferred Shares                    | 1,077,605        
|Warrants                                            | 3,536,545        
|Stock options                                       | 927,834          
|Deferred share
      units                          | 51,788           
|Fully diluted common shares as at December 31, 2015 | 15,182,862       

Warrants

The following table shows the number of warrants outstanding,
the exercise prices, and the number of common shares issuable on exercise of the
warrants and the exercise price per common share for 30 warrants at December 31,
2015:

|                  |  |             |  |   |          |  |  | Number of     |  |   | Exercise     |  
|----------------- |  | ----------- |  | - | -------- |  |  | ------------- |  | - | ------------ | -
|                  |  |             |  |   |          |  |  | Common shares |  |   | Price per    |  
|                  |  | Number of   |  |   | Exercise |  |  | Issuable      |  |   | Common Share |  
|Expiry dates      |  | Warrants    |  |   | Price    |  |  | on Exercise   |  |   | (30 Warrants | )
|                  |  |             |  |   |          |  |  |               |  |   |              |  
|March 15, 2018    |  | 9,213,780   |  | $ | 0.40     |  |  | 307,126       |  | $ | 12.00        |  
|March 27, 2018    |  | 300,000     |  | $ | 0.40     |  |  | 10,000        |  | $ | 12.00        |  
|December 13, 2018 |  | 96,582,576  |  | $ | 0.28     |  |  | 3,219,419     |  | $ | 8.40         |  
|Total             |  | 106,096,356 |  |   |          |  |  | 3,536,545     |  |   |              |  

Our board of directors authorized or ratified the issuances of
the warrants set forth in the table below and the issuance of one common share
upon the due exercise of each 30 warrants in accordance with its terms and the
receipt by us of the designated exercise price payable in respect of the share
prior to the time of expiry on the designated expiry date.

Stock Options

Our board of directors authorized or ratified the issuances of
the options set forth in the table below and the issuance of one common share
upon the due exercise of each option in accordance with its terms and the
receipt by us of the designated exercise price payable in respect of the share
prior to the time of expiry on the designated expiry date.

Deferred Share Units

As at December 31, 2015, we had 51,788 issued and outstanding
DSUs which are convertible into common shares.

35

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Prior Sales

The following table summarizes details of each class of
securities that is outstanding but not listed or quoted on a marketplace issued
by the Company during the year ended December 31, 2015.

Date of Issuance
    Price per Security or Exercise
      Price as Applicable
    Number of and Description of
      SecuritiesApril 1, 2015
    $23.441
    85,000 Options(1)April 7, 2015
    USD$19.50
    1,077,605 Series II First Preferred Shares
      (2)May 27, 2015
    $28.045
    29,000 Options(1)May 27, 2015
    $28.045
    8,558 Deferred Share
      Units(3)June 4, 2015
    $28.519
    12,500 Options(1)June 16, 2015
    $29.422
    2,039 Deferred Share
      Units(3)November 19, 2015
    $19.333
    220,859 Options(1)November 19, 2015
    $19.333
    12,414 Deferred Share
      Units(3)


Note:

|(1) | Issued under the 2014 Stock Option Plan.                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|(2) | Issued in an underwritten public offering of common
      shares and non-voting convertible preferred shares in the United
      States.
|(3) | Issued under the 2014 DSU Plan.                                                                                                         

MARKET FOR SECURITIES

We are listed on the TSX under the symbol TR and on the NASDAQ
Capital Market under the symbol TRIL. The following table shows the price
ranges and volumes traded on the TSX and NASDAQ for the periods noted:

Month
    TSX
    NASDAQHigh ($)
    Low ($)
    Volume (#)
    High (US$)
    Low (US$)
    Volume (#)December 2015
    $ 20.000
    $ 16.010
    50,495
    $ 15.020
    $ 11.494
    987,213November 2015
    $ 21.980
    $ 17.850
    49,350
    $ 16.690
    $ 13.420
    839,500October 2015
    $ 21.800
    $ 16.000
    116,560
    $ 16.650
    $ 12.200
    1,590,038September 2015
    $ 25.000
    $ 15.950
    89,362
    $ 19.080
    $ 12.000
    1,320,768August 2015
    $ 28.080
    $ 18.150
    114,851
    $ 22.200
    $ 13.380
    1,984,450July 2015
    $ 30.010
    $ 24.200
    123,555
    $ 23.300
    $ 18.770
    1,777,870June 2015
    $ 32.760
    $ 25.000
    154,336
    $ 26.720
    $ 19.990
    2,823,681May 2015
    $ 30.570
    $ 21.210
    180,416
    $ 24.560
    $ 17.572
    3,303,704April 2015
    $ 37.270
    $ 22.690
    538,051
    $ 27.989
    $ 18.800
    7,607,223March 2015
    $ 26.065
    $ 17.000
    307,858
    $ 20.880
    $ 13.060
    2,542,925February 2015
    $ 20.210
    $ 15.140
    204,365
    $ 16.500
    $ 12.610
    1,321,813January 2015
    $ 18.370
    $ 10.500
    361,364
    $ 15.647
    $ 9.050
    3,046,079


36

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BOARD OF DIRECTORS AND MANAGEMENT

