YM BIOSCIENCES INC.

ANNUAL INFORMATION FORM

YEAR ENDED JUNE 30, 2004

November 2, 2004

YM BIOSCIENCES INC.

ANNUAL INFORMATION FORM

TABLE OF CONTENTS

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

DOCUMENTS INCORPORATED BY REFERENCE

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

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

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

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GLOSSARY OF TERMS AND PROPER NAMES

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

Abgenix - Abegnix Incorporated

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

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

Affinity - Binding strength of an antibody to a target

Amgen - Amgen Incorporated

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

Aphton - Aphton Corporation

ASCO - The American Society of Clinical Oncology

AZ/AstraZeneca - AstraZeneca PLC

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

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

BMS - Bristol Myers Squibb Company

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

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

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

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

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

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

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

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

Cisplatin - Approved chemotherapeutic agent

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

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

Cyclophosphamide - Approved chemotherapeutic agent

Cytoprotective - Having the capacity to protect cells

Cytostatic - Having capacity to arrest the growth of cells

Cytotoxic - Having capacity to kill cells

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

Doxorubicin - Approved chemotherapeutic agent

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

Eli Lilly - Eli Lilly and Company

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

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

Estramustine - An approved chemotherapeutic agent

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

5-FU - See Fluorouracil

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

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

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Genentech - Genentech Incorporated

Genmab - Genmab A/S

Genta - Genta Incorporated

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

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

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

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

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

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

ImClone - ImClone Systems Incorporated

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

Irinotecan - An approved chemotherapeutic agent

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

ISIS - ISIS Pharmaceuticals

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

Lorus - Lorus Therapeutics Inc.

Merck - Merck KGaA

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

Mitoxantrone - An approved chemotherapy agent

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

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Murine - Derived from mouse cells

NCE - A new chemical entity

NCIC - The National Cancer Institute of Canada

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

NSCLC - Non Small Cell Lung Cancer

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

Oncogene - A gene that induces or promotes uncontrolled cell growth

Oncoscience - Oncoscience AG

Orange Book - A reference to the Hatch/Waxman Act

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

OSI - OSI Pharmaceuticals, Inc.

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

P64k - Outer membrane protein of N. meningitides

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

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

pGp inhibitor - Inhibitor of the activity of P-Glycoprotein

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

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

Prednisone - An approved standard anti-inflammatory

Resection - The process of tumor removal

Roche - F.Hoffmann-LaRoche Ltd.

TAP - TAP Pharmaceuticals

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Taxol - An approved chemotherapeutic agent

Taxotere - An approved chemotherapeutic agent

TGFa - Transforming growth factor alpha

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

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

Titers - Term used to express levels of circulating antibodies

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

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

Vinylfuran - A chemical polymer

Yttrium 90 - A radioisotope used in the treatment of disease

FORWARD LOOKING STATEMENTS

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

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

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CORPORATE STRUCTURE

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

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

Organizational Structure

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

[graphic omitted]

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

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

GENERAL DEVELOPMENT OF THE BUSINESS

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

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

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

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

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

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

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

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

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

NARRATIVE DESCRIPTION OF THE BUSINESS (the "Business")

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

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

RISK FACTORS

Risks Related To Our Business

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

WE ARE RELIANT ON LICENSORS FOR RESEARCH ON NEW PRODUCTS.

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

-15-

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

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

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

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

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

-16-

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

Risks Related To Our Financial Results And Need For Financing

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

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

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

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

-17-

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

OUR OPERATING RESULTS AND STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY.

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

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

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

Risks Related To Our Industry

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

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

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

-18-

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

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

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

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

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

-19-

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

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

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

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

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

-20-

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

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

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

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

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

Risks Related To Intellectual Property And Litigation

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

-21-

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

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

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

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

TESMILIFENE

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

-22-

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

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

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

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

NORELIN TM

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

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

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

-23-

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

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

THERACIM

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

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

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

-24-

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

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

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

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

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

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

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

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

-25-

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

Risks Related To Being A Canadian Entity For Foreign Investors

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

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

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

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

-26-

BUSINESS STRATEGY

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

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

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

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

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

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

-27-

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

CANCER AND CANCER THERAPEUTIC MARKET

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

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

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

-28-

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

PRODUCTS IN CLINICAL DEVELOPMENT

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

TESMILIFENE

BACKGROUND:

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

CLINICAL EXPERIENCE AND DEVELOPMENT PLANS:

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

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

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

-29-

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

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

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

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

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

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

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

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

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

-30-

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

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

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

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

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

MANUFACTURING:

-31-

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

INTELLECTUAL PROPERTY:

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

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

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

-32-

COMPETITIVE POSITION:

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

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

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

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

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

THERACIM AND RADIOTHERACIM

BACKGROUND:

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

-33-

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

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

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

CLINICAL EXPERIENCE - THERACIM:

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

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

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

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

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

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

-34-

CLINICAL EXPERIENCE - RADIOTHERACIM:

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

MANUFACTURING:

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

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

MARKETING:

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

INTELLECTUAL PROPERTY:

-35-

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

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

COMPETITIVE POSITION:

-36-

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

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

NORELIN TM

BACKGROUND:

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

CLINICAL EXPERIENCE:

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

-37-

MANUFACTURING:

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

INTELLECTUAL PROPERTY:

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

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

COMPETITIVE POSITION:

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

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

-38-

PRODUCTS IN PRE-CLINICAL DEVELOPMENT

TGFa CANCER VACCINE

BACKGROUND:

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

RATIONALE:

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

INTELLECTUAL PROPERTY:

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

PRODUCT STATUS:

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

-39-

HER-1 BASED CANCER VACCINE

BACKGROUND:

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

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

RATIONALE:

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

INTELLECTUAL PROPERTY:

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

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

PRODUCT STATUS:

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

- -40-

CURRENT STATUS of TGFa and HER-1 LICENSES:

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

G-1 VINYLFURAN

BACKGROUND:

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

CLINICAL EXPERIENCES:

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

CURRENT STATUS:

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

INDUSTRY COMPETITION

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

-41-

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

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

CLINICAL, PRE-CLINICAL AND BASIC RESEARCH

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

-42-

LICENSING ARRANGEMENTS

IN-LICENSING

LICENSE FOR TESMILIFENE

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

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

LICENSE FOR NORELIN TM

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

-43-

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

(i) The 1995 CIMYM License

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

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

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

-45-

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

(ii) The 2001 CIMYM License

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

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

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

-45-

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

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

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

LICENSE FOR G-1

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

OUT-LICENSING

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

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

-46-

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

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

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

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

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

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

THERACIM:

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

TGFa CANCER VACCINE AND HER-1 BASED CANCER VACCINE:

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

-48-

REGULATORY APPROVAL

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

CANADIAN APPROVAL PROCESS

-48-

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

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

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

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

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

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

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

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

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

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

-49-

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

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

UNITED STATES APPROVAL PROCESS

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

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

Stage 1: Preclinical Research

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

Stage 2: Clinical Research

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

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

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

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

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

Stage 3: FDA Review and Approval

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

Stage 4: Marketing

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

ARRANGEMENTS WITH SUBSIDIARIES

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

-51-

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

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

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

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

-52-

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

PROPERTY, PLANTS AND EQUIPMENT

FACILITIES

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

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

EQUIPMENT AND OTHER PROPERTY

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

EMPLOYEES

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

DIVIDENDS

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

CAPITAL STRUCTURE

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

-53-

MARKET FOR SECURITIES

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

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

DIRECTORS AND OFFICERS

- -------------------------------- -------------------------------------------------- -------------------
Name Position Period Served
- -------------------------------- -------------------------------------------------- -------------------

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

-54-

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

SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

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

- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Common
Number of Percentage of Shares
Common Common Shares Held Under
Name Shares Outstanding Option Exercise Price Expiration Date
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------

David G.P. Allan 669,659 1.8% 656,250 $1.75 - $4.50 2007 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Thomas I.A. Allen - * 105,600 $1.75 - $4.50 2007 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Mark Entwistle - * 80,660 $1.75 - $4.50 2007 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
John Friedman - * 50,000 $2.10 2014
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Henry Friesen - * 80,660 $1.75 - $4.50 2011 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Paul M. Keane - * 204,000 $1.75 - $4.50 2007 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Vincent Salvatori - * 80,000 $1.75 - $2.50 2008 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Len Vernon - * 170,000 $1.75 - $4.50 2008 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Julius Vida - * 75,660 $1.75 - $4.50 2011 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Gilbert Wenzel - * 75,660 $1.75 - $4.50 2011 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------
Tryon M. Williams 20,100 * 118,160 $1.75 - $4.50 2007 - 2013
- --------------------------- ------------- ------------------ ------------- -------------------- ----------------------

* Less than one percent

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

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

-55-

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

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

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

MARK ENTWISTLE, M.A. - DIRECTOR

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

JOHN FRIEDMAN - DIRECTOR

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

-56-

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

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

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

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

VINCENT SALVATORI, PH.D. - EXECUTIVE VICE PRESIDENT

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

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

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

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

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

GILBERT WENZEL, PH.D. - DIRECTOR

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

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

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

CLINICAL AND SCIENTIFIC ADVISORY BOARD

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

-58-

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

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

ROBERT S. KERBEL, PH.D.

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

AGUSTIN LAGE DAVILA M.D. PH.D.

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

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

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

RAYMOND M. REILLY, PH.D.

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

NICLAS STIERNHOLM, PHD.

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

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

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

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

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

BOARD PRACTICES

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

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

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

AUDIT COMMITTEE

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

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

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

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE

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

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

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COMPENSATION COMMITTEE

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

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

LEGAL PROCEEDINGS

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

TRANSFER AGENT AND REGISTRAR

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

MATERIAL CONTRACTS

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

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

(b) Clinical Research Services Agreement between YM BioSciences Inc. and
Pharm-Olam International, Ltd. ("POI"), dated March 10, 2004. The
Corporation has contracted with POI to do a Phase III clinical trial
with tesmilifene in metastatic and recurrent breast cancer. POI in
turn is contracting with others to perform services and to recruit and
treat patients. The contract with POI is payable over the next few
years depending on the recruitment of patients.

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

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

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

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

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

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

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

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

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

ADDITIONAL INFORMATION

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

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

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

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

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

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

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

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

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

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

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Schedule "A"

YM BIOSCIENCES INC.

AUDIT COMMITTEE MANDATE

1. General

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

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

2. Members

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

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

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

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

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

3. Meetings

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

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

4. Committee Charter

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

5. Duties of the Audit Committee:

The Audit Committee shall have the following duties:

Financial Information and Reporting

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

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

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

Internal Controls

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

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

External Auditors

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

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

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

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

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

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

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

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

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

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Pre Approval of Non-Audit Services

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

Complaints procedure

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

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

Reporting

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

6. Authority to engage independent counsel and advisors

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

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

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