The following table and summary of business experience set
forth the name, office held, and functions and areas of experience in the
Company, principal business activities and other principal directorships of each
of our directors and senior management:

|Name Present Office Held
      Province/State and Country of Residence
      Position Held Since |  | Principal Business
      Activities, Other Principal Directorships and Function                                                                                                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Luke Beshar Director(1)New
      Jersey, USA                                                     |  | Mr. Beshar is an independent biotechnology
      consultant and financial expert. He was most recently the Executive/Senior
      Vice President and Chief Financial Officer of NPS Pharmaceuticals, Inc., a
      global biopharmaceutical company from November 2007 to February 2015.                                                                                                                   
|March 10, 2014                                                                                   |  | As an
      independent director, Mr. Beshar supervises our management and helps to
      ensure compliance with our corporate governance policies and standards.                                                                                                                                                                                                                                          
|Henry Friesen Director(1)(2)Manitoba, CanadaJune 28, 2011                                        |  | Dr. Friesen is a Distinguished University
      Professor Emeritus at University of Manitoba since October 2000.
    As an
      independent director, Dr. Friesen supervises our management and helps to
      ensure compliance with our corporate governance policies and standards.                                                                                                                    
|Robert Kirkman Director(1)(3)Washington, USA
      December 17, 2013                             |  | Dr. Kirkman was President and Chief Executive Officer and director of
      Oncothyreon Inc., an oncology-focused biotechnology company from September
      2006 to January 2016.
      As an independent director, Dr. Kirkman supervises our management and
      helps to ensure compliance with our corporate governance policies and
      standards.                                                
|Michael Moore Director(2)(3)Surrey,
      UK
      April 9, 2013                                 |  | Dr. Moore is the Executive Chair of MISSIONTherapeutics Ltd. since 2012 and a Board Chair or Director of several
      private biopharmaceutical companies in the UK. From 2004 to 2013, Dr.
      Moore was the Chair of Trillium Privateco, and from 2003 to 2008, Dr.
      Moore was the Chief Executive Officer and Director of PIramed Ltd, a UK-
      based oncology company sold to Roche in 2008.
|                                                                                                 |  | As an
      independent director, Dr. Moore supervises our management and helps to
      ensure compliance with our corporate governance policies and standards.                                                                                                                                                                                                                                           
|Thomas ReynoldsDirector(2)(3)Washington, USA                                                     |  | Dr. Reynolds is an independent biotechnology
      consultant since February 2013, and was Chief Medical Officer of Seattle
      Genetics, Inc., a biotechnology company focused on antibody-based
      therapies for the treatment of cancer from March 2007 to January 2013. Dr.
      Reynolds also sits on the board of MEI Pharma, Inc.                                                             
|March 10, 2014                                                                                   |  | As an
      independent director, Dr. Reynolds supervises our management and helps to
      ensure compliance with our corporate governance policies and standards.                                                                                                                                                                                                                                        
|Calvin StillerDirector, Chair of the
      Board Ontario, Canada                                 |  | Dr. Stiller is the Chair of Ontario Institute
      for Cancer Research and Professor Emeritus at Western University. Dr.
      Stiller also sits on the board of Revera Corporation and Magor
      Corporation.                                                                                                                                                                                          
|July 18, 2011                                                                                    |  | As an
      independent director, Dr. Stiller supervises our management and helps to
      ensure compliance with our corporate governance policies and standards.                                                                                                                                                                                                                                         

37

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|Niclas Stiernholm President and Chief
      Executive Officer, Director 
    Ontario, Canada
    Director since
      July 18, 2011; President and CEO since April 9, 2013 |  | Dr. Stiernholm is the President and Chief Executive Officer of Trillium
      since April 9, 2013 and was the President and Chief Executive Officer of
      Trillium Privateco prior thereto from 2002. He joined Trillium from YM
      BioSciences where he was Executive Vice President and Chief Scientific
      Officer.
      As President and Chief Executive Officer, Dr. Stiernholm is responsible
      for overseeing our strategic direction, executing business development
      plans and ensuring that our scientific programs remain funded and advance
      on schedule. As a director, Dr. Stiernholm participates in management
      oversight and helps to ensure compliance with our corporate governance
      policies and standards.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Robert Uger Chief Scientific
      OfficerOntario, Canada                                                                                                                  |  | Dr. Uger is the Chief Scientific Officer of
      Trillium since April 9, 2013 and was the Vice President, Research of
      Trillium Privateco prior thereto from 2003. He joined Trillium from
      Aventis Pasteur where he was a Senior Research Scientist involved in
      cancer vaccine research.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|April 9, 2013                                                                                                                                                              |  | As
      Chief Scientific Officer, Dr. Uger is responsible for developing and
      implementing our scientific direction, and oversees both internal product
      development and external research and development programs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|James Parsons Chief Financial Officer Ontario,
      Canada
      August 25, 2011                                                                                          |  | Mr. Parsons is the Chief Financial Officer of Trillium since August 25,
      2011 and was also the Director, Finance of Trillium Privateco. He was
      previously the Vice President, Finance of DiaMedica Inc. from October 2010
      to May 2014, and Chief Financial Officer of Amorfix Life Sciences Ltd.
      from 2006 to 2010. Mr. Parsons sits on the board of Sernova Corp and
      DiaMedica Inc.
      As Chief Financial Officer, Mr. Parsons is responsible for financial
      and risk management, investor relations, corporate governance and
      administration.                                                                                                                                                                       
|Penka PetrovaChief Development Officer Ontario,
      Canada
      May 29, 2015                                                                                            |  | Dr. Petrova is the Chief Development Officer of Trillium since May 29,
      2015 and was the Vice President, Drug Development from April 2013 to May
      2015. Dr. Petrova joined Trillium Privateco from Prescient Neuropharma in
      2003.
      As Chief Development Officer, Dr. Petrova is responsible for managing
      our formal drug development efforts, including all outsourced activities
      to contract manufacturers and contract research organizations.                                                                                                                                                                                                                                                                                
|Eric Sievers Chief Medical Officer Washington,
      USA
      April 1, 2015                                                                                               |  | Dr. Sievers is the Chief Medical Officer of Trillium since April 1,
      2015. He previously held several senior roles at Seattle Genetics
      including the Senior Vice President, Clinical Development from October
      2013 to March 2015, the Vice President and Interim Chief Medical Officer
      from 2012 to October 2013, and Vice President, Clinical Affairs from 2011
      to 2012, and Executive Medical Director from 2010 to 2011.
      As Chief Medical Officer, Dr. Sievers is responsible for the design and
      execution of our clinical and regulatory strategy.                                                                                                                                                                  

Notes:

|(1) | Member of our audit committee.                                    
|--- | ------------------------------------------------------------------
|(2) | Member of our corporate governance and nominating
      committee.
|(3) | Member of our compensation
committee.                             

Directors are elected annually and hold office until a
successor is elected at a subsequent annual meeting of the Company, unless a
directors office is earlier vacated in accordance with the by-laws of the
Company. The business address for our directors and senior management is Trillium
Therapeutics Inc., 96 Skyway Avenue, Toronto, Ontario, Canada, M9W 4Y9.

38

---

As at December 31, 2015, the directors and senior officers of
the Company, as a group, beneficially owned, directly or indirectly, 31,000
common shares of the Company constituting approximately 0.4% of the issued and
outstanding common shares.

CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS

Cease Trade Orders

To the knowledge of the Company, no director or executive
officer of the Company is, or within the ten years prior to the date hereof has
been, a director, chief executive officer, or chief financial officer, of any
company (including the Company) that was subject to (a) a cease trade order; (b)
an order similar to a cease trade order; or (c) an order that denied the
relevant company access to any exemption under securities legislation, that was
in effect for a period of more than thirty consecutive days, issued while that
person was acting in such capacity or issued thereafter but resulted from an
event that occurred while that person was acting in such capacity.

Bankruptcies

To the knowledge of the Company, no director or executive
officer or shareholder holding a sufficient number of securities of the Company
to affect materially the control of the Company is, or within the ten years
prior to the date hereof has been, a director or executive officer of any
company (including the Company) that, while that person was acting in such
capacity or within a year of that person ceasing to act in such capacity, 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.

To the knowledge of the Company, no director or executive
officer or shareholder holding a sufficient number of securities of the Company
to affect materially the control of the Company has, within the ten years prior
to the date hereof, become bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency, or become subject to or instituted any
proceedings, arrangement, or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold that persons assets.

Penalties and Sanctions

No director or executive officer of the Corporation, or a
shareholder holding a sufficient number of securities of the Company to affect
materially the control of the Corporation has been subject to (a) any penalties
or sanctions imposed by a court relating to securities legislation or by a
securities regulatory authority or has entered into a settlement agreement with
a securities regulatory authority; or (b) any other penalties or sanctions
imposed by a court or regulatory body that would likely be considered important
to a reasonable investor in making an investment decision.

All of the above disclosure also applies to any personal
holding companies of any of the persons referred to above.

CONFLICTS OF INTEREST

Certain of our officers and directors are also officers and/or
directors of other companies engaged in the biotechnology industry and research
business generally. As a result, situations arise where the interest of such
directors and officers conflict with their interests as directors and officers
of other companies. The resolution of such conflicts is governed by applicable
corporate laws, which require that directors act honestly, in good faith and
with a view to the best interests of the Company. In addition, the OBCA, our
governing statute, requires our officers and directors to disclose any personal
interest which they may have in any material contract or transaction which is
proposed to be entered into with the Company and, in the case of directors, to
abstain from voting as a director for the approval of any such contract or
transaction, unless otherwise permitted under the OBCA.

In relation to the acquisition of Fluorinov on January 26,
2016, two directors declared a conflict of interest and recused themselves from
discussions and board decisions relating to the acquisition. One director was
also a director of Fluorinov and had an ownership position in Fluorinov at the
time of acquisition of less than 2%. A second of our directors was a director of
the Ontario Institute of Cancer Research (being a beneficiary of the Fight
Against Cancer Innovation Trust, a shareholder and debenture holder of
Fluorinov).

39

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LEGAL PROCEEDINGS

We are and were not a party to, and none of our property or
assets are or were subject to, any material legal proceedings during the last
financial year, nor to our knowledge are any such proceedings contemplated.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Except as provided herein, there are no material interests,
direct or indirect, of directors, executive officers, any shareholders who
beneficially own, or controls or directs, directly or indirectly, more than 10%
of our outstanding common shares, or any known associates or affiliates of such
persons, in any transaction within the last three completed financial years or
during the current financial year which has materially affected or is reasonably
expected to materially affect the Company.

For the years ended December 31, 2015 and 2014, $0 and $7,916,
respectively, was paid to our former Executive Chair, a director, for consulting
fees. These transactions were in the normal course of operations and were
measured at the exchange amount, which is the amount of consideration
established and agreed to by the parties.

INTEREST OF EXPERTS

Our auditors are Ernst & Young LLP, Chartered Professional
Accountants, Licensed Public Accountants, Toronto, Ontario, Canada. Our
consolidated financial statements as at December 31, 2015 and 2014 have been
audited by Ernst & Young LLP, Independent Registered Public Accounting Firm,
as indicated in their report dated March 9, 2016. Ernst & Young LLP has been
the Corporation's auditors since inception on March 31, 2004.

Ernst & Young LLP has advised that they are independent
with respect to the Corporation within the meaning of the Rules of Professional
Conduct of the Chartered Professional Accountants of Ontario (registered name of
the Institute of Chartered Accountants of Ontario) and the rules and standards
of the Public Company Accounting Oversight Board (United States) and the
securities laws and regulations administered by the United States Securities and
Exchange Commission.

TRANSFER AGENT

Our registrar and transfer agent is Computershare Trust Company
of Canada, located at 100 University Avenue, Toronto, Ontario, M5J 2Y1.

MATERIAL CONTRACTS

There are no other contracts, other than those disclosed in
this AIF and those entered into in the ordinary course of our business, that are
material to us and which were entered into in the last completed fiscal year or
which were entered into before the most recently completed fiscal year but are
still in effect as of the date of this AIF:

| | 1. | License Agreement between Trillium Privateco, UHN and HSC
      dated February 1, 2010 pursuant to which we licensed intellectual property
      relating to methods and compounds for the modulation of the SIRPα-CD47
      interaction for therapeutic cancer applications. The license agreement
      requires us to use commercially reasonable efforts to commercialize the
      licensed technology. The license agreement will terminate on a
      country-by-country basis, in countries where a valid claim exists, when
      the last valid claim expires in such country, or if no valid claim exists,
      when the last valid claim expires in the U.S. We paid an up-front license
      fee of $150,000 and committed to pay an annual maintenance fee of $25,000,
      as well as payments on patent issuances, development milestone payments
      ranging from $100,000 to $300,000 on the initiation of phase I, II and III
      clinical trials respectively, and payments upon the achievement of certain
      regulatory milestones as well as royalties of either 3% or 1% of net
      revenues on commercial sales. The regulatory milestone payments amount to
      $1 million on each of the submission of a first BLA in the U.S. and
      receipt of first regulatory approval in the U.S.
and proportionate payments in other territories worldwide.
      The aggregate milestones payable on their first achievement under the
      agreement in the major markets of the U.S., Europe and Asia combined are
      $5,660,000. Under the license agreement, Trillium is required to pay 20%
      of any sublicensing revenues to the licensors on the first $50 million of
      sublicensing revenues, and pay 15% of any sublicensing revenues to the
      licensors after the first $50 million of sublicensing revenue
  received.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

40

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| | 2. | GPEx®-Derived Cell Line Sale Agreement between Trillium
      Therapeutics Inc. and Catalent Pharma Solutions, LLC dated August 12, 2014
      pursuant to which we acquired the right to use the GPEx® expression system
      for the manufacture of TTI-621 (SIRPαFc). Consideration for the license
      includes potential pre-marketing approval milestones of up to US$875,000
      and aggregate sales milestone payments of up to US$28.8 million. 
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | 3. | GPEx®-Derived Cell Line Sale Agreement between Trillium
      Therapeutics Inc. and Catalent Pharma Solutions, LLC dated August 12, 2014
      pursuant to which we acquired the right to use the GPEx® expression system
      for the manufacture of TTI-622 (SIRPαFc). Consideration for the license
      includes potential pre-marketing approval milestones of up to US$875,000
      and aggregate sales milestone payments of up to US $28.8
million.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | 4. | Share purchase agreement among the Company, Fluorinov and
      Fluorinov shareholders dated January 26, 2016 pursuant to which we
      purchased all of the issued and outstanding shares in the capital of
      Fluorinov. See General Development of the Business  3 Year
    Summary.                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | 5. | Royalty agreement among the Company, Fluorinov and
      Fluorinov shareholders dated January 26, 2016 which sets out contingent
      future royalty payments. See the discussion in the section of this AIF
      entitled General Development of the Business  3 Year
  Summary.                                                                                                                                                                        

AUDIT COMMITTEE INFORMATION

Audit Committee

The Charter of the Audit Committee is attached hereto as
Schedule A. The purpose of our audit committee is to assist our Board in:

| |  | overseeing the integrity of our financial statements and
      our accounting and financial reporting processes and financial statement
      audits;                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                
| |  | overseeing our compliance with legal and regulatory
      requirements;                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                
| |  | overseeing the qualifications and independence of our
      registered public accounting firm (independent auditor);                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                
| |  | overseeing the performance of our independent auditor;
      and                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                
| |  | overseeing the design, implementation and ongoing
      effectiveness of our systems of disclosure controls and procedures, risk
      management systems, internal control over financial reporting and
      compliance with ethical standards adopted by us.

Composition of the Audit Committee

Our audit committee is comprised of a minimum of three members,
each of whom, in the determination of our board of directors, satisfies the
independence, financial literacy and experience requirements of applicable U.S.
and National Instrument 52- 110 Audit Committees (NI 52-110),
rules and guidelines, any applicable stock exchange requirements or guidelines
and any other applicable regulatory rules.

In particular:

41

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| |  | each member shall be (a) an Independent Director, as
      defined in NASDAQ Stock Market Rule 5605(a)(2), and (b) independent
      within the meaning of Rule 10A-3 under the Exchange Act, and the
      determination of independence will be affirmatively made by our board
      annually, provided that our board may elect to take advantage of any
      exemption from such requirements provided in the rules of NASDAQ or the
      Exchange Act;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | each member shall meet the independence and financial
      literacy requirements set forth in Canadian NI 52-110;                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | each member shall not have participated in the
      preparation of the financial statements of ours (or any then current
      subsidiary of ours) at any time during the past three years;                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | each member shall be able to read and understand
      fundamental financial statements in accordance with the audit committee
      requirements for companies listed on NASDAQ in NASDAQ Stock Market Rule
      5605(c)(2)(A)(iv); and                                                                                                                                                                                                                         

at least one (1) member shall, in the judgment of our board, be
an audit committee financial expert within the meaning of such term in Item
407(d) of Regulation S-K under the United States Securities Act of 1933.

Our audit committee members are Mr. Luke Beshar (chair), Dr.
Henry Friesen and Dr. Robert Kirkman, each of whom is a non-executive member of
our Board. Our Board has determined that each of the members of our audit
committee is financially literate and has sufficient financial expertise, and is
independent within the meaning of such term in the rules of NASDAQ, the SEC and
Canadian provincial securities regulatory authorities. Our Board has determined
that Mr. Luke Beshar is a financial expert in accordance with the rules and
regulations of the SEC.

Relevant Education and Experience

The following describes the education and experience of each
audit committee member that is relevant in the performance of his
responsibilities as an audit committee member:

Luke Beshar, CPA- Director, Chair of the
Audit Committee

Mr. Beshar was Executive Vice President and Chief Financial
Officer of NPS Pharmaceuticals until February 2015 when the company was sold to
Shire plc. He joined NPS Pharmaceuticals in 2007 and has been responsible for
financial management, investor relations, information technology, technical
operations, supply-chain management, facilities, project management, contracts
and outsourcing and strategic and alliance management. Prior to joining NPS, Mr.
Beshar served as Executive Vice President and Chief Financial Officer of Cambrex
Corporation, a global life sciences company. Mr. Beshar began his career with
Arthur Andersen & Co. and is a certified public accountant.

He obtained his bachelors degree in Accounting and Finance
from Michigan State University and is a graduate of The Executive Program at the
Darden Graduate School of Business at the University of Virginia.

Dr. Henry Friesen- Director

Dr. Friesen was the President of the Canadian Governments
Medical Research Council, and the architect and lead champion for the creation
the Canadian Institutes for Health Research, President of the National Cancer
Institute of Canada and President of the Canadian Society for Clinical
Investigation. He is the Past Founding Chair of Genome Canada. A Fellow of the
Royal Society of Canada, Dr. Friesen was named a Companion of the Order of
Canada and was inducted into the Canadian Medical Hall of Fame in 2001 and,
later the Order of Manitoba. He was also awarded the Gairdner Foundation
Wightman Award, the McLaughlin Medal of the Royal Society of Canada, and the
Koch Medal, the highest award of the Endocrine Society. He was presented with
the Frederic Newton Gisborne Starr Award by the Canadian Medical Association,
the associations highest award, in 2006. Dr. Friesen also holds eight Honorary
Doctorates from Canadian universities.

42

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Dr. Robert Kirkman- Director

Dr. Kirkman served as Oncothyreons President and Chief
Executive Officer from September 2006 to January 2016. From 2005 to 2006, he was
acting President and Chief Executive Officer of Xcyte Therapies, which concluded
a merger with Cyclacel Pharmaceuticals, both development-stage biopharmaceutical
companies, in March of 2006. From 2004 to 2005, Dr. Kirkman was Chief Business
Officer and Vice President of Xcyte. From 1998 to 2003, Dr. Kirkman was Vice
President, Business Development and Corporate Communications of Protein Design
Labs, a biopharmaceutical company. Dr. Kirkman holds a M.D. degree from Harvard
Medical School and a B.A. in economics from Yale University.

Audit Committee Oversight

Since the commencement of our most recently completed fiscal
year and adoption of the audit committee charter, the Board has not failed to
adopt a recommendation of the audit committee to nominate or compensate an
external auditor.

Pre-Approval Policies and Procedures

The audit committee has adopted specific policies and
procedures for the engagement of audit and non-audit services as set out in our
Auditor Services Pre-Approval Policy. Pursuant to the Policy, the audit
committee on an annual basis may approve the provision of a specified list of
audit and permitted non-audit services that the audit committee believes to be
typical, reoccurring or otherwise likely to be provided by the external auditor
during the then current fiscal year. All pre-approvals granted under this Policy
shall be sufficiently detailed as to the particular services being provided that
it will not be necessary for management of Trillium to exercise any discretion
in determining whether a particular service has been pre-approved.

In addition, pursuant to the Policy the audit committee has
delegated its pre-approval authority to the Chair of the audit committee for
services where the aggregate fees are estimated to be less than or equal to Cdn.
$50,000. The Chair of the audit committee is required to report any such granted
pre-approvals to the audit committee at its next scheduled meeting. The audit
committee shall not delegate to management the audit committee's
responsibilities for pre-approving audit and non-audit services to be performed
by the external auditor.

Pursuant to the Policy, there is an exception to the
pre-approval requirements for permitted non-audit services, provided all such
services were not recognized at the time of the engagement to be non-audit
services and, once recognized, are promptly brought to the attention of the
audit committee and approved prior to the completion of the audit. The aggregate
amount of all services approved in this manner may not constitute more than five
percent of the total fees paid to the external auditor during the fiscal year in
which the services are provided.

External Auditors Service Fees (By Category)

The aggregate fees billed and accrued by our external auditor
in the last two fiscal years for auditor service fees were as follows:

|                      |   |               |  |  | Audit Related |  |   |                   |  |  |                   | 
|--------------------- | - | ------------- |  |  | ------------- |  | - | ----------------- |  |  | ----------------- | 
|Financial Year Ending |   | Audit Fees(1) |  |  | Fees(2)       |  |   | Tax
      Fees(3) |  |  | All Other Fees(4) | 
|December 31, 2015     | $ | 378,970       |  |  | Nil           |  | $ | 22,805            |  |  | Nil               | 
|December 31, 2014     | $ | 313,820       |  |  | Nil           |  | $ | 2,050             |  |  | Nil               | 

Notes:

| | (1) | Audit fees are the aggregate fees billed by Ernst &
      Young LLP for the audit of Trilliums consolidated annual financial
      statements, reviews of interim financial statements and attestation
      services that are provided in connection with statutory and regulatory
      filings or engagements. During 2014, the services also consisted of fees
      related to the filing of a base shelf prospectus and
  procedures for the Form 20-F filing.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

43

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| | (2) | Audit-related fees are fees charged by Ernst &
      Young LLP for assurance and related services that are reasonably related
      to the performance of the audit or review of the Trilliums financial
      statements and are not reported under Audit Fees.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                      
| | (3) | Tax fees are fees billed by Ernst & Young LLP for
      tax compliance and tax advice.                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                      
| | (4) | All other fees are fees billed by Ernst & Young LLP
      for services not described above.                                                                                                                                                                        

ADDITIONAL INFORMATION

Additional information about us may be found on SEDAR at
www.sedar.com. Additional information, including directors and officers
remuneration and indebtedness, principal holders of our securities, options to
purchase securities and securities authorized for issuance under equity
compensation plans, is contained in our Management Information Circular for our
most recent annual meeting of shareholders. Additional information may also be
found in our audited financial statements and related managements discussion
and analysis for our most recently completed financial year.

44

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SCHEDULE A

TRILLIUM THERAPEUTICS INC.CHARTER OF THE AUDIT
COMMITTEEOF THE BOARD OF DIRECTORS

Approved by the Board of Directors on November 19,
2015

POWER, AUTHORITY AND PURPOSE OF THE COMMITTEE

The purpose of the Audit Committee (the Committee) of the
Board of Directors (the Board) of Trillium Therapeutics Inc. (together with
its subsidiaries,the Company) is to assist the Board in:

| |  | Overseeing the integrity of the Companys financial
      statements and the Companys accounting and financial reporting processes
      and financial statement audits.                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                    
| |  | Overseeing the Companys compliance with legal and
      regulatory requirements.                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                    
| |  | Overseeing the qualifications and independence of the
      Companys registered public accounting firm (independent auditor).                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                    
| |  | Overseeing the performance of the Companys independent
      auditor.                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                    
| |  | Overseeing the design, implementation and on-going
      effectiveness of the Companys systems of disclosure controls and
      procedures, risk management systems, internal control over financial
      reporting and compliance with ethical standards adopted by the Company.

The operation of the Committee shall be subject to the Bylaws
of the Company, as in effect from time to time, and the rules and regulations
promulgated by the Ontario Securities Commission, the Toronto Stock Exchange,
the U.S. Securities and Exchange Commission (SEC) and the NASDAQ Stock Market
LLC (NASDAQ), as in effect from time to time. The Committee shall have the
full power and authority to carry out the duties and responsibilities listed
below.

While the Committee has the responsibilities and powers set
forth in this charter (this Charter), it is not the duty of the Committee to
plan or conduct audits or to determine that the Companys financial statements
are complete and accurate and are in accordance with generally accepted
accounting principles. Management is responsible for preparing the Companys
financial statements, and the Companys independent auditor is responsible for
auditing those financial statements.

The Committee has the authority to undertake the specific
duties and responsibilities listed below and such other duties as the Board may
from time to time prescribe. It is acknowledged, however, that all of the areas
of oversight listed below may not be relevant to all of the matters and tasks
that the Committee may consider and act upon from time to time, and the members
of the Committee in their judgment may determine the relevance thereof and the
attention such items will receive in any particular context.

The Committee shall have the power and authority to act
independently of management, conduct investigations into any matters within its
scope of responsibility, hire and obtain advice from its own outside legal,
accounting or other advisors who will report solely to the Committee, set and
pay the compensation for any advisors employed by the Committee and communicate
directly with internal and external auditors.

---

Committee members and the Committee Chair shall receive such
remuneration for their service on the Committee as the Board may determine from
time to time, on the recommendation of the Compensation Committee.

COMPOSITION

The Committee shall be comprised of a minimum of three members,
each of whom, in the determination of the Board, satisfies the independence,
financial literacy and experience requirements of applicable U.S. and Canadian
securities laws, rules and guidelines, any applicable stock exchange
requirements or guidelines and any other applicable regulatory rules.

In particular:

| | 1. | each member shall be (a) an Independent Director, as
      defined in NASDAQ Marketplace Rule 5605(a)(2), and (b) independent
      within the meaning of Rule 10A-3 under the United States Securities
      Exchange Act of 1934, as amended (the Exchange Act), and the
      determination of independence will be affirmatively made by the Board
      annually, provided that the Board may elect to take advantage of any
      exemption from such requirements provided in the NASDAQ rules or the
      Exchange Act;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 2. | each member shall meet the independence and financial
      literacy requirements set forth in Canadian National Instrument 52-110
      Audit Committeesand such additional criteria for independence as
      the Board may establish;                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 3. | each member shall not have participated in the
      preparation of the financial statements of the Company (or any then
      current subsidiary of the Company) at any time during the past three
      years;                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 4. | each member shall be able to read and understand
      fundamental financial statements in accordance with the audit committee
      requirements for companies listed on NASDAQ in NASDAQ Marketplace Rule
      5605(c)(2)(A)(iv); and                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 5. | at least one (1) member shall, in the judgment of the
      Board, be an audit committee financial expert within the meaning of such
      term in Item 407(d) of Regulation S-K of the SEC.                                                                                                                                                                                                                                                                                                                                        

The chairperson of the Committee (the Chair) will be
appointed by the Board on the recommendation of the Corporate Governance and
Nominating Committee and will serve at the discretion of the Board, and all
members will serve at the pleasure of the Board, continuing as a member of the
Committee until resignation or replacement. The Board may fill vacancies on the
Committee by appointment, on the recommendation of the Corporate Governance and
Nominating Committee, from qualified members of the Board.

The designation of the Chair shall occur annually at the first
meeting of the Board after a meeting of shareholders at which Directors are
elected. If the Chair is not so designated, the Director who is then serving as
Chair shall continue as Chair until his or her successor is appointed.

COMMITTEE FUNCTION AND PROCESS

The Committee will meet at least once each fiscal quarter. The
Committee may establish its own schedule and call additional meetings as it
deems necessary to fulfill its responsibilities. The Committee shall fix its own
rules of procedure, which shall be consistent with the Bylaws of the Company and
this Charter. A majority of the Committee members, but not less than two, shall
constitute a quorum. Committee meetings may be attended in person or by
telephone or video conferencing or any other electronic means of communication.
The Committee may request that any directors, officers or employees of the
Company, or other persons whose advice and counsel are sought by the Committee,
attend any meeting to provide such information as the Committee requests. The
Committee may take action by unanimous written consent when deemed necessary or
desirable by the Committee or its Chair, subject to the requirements of any
applicable law, regulation or rule.

A - 2

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The Committee Chair will approve the agenda for the Committees
meetings and any member may suggest items for consideration. Committee members
may raise any subjects that are not set on the agenda by the Committee Chair.
Each regularly scheduled meeting will conclude with an executive session of the
Committee absent members of management.

The Committee will meet separately with the Chief Executive
Officer and the Chief Financial Officer at such times as it deems appropriate to
review the financial affairs of the Company. The Committee will meet separately
with the independent auditor and without management present, at such times as it
deems appropriate, but not less than quarterly, to fulfill the responsibilities
of the Committee under this Charter.

The independent auditor shall receive notice of each meeting of
the Committee and shall be entitled to attend and be heard at any such meeting
at the Company's expense.

The Committee shall maintain copies of minutes of each meeting
and each written consent to action taken without a meeting, reflecting the
actions so authorized or taken by the Committee. After approval, the minutes
shall be signed by the Chair or Secretary of the meeting and a copy of the
minutes and all consents shall be placed in the Companys minute book.

The Committee will summarize its examinations and
recommendations to the Board as may be appropriate, consistent with this
Charter.

ROLE OF THE CHAIR

The Chairs primary role is to ensure that the Committee
functions properly, meets its obligations and responsibilities, fulfills its
purpose and that its organization and mechanisms are in place and working
effectively. More specifically, the Chair shall:

| | 1. | chair meetings of the Committee;                                                                                                                                                                                                                                                                                                                                                              
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                               
| | 2. | in consultation with the Chair of the Board, the members,
      and the Chief Financial Officer, set the agendas for the meetings of the
      Committee;                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                               
| | 3. | in collaboration with the Chair of the Board, the Chief
      Executive Officer, and the Chief Financial Officer, ensure that agenda
      items for all Committee meetings are ready for presentation and that
      adequate information is distributed to members in advance of such meetings
      in order that members may properly inform themselves on matters to be
      acted upon;
| |    |                                                                                                                                                                                                                                                                                                                                                                                               
| | 4. | assign work to members;                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                               
| | 5. | act as liaison and maintain communication with the Chair
      of the Board and the Board to optimize and co- ordinate input from
      directors, and to optimize the effectiveness of the Committee;
  and                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                               
| | 6. | provide leadership to the Committee with respect to its
      functions as described in this Charter and as otherwise may be
      appropriate.                                                                                                                                                                                                                                               

DUTIES AND RESPONSIBILITIES

The Committee shall:

| | 1. | Be responsible for overseeing the design, implementation
      and on-going effectiveness of policies and procedures for providing
      reasonable assurance regarding the reliability of financial reporting and
      the preparation of financial statements for external purposes in
      accordance with generally accepted accounting principles, including those
      policies and procedures that: (i) pertain to the maintenance of records
      that in reasonable detail accurately and fairly reflect the
      transactions and dispositions of the assets of the Company; (ii) provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the Company
      are being made only in accordance with authorizations of management and
      directors of the Company; and (iii) provide reasonable assurance regarding
      prevention or timely detection of unauthorized acquisition, use or
      disposition of the Companys assets that could have a material effect on
the financial statements.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A - 3

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| | 2. | Periodically review the adequacy and effectiveness of the
      Companys system of internal control over financial reporting and
      disclosure controls and procedures, by meeting with the Companys
      management, the independent auditor and the Chair of the Disclosure
      Committee to review the adequacy and effectiveness of such controls; and
      review before its release the disclosure regarding such system of internal
      control and disclosure controls required to be contained in the Companys
      periodic filings and the attestations or reports by the independent
      auditor relating to such disclosure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 3. | Review with the chief executive officer, the chief
      financial officer, and the independent auditor: (i) all significant
      deficiencies and material weaknesses in the design or operation of the
      Companys internal controls that could adversely affect the Companys
      ability to record, process, summarize and report financial information
      required to be disclosed by the Company in the reports that it files or
      submits with applicable securities regulators within the required time
      periods, and (ii) any fraud, whether or not material, that involves
      management of the Company or other employees who have a significant role
      in the Companys internal controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 4. | Be directly responsible, in its capacity as a committee
      of the Board and subject to the rights of shareholders and applicable law,
      for the selection, nomination, retention, termination and oversight of the
      work of any independent auditor (including the resolution of disagreements
      between management and the independent auditor regarding financial
      reporting) engaged for the purpose of preparing or issuing an audit report
      or performing other audit, review or attest services for the Company. The
      Committee shall recommend to the Board the independent auditor to be
      nominated for approval by the shareholders and the compensation of the
      independent auditor. Each such independent auditor shall report directly
      to the Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 5. | Pre-approve all audit services to be provided to the
      Company by the independent auditor, and pre-approve, or establish policies
      and procedures for the review and pre-approval of all permitted non-audit
      services to be provided to the Company by the independent
  auditor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 6. | Review and provide guidance with respect to the external
      audit and the Companys relationship with its independent auditor by (a)
      reviewing the independent auditors proposed audit plan (including scope,
      fees and schedule), approach and independence; (b) obtaining on a periodic
      basis, but no less frequently than annually, a formal written statement
      from the independent auditor delineating all relationships between the
      independent auditor and the Company concerning auditor independence; being
      actively engaged in dialogue with the independent auditor with respect to
      any disclosed relationship or services with the Company that may impact
      the objectivity and independence of the independent auditor, presenting
      this statement to the Board, and to the extent there are relationships,
      monitoring and investigating them; (c) taking, or recommending to the
      Board to take, appropriate action to oversee the independence of the
      independent auditor; (d) reviewing any publicly available inspection
      report on the independent auditor issued by the Public Company Accounting
      Oversight Board or the Canadian Public Accountability Board; (e)
      discussing with the Companys independent auditor the financial statements
      and audit findings, including any significant adjustments, management
      judgments and accounting estimates, significant new accounting policies
      and disagreements with management; (f) reviewing with both management and
      the independent auditor the appropriateness and acceptability of the
      Companys critical accounting policies and any proposed changes thereto;
      and (g) reviewing reports submitted to the audit committee by the
      independent auditor in accordance with the applicable regulatory
      requirements.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 7. | Review any problems experienced by the independent
      auditor in performing audits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

A - 4

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| | 8.  | Review and discuss with management and the independent
      auditor, and approve the annual audited financial statements and quarterly
      unaudited financial statements, including the Companys disclosures under
      Managements Discussion and Analysis of Financial Condition and Results
      of Operations, prior to filing with regulatory authorities.                                                                                        
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 9.  | Recommend to the Board the approval and filing of the
      annual audited financial statements.                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 10. | Periodically review and discuss with the Chair of the
      Disclosure Committee the disclosures contained in the Companys filings
      with the regulatory authorities prior to filing and the processes and
      procedures followed to ensure the accuracy of such disclosure.                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 11. | Direct the Companys independent auditor to review before
      filing with all regulatory authorities the Companys interim financial
      statements, using professional standards and procedures for conducting
      such reviews.                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 12. | Review all material written communications between the
      independent auditor and management, including post audit or management
      letters containing recommendations of the independent auditor,
      managements response and follow up with respect to the identified
      weaknesses.                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 13. | Review before release any press release including annual
      and quarterly results or forecasts.                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 14. | Satisfy itself that adequate procedures are in place for
      the review of the Companys public disclosure of financial information
      extracted or derived from the Companys financial statements (including,
      without limitation, the use of pro forma or non-GAAP financial
      information), other than the public dissemination referred to in the
      foregoing paragraph, and periodically assess the adequacy of those
      procedures.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 15. | Oversee compliance with the regulatory requirements for
      disclosure of auditors services and audit committee members, member
      qualifications and activities.                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 16. | Review and reassess the adequacy of the Whistleblower
      Policy, the Auditor Services Pre-Approval Policy, and the Corporate
      Disclosure and Confidentiality Policy on at least an annual basis and
      recommend any proposed changes to the Board for approval.                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 17. | Review, in conjunction with counsel, any legal matters
      that could have a significant impact on the Companys financial
      statements.                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 18. | Engage, as appropriate, outside legal, accounting and
      other advisors, with (a) the authority to retain such counsel or other
      advisors as the Committee may deem appropriate in its sole discretion, and
      (b) the sole authority to determine funding, approve fees and retention
      terms for such counsel and advisors.                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 19. | Review and approve in advance any proposed related-party
      transactions, and report any such transactions to the Board.                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 20. | Review and reassess the adequacy of the Audit Committee
      charter, structure, processes and membership requirements on at least an
      annual basis and recommend any proposed changes to the Board for
      approval.                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 21. | Establish procedures for the receipt, retention and
      treatment of complaints received by the Company regarding accounting,
      internal accounting controls or auditing matters; and establish procedures
      for the confidential, anonymous submission by employees of the Company of
      concerns regarding questionable accounting or auditing matters.                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 22. | Review, approve and monitor the Companys investment
      policy, investment portfolio, cash management objectives, and exposure to
      market risk.                                                                                                                                                                                                                                                                                                          

A - 5

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| | 23. | Review the effectiveness of the Companys risk management
      system to assure that material risks are identified and appropriate risk
      management processes are in place.                                                                                                                                                                                                                                                                              
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 24. | Review and discuss with management the Companys major
      financial risk exposures and the steps management has taken to monitor and
      control such exposures.                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 25. | Review with management and the external auditor the
      presentation and impact of significant risks and uncertainties associated
      with the Companys business, all alternative treatments of financial
      information with generally accepted accounting principles that have been
      discussed with management, the material assumptions made by management
      relating to them and their effect on the Companys financial
      statements.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 26. | Periodically review the Companys practices to maintain
      the security of its information technology systems.                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 27. | Ensure the regular rotation of the lead audit partner,
      the concurring partner and other audit partners engaged in the Companys
      annual audit to the extent required by applicable law;                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 28. | Perform an evaluation of its performance at least
      annually to determine whether it is functioning effectively.                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 29. | Establish, or review and approve, in accordance with
      applicable law, hiring policies for partners, employees or former partners
      and employees of the present and former independent auditor and oversee
      the hiring of any personnel from the independent auditor into positions
      within the Company.                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 30. | Obtain assurance from the independent auditor that
      disclosure to the Committee is not required pursuant to the provisions of
      the Exchange Act regarding the discovery of illegal acts by the
      independent auditor.                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 31. | Review managements processes in place to prevent and
      detect fraud.                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 32. | Review policies and practices with respect to off-balance
      sheet transactions and trading and hedging activities, and consider the
      results of any review of these areas by the independent auditor.                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 33. | Review with the chief executive officer and the chief
      financial officer their certifications required to be included in periodic
      reports filed with securities regulators.                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 34. | Perform any other activities consistent with this
      Charter, the Companys bylaws and governing laws that the Board or the
      Committee determines are necessary or appropriate.                                                                                                                                                                                                                                                                        

DELEGATION OF AUTHORITY

The Committee may, in accordance with law, delegate to one or
more independent members of the Committee the authority to pre-approve audit and
permitted non-audit services, provided that such pre-approval decision is
presented to the full Committee at its first scheduled meeting following such
pre-approval.

RESOURCES AND ADDITIONAL AUTHORITY OF THE COMMITTEE

The Committee shall have the resources and authority
appropriate to discharge its duties and responsibilities in accordance with this
Charter. The Company shall provide appropriate funding, as determined by the
Committee, in its capacity as a committee of the Board, for payment of (i)
compensation to any independent auditor engaged for the purpose of preparing or
issuing an audit report or performing other audit, review or attest services for
the Company; (ii) compensation to any advisors employed by the Committee
pursuant to the foregoing paragraph; and (iii) ordinary administrative expenses
of the Committee that are necessary or appropriate in carrying out its duties.

A - 6

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